Charitable Giving in a Global Environment
Cross-border charitable giving has generally become known as “international philanthropy” and when involving multiple countries “global philanthropy.” However, by whatever name and in whatever scope, worldwide charitable giving and activities have grown tremendously in recent years and are likely to continue as individuals are increasingly connected and more aware of those needing charitable support. Charitable giving in the United States rose to approximately $427 billion in 2018, and of that, international giving comprised approximately $23 billion.
Leading this trend have been donors who are individuals, corporations, public charities, and private foundations of the United States. This in turn has impacted U.S. lawyers, accountants, and other professional advisors who counsel them with respect to charitable giving and, more than ever, made it important for these professionals to understand the complex network of applicable federal tax and other laws. It has long been recognized that the tax laws governing charitable giving are complicated; however, they are even more challenging in the international context when a professional advisor must take into account not only the domestic tax laws, but also the rules of international taxation, U.S. anti-corruption and counter-terrorism laws, and sometimes foreign law and practice that characterize the nature of a foreign charity for U.S. tax purposes.
This article introduces some of the major U.S. tax issues applicable to global philanthropy, and through this introduction, a professional advisor should begin to acquire a basic conceptual framework within which to guide clients more effectively in this area.
“Charitable Organization” Defined
A “charitable organization” or a “501(c)(3)” are commonly used terms that refer to an organization that is exempt from federal income taxation under I.R.C. §501(c)(3). Section 501(c)(3) is the cornerstone requirement and provides that the organization must be “organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes….” The entity itself may be organized as a corporation, fund, or foundation. Often, a charitable organization is created as a not-for-profit corporation under state law.
Every organization that qualifies for tax exemption under §501(c)(3) is a private foundation unless it is a public charity as a result of falling into one of the following three categories: 1) organizations that generally have broad public support; 2) organizations such as hospitals, educational, and religious institutions, governments, and others; or 3) organizations that support the foregoing charities by generally being operated, supervised, and/or controlled by the charity being supported (commonly referred to as “supporting organizations”) subject to certain limitations.
In the estate planning context, charitable organizations are often grantmaking or scholarship organizations funded primarily or exclusively from a family and are likely classified as a non-operating private foundation. It is important to be aware of the distinction between private foundations and public charities because private foundations are subject to numerous regulatory requirements and certain excise taxes that do not apply to public charities. Additionally, the classification as a private foundation or public charity based on sources of financial support is not permanent; it may change depending upon its level of public support received over time from private-sector and government donations.
Tax-Deductible Charitable Contributions
A major question that every client asks is the simple but important one of whether the charitable contribution will be tax deductible. While it is a simple question, it is one that invokes more questions, many of which are relevant to charitable contributions made to both domestic and foreign charities. However, in the case of contributions to foreign charities or in support of foreign charitable activities, there are additional questions and issues to address.
The answer relating to tax deductibility of contributions to charitable organizations, domestic and foreign, begins with the oft-used words of tax lawyers, “it depends.” It depends upon: Who is the taxpayer making the contribution — an individual, partnership, corporation, trust, or estate? What is the type of charity that will receive the contribution — a public charity or private foundation, domestic or foreign, and, if it is a foundation, is it a grant-making or operating foundation? What is the amount of the charitable contribution — small or large? What is the nature of the contribution — money or property, and if property, what is the nature of the property? Is the property created by the donor, such as art or intellectual property, is it a direct or indirect interest in real estate, or is it intangible property, such as publicly traded securities, interests in private or family-controlled companies, or other capital asset property? Is the charitable gift made with or without conditions, restrictions, or retained interests? Is the deduction desired for income, gift, or estate-tax purposes? These are among the important questions to resolve in order to make the determination of deductibility, and, therefore, the professional advisor should have a thorough discussion with the client about the nature of proposed charitable gift in light of these considerations.
Here are some general answers to these questions. An unrestricted contribution of money or property by an individual or corporation directly to a domestic public charity or domestic private foundation is deductible for federal income tax purposes subject to certain percentage limitations on the amount of the deduction. A similar charitable contribution made directly to a foreign charity by an individual or corporation is not deductible for income tax purposes unless it is permitted under a tax treaty that the U.S. has with the foreign country where the charity is located, such as the tax treaties with Mexico, Canada, and Israel.
