source

“Sending money overseas to individuals without documentation proving use for exempt purposes endangers a U.S. charity’s tax- exempt status with the IRS.”

“Private Letter Ruling 201001024, the IRS denied 501(c)(3) tax-exempt status to an allegedly nonprofit organization because the organization did not keep records of the eligibility of students who were receiving their aid.”

“Once again, a U.S. charity or church is similarly in danger of losing their 501(c)(3) tax-exempt status if they practice any of the following:

• Allowing funds kept in the U.S. charity in the U.S. to be transferred directly to nationals or foreign NGOs without reporting and without authorization;
• Allowing funds to be given to individual recipients without documentation showing that the U.S. charity used criteria based on their exempt purposes for selecting the recipient; or
• Allow donors to earmark their donations for a foreign national who has not yet been approved/selected by the U.S. charity to receive ministry funds, and to allow those funds to slide through without any other proven control for exempt purposes.”

→ even though before we approve grants we think “is this for the benefit of the public? Is it charitable/scientific?” and only approve if yes, that’s not enough. It needs to be documented. So maybe every time we approve projects we should be required to leave a comment explaining why it passes.

Also: “the U.S. charity must require a detailed accounting of the expenditure of funds in order to monitor compliance with 501(c)(3) related expenditures. Should the domestic organization find out that money is not being spent in a way that could be acceptable by the IRS, the donations to that foreign organization should cease immediately.”

→ so we do need grantees from other countries to keep track of expenditures

Question: why doesn’t EA Funds just become a 501c3? Was it that hard for Manifold for Charity

Fiscal sponsorship

Austin: “can’t you feel the timeline burning away”

Places I’m worries we (would) fall short (if we did this for LTFF):

• money management/accounting
  • we’re just pretty loose about this right now: we have one big pot, and track things in our txns table in a way that basically works but we probably want to refine if we have more different pots that shouldn’t mix
  • I am personally bad about this in my own life as well, wary of having millions of dollars controlled by my 21 year old self + Austin who’s VERY “move fast and break things”
  • Can we even use Wise?? Maybe we can use Mercury better and be just as efficient
• legal compliance around where they can send money and documentation
  • I/Manifund feel comfortable taking legal responsibility for our own stuff, and sometimes accidentally falling a bit short because we’re new and don’t move that much money. Seems normal for startups and new non-profits to operate this way
  • but different when you’re providing a service where the main benefit is “we’ll handle all the complicated legal stuff and be liable etc.” Legal standards seem like they should be higher within a fiscal sponsorship org relative to a nonprofit startup org