This book is a practical guide addressing the issues faced by philanthropists seeking to engage in international charitable activities and offers alternative approaches to traditional US-based foundations. A significant portion of the regulatory burdens facing US private foundations derives from tax benefits available to donors under US law. A charitable organization must initially qualify and then be maintained under a complex regulatory regime. If some or all of these tax benefits are either unavailable or not needed, or if the tax advantages are outweighed by the burdens of regulatory compliance, foundations can be established in foreign jurisdictions. Charitable activities can then be operated flexibly and privately outside the constraints of the US regulatory regime. For existing private foundations, this book suggests strategies designed to hedge against ever-increasing and intrusive regulation.
Jonathon R. Moore, an internationally recognized expert in the legal aspects of philanthropy, is a partner in the law firm of Moore & Bruce, LLP, in Washington, DC, and London, England. His practice focuses on planning and compliance matters for exempt organizations and for non-US and US corporate and individual clients interested in establishing charitable organizations. He is a member of the District of Columbia and New York Bars, the Committee on Exempt Organizations of the American Bar Association's Section on Taxation, the Philanthropic Advisors Network of the Council on Foundations, and the District of Columbia Estate Planning Council.
1. Introduction; 2. Fundamental concepts relating to charitable organizations; 3. US legal framework governing charitable organizations; 4. US legal constraints; 5. Constraints on cross-border philanthropy; 6. Why create a foreign charity?; 7. Picking a jurisdiction; 8. Establishing a foreign charitable foundation; 9. Representative structures; 10. Further resources; Appendix 1. Form 1023: application for tax exempt status, with instructions; Appendix 2. Template: corporate charter for private foundation organized as a Delaware corporation; Appendix 3. Template: corporate charter for: 'American Friends of ...' organization formed as a Delaware corporation; Appendix 4. Conflicts of interest policy recommended by the Internal Revenue Service; Appendix 5. Form 990-PF: US federal income tax return of private foundation, with instructions; Appendix 6. Form 4720, US federal excise tax return for private foundations, with instructions; Appendix 7. Revenue procedure 92-94 [equivalency determinations]; Appendix 8. US Department of the Treasury anti-terrorist financing guidelines: voluntary best practices for US-based charities; Appendix 9. Form 3520, annual return to report transactions with foreign trusts, with instructions; Appendix 10. Form W-8EXP, with instructions [withholding on US source income]; Appendix 11. Template: Bermuda charitable trust; Appendix 12. Template: generic foreign charitable trust; Appendix 13. Template: Bermuda purpose trust.