A charitable contribution made by a partnership is not deductible by the partnership because the partnership is a “pass-through” entity. Rather, the deduction is allocated by the partnership to its partners (who may be individuals, corporations, partnerships, trusts, or estates) as a separately stated item and will then be deductible or not by those partners according to the various federal income tax rules applicable to each of them. A corporation with an “S election” in effect will allocate the charitable contribution among its shareholders, and each shareholder will report a charitable contribution deduction or not according to its taxpayer status in the same manner as partners of a partnership.
A charitable contribution made by a complex trust is deductible for income tax purposes if permitted by the express terms of the trust agreement as the governing instrument, and unlike the case of an individual or corporation, the trust can make the deductible contribution directly to a foreign charity if certain conditions discussed below are satisfied. The deductible charitable contribution can be in an amount up to the entire gross income of the trust for the tax year and, therefore, completely eliminate the income tax liability of the trust for the year. There is no percentage limitation that reduces the amount of the deduction as in the case of a charitable contribution by an individual or corporation. The deduction is claimed by the trust, not treated as allocated or distributed to the beneficiaries for use by them.
A charitable contribution made by an estate can be deductible for income or estate tax purposes depending upon the terms of the will as the governing instrument. If made for income tax purposes, like a trust, the deduction can be in an amount up to the gross income of the estate for the year and eliminate any possible estate income tax liability. If made for estate tax purposes, the charitable contribution will be in an amount equal to the value of the money or property that is included in the gross estate and that constitutes the charitable gift; there is no percentage limitation imposed upon the amount of the deduction. Also, like a trust, the deduction is allowable for a charitable contribution made to either a domestic or foreign charity.
Following rules similar to those applicable to the estate tax deduction, a charitable contribution made by a U.S. citizen or resident to a domestic or foreign charity can be deductible for gift-tax purposes so that the gratuitous transfer constituting the charitable contribution is not subject to U.S. gift tax. A charitable gift made by a nonresident alien of U.S.-situs property to a domestic charity is also deductible and, therefore, not subject to gift tax; however, if the nonresident alien makes the gift to a foreign charity, it will be subject to gift tax as no gift tax deduction will be available. For example, if a nonresident alien were to make a gift of Florida real estate to a foreign charity, the charitable contribution would be subject to gift tax.
Trust and Estate Tax-Deductible Contributions When Made Directly to a Foreign Charity
As already indicated, a domestic complex trust or domestic estate may possibly claim an income tax deduction and an estate may possibly claim an estate tax deduction for a charitable contribution made directly to a foreign charity. In light of this, and given that affluent foreign individuals have been moving to the U.S. and becoming U.S. citizens or U.S. tax residents while nevertheless maintaining strong ties to their home countries, it is important to explore with these types of clients charitable gifting involving foreign countries as part of a domestic estate plan.
As part of such an estate plan, a U.S. citizen or resident decedent, as well as a nonresident alien having U.S.-situs property, could provide for charitable contributions to be made upon death directly by the estate to domestic or foreign charities, and thereby reduce or even eliminate all federal estate tax. The contributions could be deductible for federal estate tax purposes without limitation as to the amount even if they will be used for charitable purposes exclusively outside the U.S. The foreign charity that will receive a contribution can be established by the individual before or after becoming a U.S. citizen or resident, or in the case of a nonresident alien, before or after acquiring U.S.-situs property. To secure an estate tax deduction, a typical provision in a will would state a bequest of money or personal property or a devise of real property to a foreign charity, but only if the charity is determined to be an organization described in §2055 with respect to a U.S. citizen or resident decedent or §2106 with respect to a nonresident alien decedent. Before permitting the estate to make the charitable gift to the foreign charity, however, it is strongly recommended that U.S. counsel of the personal representative of the estate opine that the requirements of §§2055 or 2106, as applicable, and all the requirements of the governing instrument have been satisfied or, in the alternative, assist the personal representative of the estate in obtaining a favorable private letter ruling from the IRS that determines that the tax requirements for the deduction have been satisfied. In order to render the opinion or prepare the ruling request, counsel must carefully review the governance documents, internal policies and activities of the foreign charity, and also consider the laws and practices of the foreign country in light of all applicable U.S. tax law.
Income Tax-Deductible Contribution for Gifts that Benefit a Foreign Charity
As previously stated, direct contributions to a foreign charity by an individual or corporation are not deductible for federal income tax purposes unless a tax treaty applies. However, there are different legally permitted ways that an individual or corporation may achieve an income tax deduction while benefiting a foreign charity, and the attorney or other professional advisor should help the client understand these alternatives. Several factors should be considered such as the charitable purpose of the gift, the size and nature of it, whether it will be a single charitable gift or a series of gifts over time, and the nature of continuing involvement, if any, that the client would like to have regarding the administration of one or more charitable gifts.
