Going International: 3 Things Your Nonprofit Needs to Know
For many nonprofit organizations, international service is part of the deal--to effectively fulfill their mission or even grow, your nonprofit may need or want to explore a more global mission. Of course, this is no easy task, and comes with some serious potential complications (and some potentially great rewards).
If you’re considering expanding your operations to include international service, there are a few things you should account for, plan for, and structure as you begin your business abroad.
Remember the people doing the work
Many nonprofits choose to serve internationally utilizing staff from their US homebase. While this prevents the hassle of searching for more employees in a country that may be unfamiliar, it can be complicated. Your employee will need to determine whether or not they owe income tax in their host country. This will totally depend on the country, since the United States has tax treaties with around 75 countries with different stipulations and processes. You’ll want to work with a nonprofit tax professional who will be able to identify relevant treaties and appropriate steps, decide how long you plan to be in a particular country, and additional considerations for things like insurance.
When you extend your business overseas, you also have options for structuring it. Perhaps all oversight happens in the United States, while you provide services overseas. Maybe you hire an independent contractor to oversee legalities abroad, but maintain ownership of products. You could also choose to establish a subsidiary overseas managed by the parent company in the US.
Laws vary from state to state within the United States, so don’t go jet setting and expect everything be the same. You may need to operate within US law and also within the law of the country you’re doing business in. In some countries, nonprofits must register with a governmental agency, which will then enforce additional regulations. Failure to register or comply may mean big bucks for your nonprofit, so do your research.
Things like intellectual property and trademarks can be governed differently too, so protect your brand by investigating local laws. In these instances, it will be helpful to work with someone who specializes in IP protection, patents, trademarks, and copyrights locally. Ultimately, it will be in your best interest to familiarize yourself with all things local in the area you’re serving. From taxes to etiquette, learning a country’s customs will serve you well.
Protect your status
For nonprofits, there is perhaps nothing more important than tax exempt status. Historically, the IRS has maintained that organizations qualify for tax exempt status based on charitable activities enacted overseas or partially overseas--but an organization based here cannot act as a conduit to send funds overseas, or tax exempt status will be lost.
Protect yourself through education, and make the decision that’s best for your organization by seeking advice from certified professionals.