Guidance for making grants to support Ukraine
Over the last two weeks, the Council on Foundations has received scores of questions from the field about how to help the Ukrainian people during the ongoing Russian invasion, including during our recent webinar with the State Department. The outpouring of support and willingness to make immediate relief funds available has been heartening, but a frequent question has emerged: how can I make sure my grant helps those most in need in a timely and safe matter?
While we don’t suggest the specific organizations you should support, we are regularly updating a list of response funds up to date on our website. These resources include trusted crowdsourced lists of organizations you can support who are working directly or adjacent to the conflict.
For funders who are making grants to support Ukraine, there are three main ways to respond:
- Making direct grants to organizations in the region
- Funding through an intermediary or pooled fund hosted by US organization, or
- Funding US 501(c)(3) or international organizations responding in the region.
Council members may also access our legal compendium chapter, International Grantmaking: A Guide For Funders Making Grants Outside The United States, for free assistance on international grantmaking procedures.
Making a grant directly to Ukrainian or other European organizations
Making grants to support Ukraine internationally directly from private foundations or donor advised funds to non-U.S. nonprofits requires that funders undertake one of two processes laid out by the IRS: equivalency determination (ED)or expenditure responsibility (ER).
- In short, equivalency determination (ED) is a process that asks the funder to determine whether the potential recipient meets the criteria of becoming a US 501(c)(3) public charity. In other words, that the organization is the “equivalent” of a US charity. NGOSource is a repository of ED certificates used by many US-based foundations, and has helpful resources on understanding equivalency determination.
- Expenditure responsibility (ER), on the other hand, looks at the intended use of the grant to ensure that they would meet the definition set out by the IRS for charitable work. Expenditure responsibility is agnostic to the type of organization undertaking charitable work and cares only about how the funds will be used. Some funders likely use ER already to make domestic grants for charitable work at non-charitable enterprises, so the process should be familiar.
- To directly support Ukrainian or other European nonprofits, funders should consider which of these options makes more sense for them. If helpful, this guide for Council members may help you decide which process to use. Funders engaged in direct grantmaking abroad must also ensure compliance with sanctions, especially given the extent of both U.S. and EU sanctions against Russian individuals and businesses.
Important: For public charities who want to make a grant but not from a donor advised fund, they are not required to conduct ED or ER, however, we still recommend following a similar process to ensure proper due diligence is undertaken. U.S. companies also do not have to undergo ED or ER if they are making the donation directly from the corporate entity, however, ED and ER apply if the funds are coming from the company’s private foundation.
While making grants to support Ukraine, direct grants are often the most effective and fast way to get funds where they are needed, we do not recommend trying to vet a new organization during an armed conflict as their staff will be preoccupied with response efforts and their own safety. Please see below for other ways you can support relief work.
Working with global intermediaries
Another option for U.S. funders who want to make a grant to support Ukraine but don’t know where to start is to give through a U.S.-based intermediary. For these purposes, intermediaries are defined as US-based public charities whose primary purpose is to act as a re-grantor internationally. Many of these organizations operate using donor advised funds or field of interest funds.
Donors may contribute to an existing relief fund or establish a donor advised fund with these organizations and subsequently recommend grants to pre-vetted organizations working on relief. The main benefit of working with an intermediary is that they have often already done all of the hard work (I.e. conducting ED or ER if required) and your staff doesn’t need to undertake any additional due diligence. You are essentially outsourcing the due diligence process to these intermediaries, and therefore a fee is taken on contributions you make or grants you recommend, depending on the intermediary.
Many of the organizations listed on our Ukraine response page act as global intermediaries and have a proven track record supporting non-profits in the region and are therefore trusted by many US foundations and corporations.
Funding international organizations, such as UNHCR or UNICEF, and U.S.-based charities working in the region
One of the easiest options for U.S. funders seeking to support the relief efforts is to fund an international organization that has been deemed the equivalent of a US 501(c)(3) public charity, as defined by Executive Order 9698. This includes the United Nations and all its bodies, so groups like UNICEF, UN Women, UNHCR, the WHO and others are included. Funders working with these groups do not need to conduct ED or ER and can treat them as they would a US 501(c)(3) public charity.
Similarly, working with international nonprofits such as the Red Cross makes it easy to support relief efforts quickly as no due diligence is required despite the intended purpose of the funds being international relief.
Making grants to Russian organizations to support Russian civilians
Notably, there are innocents on both sides of a conflict, and many Russian citizens will suffer needlessly during this crisis. While many funders will choose to support the Ukrainian people and refugees, some may wish to support Russians facing economic collapse and food insecurity.
Funding Russian organizations directly triggers the same requirements of equivalency determination or expenditure responsibility as noted above, however there are additional concerns you should be aware of. Namely:
- Russia’s civil society has been under assault for decades. What exists today is a fractured sector that is governed by strict laws and limits on their ability to fundraise and work on issues that are contrary to government priorities.
- Russia has made it nearly impossible for its nonprofit sector to receive funds from abroad. Its Foreign Agent law has sweeping language that requires any nonprofit who receives foreign funds to register as a foreign agent. It also has an ongoing list of “Undesirable Organizations” that includes U.S.-based nonprofits and foundations.
- The current suite of sanctions targeting Russian businesses and individuals is unprecedented in its scope. While the U.S. Office of Foreign Assets Control (OFAC) typically does not target philanthropic flows, this might be a time to be extremely cautious of US and EU sanctions.
At this time, Council on Foundations does not recommend attempting direct grants to Russian organizations. For more information, visit the Council on Foundations’ website.