To benefit a foreign charity or support a foreign charitable activity, an individual or corporation could make an income tax deductible contribution to a U.S. charitable organization with international programs or that makes gifts to foreign charities in order to carry out the tax-exempt purposes of the U.S. organization. To illustrate, consider the structure and operations of the Bill and Melinda Gates Foundation (Gates Foundation) or the Catholic Near East Welfare Association (CNEWA). If an individual or corporation wanted to make an income tax-deductible gift to be used to find solutions to health problems in developing countries, a contribution could be made to the Gates Foundation to support its Global Health programs. Or, if an individual or corporation wanted to support education of children in Africa or the Middle East, a charitable gift could be made to CNEWA with a statement of desire that the gift be used for that purpose. In these circumstances, the individual or corporation would be entitled to an income tax deduction and not have any continuing responsibility or any administration or supervision burdens.
If limited, continuing involvement is desired, however, an individual or corporation could make an irrevocable charitable contribution to a donor-advised fund while contractually retaining the right to advise or recommend investments and grants to other eligible charities, but without a legal right to control the investment and grant decisions. For example, an individual could contribute money to a donor-advised fund and then recommend that the gift be invested in certain ways and periodically used as grants to one or more foreign charities (often limited by donor-advised funds to those foreign charities that have a §501(c)(3) determination letter from the IRS). Similarly, a charitable gift could be made to a domestic public charity known as a “friends of” organization that supports a specific foreign charity, such as the American Friends of the Louvre that helps the Louvre art museum in Paris.
Finally, there is the possibility that the client would like to establish its own charitable organization rather than donate to an existing one. This newly formed organization would, in turn, make charitable contributions to foreign charities. Some reasons why one may choose to form a charitable organization rather than donate to an existing one relate to greater control, family considerations, and estate planning aspects.
With regard to greater control, the distinctive nature of giving by millennials and younger generations is noteworthy: They seek to engage and track results. Accordingly, in the coming years, more philanthropy may take the form of creating a charitable organization rather than donating to an existing one. With regard to family planning, forming a charitable organization provides a vehicle for a family to work together across generations in promoting shared values and to create a unifying family legacy. Philanthropy also may be viewed as an important part of family governance and wealth planning, creating an opportunity for children to make decisions together, which may assist them in managing inherited wealth together. Finally, as to estate planning aspects, the foundation can serve as the final receptacle of estate assets resulting in “zeroing out” the potential federal estate tax since there is no percentage limitation on the size of the estate tax deduction.
If the decision is made to form a charitable organization, a complex set of rules must be followed in order to assure the tax deduction for donors and also to protect the tax-exempt status of the organization itself and, with respect to private foundations, to avoid the application of certain excise taxes that generally apply when the organization is not operating for the “public benefit” as that concept is defined under the tax law. Although many of these excise taxes do not apply to public charities, and some do not apply to operating private foundations, it is considered a best practice for all charitable organizations to comply with these requirements. A full discussion of these provisions is outside of the scope of this article, but it is important to note that they generally involve excise taxes to guard against using a private foundation improperly, such as for making excessively risky investments or holding excessive interests in businesses, using the private foundation as vehicle to earn investment income tax-free, engaging in improper transactions with related parties, such as paying salaries or making loans to family members for their personal benefit in manner not permitted by the tax law, making grants for improper purposes or without pre-approval by the IRS where required, paying excessive executive compensation, and failing to make a sufficient amount of qualifying distributions thereby accumulating income and assets rather than using them for the exempt purposes for which the foundation was formed.
Supporting Charitable Activities Abroad
Forming a U.S. charitable organization to support organizations or activities outside of the U.S. may be appealing to a client. A domestic charitable organization provides the opportunity for individual and corporate donors to receive federal income tax deductions and generally helps fundraising as the organization gains legitimacy because it is subject to U.S. tax laws, federal and state reporting obligations, and review by the IRS. In order to support charitable activities abroad, a private foundation must follow all the rules applicable to domestic private foundations as indicated above. Additionally, there are other requirements where grants are made to foreign organizations to ensure compliance with counter-terrorism and anti-corruption laws.
