The Nonprofit FAQ
| Can US corporations contribute to activities outside the USA? |
| Michael Taslitz asked: "[Has] the IRS prohibited charitable contributions from U.S. corporations to U.S. non-profits that are using the funds to operate a program outside of the U.S.?" John Taylor replied: I am not aware of anything in writing that says this regulation was not enacted. Most proposed regulations that are not enacted die in a very quiet way. On the other hand, there is some material in black and off-white that specifies when deductions from corporations for purposes abroad are allowed or denied. Without knowing the details of your organization I cannot comment further. Instead, please review paragraphs 5010-5014 of Charitable Giving and Solicitation. NOTE: The reference cited is a loose-leaf technical publication available from Warren Gorham and Lamont through http://www.wgl.com/special/cgs.html; no price is given at that webpage. Bruce Hopkins' The Tax Law of Charitable Giving was published in a second edition in February, 2000. You can order this reference work through this link to Amazon.com (the price is $150); a royalty will be paid which will benefit this site. Order rofi"> The Tax Law of Charitable Giving now. Richard Sansing added: I think what you are looking for is Treas.Reg.1.861-8(e)(12)(ii)(A). This was a proposed amendment to the Section 861 Regulations. To my knowledge, this has not been withdrawn. (NOTE: A search of Treasury Regulations on Oct. 2, 2003, turns up no subparagraph 12 of 1.861-8(e).) It is not exactly what you describe, but the ultimate effect is similar. The issue is whether a charitable contribution that is used outside the United States reduces foreign source income for purposes of the foreign tax credit limitations. If the corporation you approached is in what is called an "excess foreign tax credit" position, the donation to your organization will not generate a tax benefit for the corporation. I remember this being a point of controversy, and it may have since been withdrawn. Individuals' contributions to overseas charities are discussed in IRS publication 526 which can be downloaded in .pdf format from http://ftp.fedworld.gov/pub/irs-pdf/p526.pdf and found in other forms through http://www.irs.gov/help/search_help.html Revised 6/10/00, 10/2/03 -- PB |