If your nonprofit is a 501(c)(3) tax-exempt organization, you may be wondering whether you can accept donations from foreign individuals, businesses, or organizations. The short answer is yes! A U.S.-based 501(c)(3) can accept donations from non-U.S. donors without restriction. However, there are a few important considerations to keep in mind.
1. Legal Considerations for Accepting Foreign Donations
While the IRS does not prohibit nonprofits from accepting foreign donations, there are certain legal and reporting obligations to be aware of:
OFAC Restrictions: Your organization must ensure that donations do not come from individuals, organizations, or countries on the U.S. Treasury Department’s sanctions list (Office of Foreign Assets Control – OFAC).
Anti-Money Laundering (AML) Compliance: Large or unusual donations may require additional due diligence to ensure they are not tied to illegal activities.
2. Tax Deductibility for Foreign Donors
U.S. Donors: Donations to a 501(c)(3) are tax-deductible for U.S. taxpayers.
Foreign Donors: Donations from non-U.S. taxpayers may or may not be deductible depending on their country’s tax laws. Some countries allow deductions for gifts to U.S. charities under tax treaties.
If a foreign donor asks about tax deductions, advise them to consult a tax professional in their country.
3. Receiving International Donations
Nonprofits can receive international donations in several ways:
Direct Bank Transfers – Ensure your nonprofit’s bank can process international wire transfers.
Credit Card/PayPal Donations – Many online donation platforms accept payments from international credit cards.
Cryptocurrency Donations – If your nonprofit accepts crypto, you may receive donations from international donors more easily.
4. Reporting Large Foreign Donations
While routine foreign donations typically do not require special IRS reporting, large donations from a single foreign source may trigger additional disclosures. The IRS may require Form 990, Schedule B, or other reporting if donations exceed certain thresholds.
5. Fundraising Considerations in Foreign Countries
If your nonprofit actively fundraises abroad, be aware that some countries require registration or compliance before soliciting donations from their citizens. Research the laws of the country where you plan to fundraise.
Conclusion
Your 501(c)(3) can accept donations from foreign donors with no IRS restrictions, but it's important to follow best practices to ensure compliance. If you receive large donations from foreign sources or plan to actively fundraise internationally, consider consulting a tax or legal professional for guidance.
Need help managing your nonprofit’s compliance? InstantNonprofit can assist with maintaining your tax-exempt status and reporting requirements!