In order for a charitable organization to make a grant to a foreign charity that does not have a §501(c)(3) determination letter issued by the IRS, the threshold question is whether the grant should be made according to an “equivalency determination letter” or by exercising “expenditure responsibility.”
An equivalency determination letter is an opinion letter generally prepared by a qualified U.S. tax attorney or accountant that, in effect, performs the same due diligence as the IRS would when a domestic charity applies for tax-exempt status. This letter is prepared in accordance with Revenue Procedure 2017-53 and involves the review and analysis of multiple issues, such as the foreign law applicable to the charity in its home country, the foreign charity’s governance documents and internal policies, the foreign charity’s activities, the foreign charity’s financial statements, and the foreign charity’s officers and directors relating to anti-terrorism, discussed below. “Expenditure responsibility” refers to a specific type of due diligence in tracking the use of the grant funds made to the foreign charity, the requirements of which are set forth in detail in §4945(h) and the related regulations. This generally involves a pre-grant inquiry, a grant application and agreement, regular reports of the use of funds, grant funds maintained in a segregated account, and the requirement that the grant is terminated and all amounts returned if the funds are used improperly.
The question becomes: Which is better? Expenditure responsibility or an equivalency determination letter? Again, it depends. If a U.S. charitable organization desires to make grants to multiple foreign charities, as determined from time to time, then expenditure responsibility may be a more efficient option because the U.S. charity will expend its resources as and when needed when the grants are made. However, if the U.S. charitable organization seeks to make grants to only one or two foreign charities over a long period of time, then an equivalency determination letter may be the better option because the upfront investment in time reviewing the operations of the foreign charity and the contours of the foreign law may save time and costs in the long run and also will streamline grant distributions. In the latter case, the U.S. charitable organization must be careful it is not merely serving as a conduit by simply funneling money to the foreign charity. If so, the grants made to the foreign charity would violate one or more of the various rules set forth above and could subject the U.S. charitable organization to excise taxes or loss of tax-exempt status.
When the U.S. charitable organization makes a grant to the foreign charity described in §501(c)(3), withholding on that grant may be required unless the organization receives an IRS Form W-8EXP, “Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding and Reporting,” properly completed and provided to the charitable organization before the grant distribution is made to the foreign charity. This requires a certification that the foreign charity is a public charity as officially determined by the IRS in a currently valid determination letter or attaches to the form an opinion from U.S. counsel concluding that the foreign charity is described in §501(c)(3). If the opinion of U.S. counsel provides the classification to be a public charity, then an affidavit must also be attached setting forth sufficient facts for the IRS to determine whether public charity classification is appropriate. Without IRS Form W-8EXP and proper compliance, there may be a 30% withholding tax imposed on the amount of the grant. Therefore, compliance in this area is extremely important.
Further, after the U.S. charitable organization is formed, it may receive contributions from U.S. and foreign persons. If a foreign person makes a contribution, the U.S. charitable organization is not required to file IRS Form 3520, “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.” However, if the gift from the foreign person is in excess of $5,000, the gift and the identity of the donor would be reported in the organization’s annual tax return, IRS Form 990 PF, “Return of a Private Foundation” (Form 990 PF) on Schedule B, schedule of contributors.
Counter-Terrorism and Anti-Corruption
In the years following 9/11, and in part in response to Executive Order 13224, the Treasury Department issued additional regulations and guidance that apply to U.S. organizations providing funds to foreign recipients, including substantial penalties that can result if a person violates these counter-terrorism laws. Further, it released the U.S. Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities, which discusses best practices, such as governance and financial accountability and transparency. Grants being made to foreign charities must comply with the Office of Foreign Asset Control (OFAC) regulations. This compliance must be demonstrated as part of the organization’s application to the IRS obtain classification as a private foundation or public charity (Form 1023), where the application indicates grants will be made outside of the U.S. Further, the Form 990 PF specifically asks if the private foundation has an interest in or a signature or other authority over a bank, securities, or other financial account in a foreign country, and if the aggregate amount of the foregoing exceeds $10,000 at any time during the calendar year, the foundation is required file a report of foreign bank and financial accounts (FBAR).
