Giving internationally

Charities are firmly in the era of the global village when it comes to giving. As our society increasingly forms links around the world through families, friends, colleagues and business interests, charities are under pressure to develop new ways of raising funds to draw on these links and grow their income. That means the charitable sector looks to take maximum advantage of the communications tools which connect us globally.

We can see events unfolding live, right around the world and the public has shown, in response to disasters such as the Asian tsunami and the recent Chinese earthquake, that there is great generosity of spirit in this developing sense of global citizenship. As we visit villages and cities around the world in person or virtually we are inspired by the communities and entrepreneurial leaders we encounter. We want to make a positive contribution, to encourage and support a change or cause we passionately believe in and want to see succeed.

There are also sound practical reasons for international giving founded on the huge income disparity between and within developed and developing countries.  Now, the new generation of global philanthropists gets first hand experience of the desperate need in other countries through travelling or simply via the internet. These issues are even more personal for the growing Diaspora – the huge numbers of people who have sought, or been forced to seek, a better life in another country and have prospered in their adopted home. They understand better than anyone the importance of giving to help develop educational or health services in the country they left behind.

The most recent data shows that UK-based charities operating internationally continue to dominate the league table most frequently given to by those using CAF’s services. CAF also helps donors give direct to organisations based outside the UK and the US. Over the years, we’ve seen a significant increase in the number of donors wishing to give this way and the value of their giving. UK, US and Australian donors asking CAF’s help to direct funds to, and increasingly to source charities, outside their principal home countries gave over £42m in 2007/08 through CAF, an increase of 26% on the previous year.

In 2006/07 the estimated amount given to charity by individuals in the UK was just under £1bn, while the percentage share given to `overseas’ causes was 9% . People donating to overseas/disaster relief work or religious causes are most likely to give to the other – these causes ‘cluster’ together more strongly than others.

Total official government aid to developing countries is estimated at over $105bn; however philanthropy is a larger source of revenue for developing countries’ civil society organisations than is official aid.  It is often the income from philanthropists that ‘buys’ charities freedom from government and the flexibility to try new approaches.

Issues to consider when giving internationally

Philanthropy UK’s principles and framework for effective giving, outlined in this Guide, apply to giving whether at home or abroad. Your objectives, assets, focus and mechanisms for giving will form your giving approach or strategy; monitoring and evaluation will inform and refine your giving.

Philanthropy is more successful when you have a clear, costed and workable strategy in place. You may know you want to give, but be unsure of which charities to support. Alternatively you may know which charities you want to give to and what support you’d like to provide, but would like this to be independently evaluated.

Thinking about your charitable goals and objectives will help you shape your long-term strategy, while your assets and choice of giving mechanism will determine how much you give. Monitoring and reviews are recommended to inform and shape your giving.

You may require an overview of the strengths and areas for improvement of a particular sector in a region, country or countries. You may be looking for a review of organisations working in particular areas on which to base your decisions. Your appetite for risk and for building capacity will be crucial to determining the decisions you make. For example, would you prefer to support an existing, robust organisation, or a fledgling charity where vital support is needed to build capacity and infrastructure?

We want to know that we can trust the charity that we are supporting. Fundamental to all international giving facilitated by CAF is whether the organisation would qualify as a charity under the laws of the country where the funds are held. This means that in the UK, for example, the beneficiary’s governing documents, accounts and activities are assessed under UK law.

The UK tax environment for giving is one of the most favourable to donors and charities in the world. However, giving direct to charities based outside the UK does not carry tax benefits for individuals or companies unless an intermediary, such as a private foundation, is used.

How to find charities and charitable projects

There is a growing number of philanthropic advisors working independently, in non-profits and in private banks. CAF, for instance, has a presence in Asia, the Americas and Europe as well as an extensive network of advisors and partners. Our Advisory and Consulting Service, working with donors who make grants of £10,000 or more each year, designs, runs and reviews giving programmes. It provides information and research on charities across the world and undertakes in-depth organisational reviews, including site visits where appropriate.

Other specialist advisors include New Philanthropy Capital, Geneva Global and the Asian Foundation for Philanthropy, as well as web portals such as Global Giving and The Big Give.

Tax-efficient international giving

The UK’s stable political climate, generous tax regime and favourable reputation for governance provides an ideal environment to establish a charitable foundation. You can set up your own Trust">charitable trust or contact CAF’s Global Trustees service which works with overseas donors to establish endowed charitable foundations in the UK to support charitable activity in their home country and throughout the world.

Alternatively, UK tax payers can make tax-efficient gifts to charities outside the UK by using a CAF Charity Account or Trust. As funds are paid into the account CAF reclaims the basic rate tax paid via Gift Aid and adds it to your balance. Donors paying higher-rate tax can reclaim this on their tax returns and gift the funds on.  UK businesses are able to offset donations made to CAF for onward granting against Corporation Tax.

If you are paying tax in both the UK and the US, US tax rules can invalidate UK tax breaks on charitable giving. The CAF American Donor Fund can help you to make the most of tax reliefs from both countries and make gifts to charities across the world.

Another resource is Transnational Giving Europe (TGE), which enables tax payers in participating countries to make tax-effective cross-border donations. If you want to make a tax-effective donation to a UK charity from one of the member countries, then this is a solution. CAF is the UK partner, and other members are currently working in Belgium, France, Germany, Ireland, Netherlands, Poland, Switzerland; with more countries planning to join soon.

Recommended resources

• tax efficiently">Giving tax efficiently section of this Guide
• Giving in Europe: A guide to cross-border giving within EU member states, Giving in Europe provides a search tool for information based on country of donor, country where assets held, and country of beneficiary.  The online resource is hosted by King Baudouin Foundation, a member of Transnational Giving Europe.
• United States International Grantmakers (USIG) site carries information by country on types of civil society organsiations and tax laws prepared by the International Center for Not-for-Profit Law, the leading source of information on legal environments for civil society. 

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