Compliance and Recordkeeping
Compliance and recordkeeping are required as a matter of state law as well as the federal tax law. The applicable Florida statutes for a not-for-profit corporation are found in Ch. 617, corporations not for profit. Additionally, in Florida as well as in other states, a charitable organization that seeks to solicit donations from the general public must register with the appropriate state authority. In Florida, this is the Florida Department of Agriculture and Consumer Affairs. The IRS has issued compliance guides that explain requirements relating to maintaining good accounting records, tracking donations and expenditures, and other matters. These guides should be reviewed and followed.
The U.S. tax law encourages global charitable giving by allowing charitable organizations to be exempt from taxation and, in addition, allowing the charitable gifts to be deductible for all federal tax purposes — income, gift, and estate taxation — even when all of the charitable purposes of the gift will be accomplished outside of the U.S. However, the code and regulations in this area are extremely complex and must be strictly followed. Further, there must be full compliance with all applicable non-tax federal laws and state laws.
 See Giving USA, Giving USA 2019: Americans Gave $427.71 Billion to Charity in 2018 Amid Complex Year for Charitable Giving (June 12, 2018), available at https://givingusa.org/giving-usa-2018-americans-gave-410-02-billion-to-charity-in-2017-crossing-the-400-billion-mark-for-the-first-time/; see also Giving USA 2018: Americans Gave $410.82 Billion to Charity in 2017, Crossing the $400 Billion Mark for the First Time (June 13, 2018), available at https://givingusa.org/giving-usa-2018-americans-gave-410-02-billion-to-charity-in-2017-crossing-the-400-billion-mark-for-the-first-time/; and Giving USA 2017: Total Charitable Donations Rise to New High of $390.05 Billion (June 12, 2017), available at https://givingusa.org/giving-usa-2017-total-charitable-donations-rise-to-new-high-of-390-05-billion/.
 This article is for educational purposes only and is not intended to provide tax or other legal advice. The laws discussed herein are complex, and an appropriate course of action is dependent upon all applicable laws, rules, and regulations as well as the pertinent facts and circumstances. Any person interested in forming a charitable organization should consult with his or her legal and tax advisors.
 References in this article to “U.S. tax law” or “for U.S. tax purposes” encompass the complete federal tax law represented by the Internal Revenue Code, Treasury Regulations, IRS administrative rulings, and caselaw. All section references in this article are to the Internal Revenue Code of 1986, as amended, unless otherwise indicated.
 See I.R.C. §501(c)(3).
 Despite its state law status as a not-for-profit corporation, federal tax-exempt status can only be achieved by filing with the Internal Revenue Service Form 1023, “Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code” (Form 1023), or IRS Form 1023-EZ, “Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code,” and receiving a favorable determination from the Internal Revenue Service based upon the application.
 See I.R.C. §§509(a)(1) and 170(b)(1) (including additional sections referenced therein).
 See I.R.C.§ 170(b)(1)(a)(vi); Treas. Reg. 1.170A-9(f).
 See I.R.C. §509(a)(3).
 A private foundation is further classified as either “operating” under §4942(j)(3) or not an operating foundation under that provision. In general, an operating foundation is one that spends at least 85% of the lesser of its adjusted net income or minimum investment return directly for the active conduct for its charitable activities, rather than indirectly by making grants to other organizations. A foundation that provides scholarships or grants often will not be considered an operating foundation unless it maintains significant involvement in the active programs in support of which such grants or scholarships were made or awarded.
 References in this article to a “partnership” include all types of partnerships and limited liability companies permitted under applicable state law that are classified as a partnership for federal tax purposes under Treas. Reg. 301.7701-2, et seq.
 References in this article to a “corporation” include corporations and other entities created under applicable state law treated as associations taxable as corporations for federal tax purposes under Subchapter C of the Internal Revenue Code, commonly referred to as “C corporations.” The term does not include corporations taxable under Subchapter S, commonly referred to as “S corporations.”
 Generally, contributions to public charities and private foundations may be deducted up to 50% of the donor’s “contribution base,” that is, the adjusted gross income computed without regard to net operating loss carrybacks. However, a 30% limitation often applies to nonoperating private foundations, unless they make qualifying distributions of all contributions received in a taxable year shortly after the close of that taxable year or otherwise satisfy the requirements of the code. See I.R.C. §170(b). The Tax Exempt Organization Search website uses deductibility status codes to indicate these limitations; IRS, Results for Tax Exempt Organization Search, https://apps.irs.gov/app/eos/mainSearch.do?mainSearchChoice=pub78&dispatchMethod=selectSearch.
 This generally requires that the foreign charity would be considered a charitable organization if it were organized and operated in the U.S. and that the U.S. donor has income sourced in the country in which the foreign charity is located. See United States – Mexico Income Tax Convention, Article 22; United States – Canada Income Tax Convention, Article XXI; and Convention Between the Government of The United States of America and The Government of The State of Israel with Respect to Taxes on Income, Article 15-A.
 See I.R.C. §702(a)(4). Also refer to IRS Form 1065, “U.S. Return of Partnership Income,” which, inter alia, requires on Schedule K-1 precise identification of the type of partner. Observe also that line 13 of the tax return and Schedule K-1 report charitable contributions as a separately stated item and not as a deduction in arriving to taxable income of the partnership.
 See §1366(a) flush language referencing §702(a)(4). Also refer to IRS Form 1120S, “U.S. Income Tax Return for an S corporation,” which, inter alia, requires on Schedule K and K-1 for each shareholder on line 12a that charitable contributions be separately stated and not treated as a deduction in arriving to taxable income of the corporation.
 In general, a complex trust is one that can accumulate income, distribute out of corpus, and make charitable gifts under §642(c). See I.R.C. §§661 and 662 and Treas. Reg. 1.651(a)-1(b) (“Trusts subject to section 661 are referred to as ‘complex’ trusts.”). A simple trust under §651 cannot make a charitable contribution.
 See I.R.C. §642(c).
 See I.R.C. §642(c) for income tax deductibility and §2055 for estate tax deductibility.
 See I.R.C. §642(c).
 See I.R.C. §2522(a) and Treas. Reg. 25.2522(a)-1.
 See I.R.C. §2522(b) and Treas. Reg. 25.2522(b)-1.
 The charitable gift should not be subject to FIRPTA withholding tax under §897 as not constituting a sale or other disposition, except to the extent of any indebtedness on the property being transferred therewith. However, the Internal Revenue Service may disagree as indicated in the IRS website. If the real property is contributed to a U.S. corporation, partnership, or limited liability company, and the ownership interest of the entity is transferred as a charitable gift by the nonresident alien, this should not constitute a transaction subject to gift tax. See I.R.C. §2501(a)(2).
 See I.R.C. §2055; see also, e.g., PLR 201702004.
 These sections of the code are similar to §501(c)(3).
 Foreign law and practice are particularly relevant when determining whether a foreign charity meets the U.S. requirements of an organization described in I.R.C. §§501(c)(3), 2055, 2106, or 2522. For example, the laws and practices of Colombia and governmental supervision align positively with those of the U.S. in fundamental areas and, therefore, increase the likelihood that, under appropriate circumstances, a charitable gift to a not-for-profit Colombian entity (entidad sin ánimo de lucro) would be deductible for U.S. tax purposes.
 See, e.g., Rev. Rul. 63-252.
 See Bill and Melinda Gates Foundation, Who We Are: Global Health, https://www.gatesfoundation.org/Who-We-Are/General-Information/Leadership/Global-Health.
 However, see note 37 and related text regarding the adverse consequences of a U.S. charity acting as a conduit of the foreign charity.
 See I.R.C. §§4966 and 4967. Typically donor-advised funds (DAFs) are created by public charities, community foundations, and large financial institutions where they serve as the sponsoring organization. In the role of sponsoring organization, the DAF establishes an account to which the donor makes an irrevocable charitable contribution, manages the investments of the account, and effectuates charitable gifts to eligible charities from the account normally consistent with the donor’s desires but without legal obligation to do so. Many DAFs will not permit a grant to a foreign charity unless the foreign charity has a §501(c)(3) determination letter from the IRS, because the DAF does not want to have the obligation to carry out expenditure responsibility with respect the foreign charity grantee.
 See Rev. Rul. 63-252 (reviewing the deductibility of contributions by individuals to a charity organized in the U.S., which thereafter transmits some or all of its funds to a foreign charitable organization under five fact patterns); Rev. Rul. 66-79 (Contributions to a domestic charity described in §170(c)(2) of the Internal Revenue Code of 1954, which are solicited for a specific project of a foreign charitable organization are deductible under §170 of the code where the domestic charity has reviewed and approved the project as being in furtherance of its own exempt purposes and has control and discretion as to the use of the contributions.); see also Bilingual Montessori School of Paris v. Comm’r, 75 TC 485 (Dec. 30, 1980) (No requirement that a U.S. 501(c)(3) must have a “substantial operational nexus” in the United States.)
 See, e.g., Rev. Rul. 74-229 (U.S. organization will qualify as a public charity (as a supporting organization) where it is organized and operated exclusively to support a foreign organization that would qualify as a U.S. public charity (not as a supporting organization) if it were organized and operated in the United States.).
 See Justin Wheeler, How Millennials Are Changing Philanthropy, Forbes (Aug. 15, 2018), available at https://www.forbes.com/sites/theyec/2018/08/15/how-millennials-are-changing-philanthropy/#f70982e7c686; and Bradley Depew, Learn About Millennials and Charity (Jun. 25, 2019), https://www.thebalancesmb.com/how-millennials-have-changed-charitable-giving-2501900.
 For excise taxes applicable to private foundations, see I.R.C. §§4940 (Excise Tax Based on Investment Income), 4941 (Taxes on Self-Dealing), 4942 (Taxes on the Failure to Distribute Income, only applies to non-operating private foundations), 4943 (Taxes on Excess Business Holdings), 4944 (Taxes on Investments which Jeopardize Charitable Purpose), and 4945 (Taxes on Taxable Expenditures). For excise taxes applicable to both private foundations and public charities, see c§4960 (Tax on Excess Tax-exempt Organization Executive Compensation), 4958 (Taxes on excess benefit transactions), and 511-512 (Imposition of Tax on Unrelated Business Income of Charitable, Etc., Organizations and Unrelated Business Taxable Income).
 The requirements of obtaining an equivalency determination letter or exercising expenditure responsibility apply to grantmaking by private foundations, but do not apply to grantmaking by public charities. Nevertheless, it is advisable for a public charity to follow the same rules that apply to private foundations in this area in order to demonstrate clear compliance with the U.S. tax laws.
 Rev. Proc. 2017-53 at §3.02 provides a definition of tax practitioners qualified to prepare an equivalency determination letter: “A ‘qualified tax practitioner’ is an attorney, certified public accountant (CPA), or enrolled agent who is subject to the standards of practice before the IRS set forth in Circular 230 (31 CFR Part 10).” Further, §3.05 sets forth general requirements imposed on qualified tax practitioners in preparing the letter.
 See I.R.C. §4945(h) (expenditure responsibility); see also I.R.C. §4942 for special rules that may apply to grants made by U.S. private foundations to foreign charities that would be considered non-operating private foundations or controlled by the U.S. private foundation in order for the U.S. private foundation to satisfy its requirement of making minimum qualifying distributions. In the case that a grant to an organization is not subject to expenditure responsibility under §4945, the grant must still meet the standards of Rev. Rul. 68-489.
 Form 1023 references these requirements in Part VIII, Lines 13-14.
 See Rev. Rul. 63-252 for examples regarding the manner in which grants from U.S. charitable organizations to foreign charities are properly and improperly made in order for the donor of funds to the U.S. charitable organization to be eligible for an income tax deduction.
 See generally Treas. Reg. §1.1441-9. Withholding may be required to the extent the amounts received by the foreign organization are includible under §512 in computing the organization’s unrelated business taxable income.
 See Treas. Reg. §1.1441-9(b)(2).
 See I.R.C. §6039F(a).
 U.S. Department of Treasury, U.S. Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S. Based Charities, available at https://www.treasury.gov/press-center/press-releases/Documents/0929%20finalrevised.pdf.
 See, e.g., IRS Form 1023 at Part VIII, Lines 12 and 14.
 See Form 990 PF at Part VII-A, Line 16 and instructions.
 This is referred to as the Florida Not For Profit Corporation Act. This statute is generally based upon the for-profit corporate statute and includes specific requirements for not-for-profit corporations (such as the requirement of a minimum of three directors) and recordkeeping.
 See Fla. Stat. Ch. 496; F.A.C.R. 5J-7.004, Florida Administrative Code.
 For the guideline for private foundations, see IRS, Tax Exempt and Government Entities, IRS Compliance Guide for 501(c)(3) Private Foundations, available at https://www.irs.gov/pub/irs-pdf/p4221pf.pdf. For the guideline for public charities, see IRS, Compliance Guide for 501(c)(3) Public Charities, available at https://www.irs.gov/pub/irs-pdf/p4221pc.pdf.
This column is submitted on behalf of the Tax Law Section, Janette M. McCurley, chair, and Taso Milonas, Charlotte A. Erdmann, and Jeanette E. Moffa, editors.