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Donating to your preferred cause abroad can still be surprisingly difficult.
You need to find the right organization, and to feel assured that it’s reliable and effective. Transferring money or other assets can be complicated, and claiming tax relief won’t always work.
That means significant lost opportunities: one 2009 study estimated the costs of cross-border barriers faced by European foundations alone at up to €100m a year. Meanwhile, cash-strapped nonprofits and non-governmental organizations (NGOs) in the Global South struggle to survive.
Fiscal sponsorship, also known as fiscal hosting, is one way around this. Fiscal hosting typically refers to entities that ‘host’ activities or groups of people doing charitable work, helping them to accept grant money either before they are legally incorporated, or because they choose to stay unincorporated. But fiscal hosts can also help to move money across borders, by hosting either registered or unregistered groups based overseas.
Most fiscal sponsors in the US – which number anything between 500 and 5,000 – do not usually work internationally, according to a 2023 study by Social Impact Commons.
But, as a tried-and-tested way to fund those who have long been excluded from formal philanthropy – and amid frustration at slow progress on localization – could more fiscal sponsors help Global North donors move their money where it’s most needed?
“Borderless giving” is already here – at least according to the tagline of Myriad Alliance. Its seven member organizations serve donors in the US, Canada, Europe, Australia, New Zealand, China and Hong Kong, who give to causes in nearly 100 countries.
Myriad USA offers fiscal sponsorship, which it calls American Friends Funds. NGOs around the world can apply to open a “Friends Fund” that sits on Myriad’s books, as an alternative to setting up their own US-based charity. Myriad handles donor support and back-office administration, including tax receipts.
Last year, Myriad USA channeled $80m to foreign NGOs through these funds, according to chief executive Jean-Paul Warmoes. In Africa, for instance, this resulted in $10.5m going to locally led organizations, including nonprofits, social enterprises and institutions like universities and museums.
And these donations seem to be on the rise – Myriad USA’s total giving to Africa (combining American Friends Funds and donor-advised funds) shot up from $10.6m in 2022, to $21.5m in 2023.
Giving in this way is, for Warmoes, a vital element of localization. Supporting locally led organizations strengthens civil society, he says, particularly as they tend to stick around – unlike many international NGOs – when disaster strikes.
It is hard to quantify how much additional giving is enabled by Myriad USA. But Warmoes believes that locally led projects without a well-connected, US-based board to vouch for them would otherwise attract a great deal less American funding. Much of that money would instead go to programs managed by international NGOs based in the USA or Europe.
“Part of what we do is to reassure the donors by telling them, ‘Listen, we thoroughly vetted those organizations, we looked at their track record, we looked at the profile of the leader, the CEO, the founder of that organization, and yes, your money is in good hands’”.
The upshot: donors who really want to make an impact must trust local leaders. “Yes, it may be a bit more complicated,” Warmoes says. “But we will hold your hand and show you how to do it… it's about lowering that threshold for American donors.”
One limitation of Myriad USA’s model is that it does not support unregistered NGOs or groups – even though funding informal groups is seen by many as a crucial way to shift power towards grassroots communities.
Some of Myriad USA’s donors and potential recipients have expressed interest in this, but widening its criteria is not currently planned: other intermediaries are more specialized in working with informal groups, Warmoes says. He’s keeping an open mind, though, and says the organization will respond to the market as it evolves.
Fiscal hosting is still largely an American business – at least 90% of it is done by US organizations, one expert estimates. That imbalance is less than ideal. It means management fees and decision-making power remain in the Global North, since fiscal hosts have the final say in distributing funds to their hosted projects.
But fiscal hosting in some other regions is becoming increasingly visible.
In May 2024, CivSource Africa hosted what was billed as the first ever gathering of Africa-led and Africa-owned fiscal hosting entities; the goal is to ultimately create “a more equitable and resilient funding ecosystem for social justice causes on the continent”.
That’s because fiscal hosting “moves money flexibly, nimbly, to organizations that are differently abled, to organizations that are just starting up and may not have the relevant or adequate infrastructure [for funding] to be passed through,” says CivSource Africa CEO, Jackie Asiimwe. “Increasingly, because of the kinds of social and political contexts, it is also sometimes the safer way to protect the work and the people doing the work.”
Her organization is currently compiling a continent-wide directory of fiscal hosts, partly to challenge the assumption that fiscal hosts are rare in this part of the world. “The point of our research is to say… there is a growing field in Africa by African-owned, African-led fiscal entities.”
Fiscal sponsorship is happening in Latin America as well. Sitawi, a Brazil-based “finance for good” NGO, serves as a fiscal sponsor for nearly 40 projects in the country, helping them manage their finance, compliance and other needs. Sitawi borrowed the idea from the USA, realizing that fiscal sponsorship could help impact-focused groups get to work without having to deal with issues such as complex labor laws. As Sitawi chief executive Leonardo Letelier says: “Starting an organization in Brazil, it's a nightmare. Closing an organization in Brazil, it's two nightmares.”
But, while fiscal hosting – or “NGO-as-a-service”, as Sitawi calls it – makes things much easier for local projects, Letelier is doubtful that creating lots more fiscal hosts would result in more money moving across borders – intermediaries merely facilitate, rather than create, flows of money, he points out.
Asiimwe agrees: fiscal hosting is one conduit for funding, but doesn’t necessarily get around the “assumptions that come with ‘Yes, but you're African’”. She adds: “We still have to work at addressing stereotypes and assumptions… it's still set within the broader context and conversation about shifting power about decolonizing aid.”
The need for fiscal hosts in the likes of New York or London is unlikely to disappear soon.
Sitawi is itself fiscally hosted in the US: individual donors there can support its operations in a tax-efficient way, with some also donating to its sponsored groups. For those groups, international donors play an outsized role: they are fewer in number but give donations three or four times larger than Brazil-based donors, says Letelier.
UK-based Global Dialogue hosts a small number of initiatives that advance rights, equity, and diversity, such as Ariadne, the network of human rights funders. “I see the kinds of philanthropic infrastructure that we offer as an interim solution,” says chief executive of Global Dialogue, Esther Hughes. “as soon as possible, the money should be going straight to the Global South.”
For now, fiscal hosts play a particularly important role when they host organizations in, but are themselves based outside of, regions where activists are in danger or where civic space is closing. That enables work to continue that might otherwise be threatened, says Hughes. Last year Global Dialogue made grants and donations totalling £1.8m, of which “certainly some of the exceptionally complex grantmaking” to activists and unregistered organizations would not have happened otherwise, she says.
Overall, fiscal hosting remains misunderstood and stigmatized, some say. In many countries setting up a formal entity is still seen as a stamp of approval, says Asta Petkeviciute, chief financial steward at Social Impact Commons, a US-based network which does research and capacity-building to support the “next-generation approach to fiscal sponsorship”. Still, it is gaining momentum: three times as many US sponsorship programs were created in the last 20 years as in the 40 years prior to 2000.
Petkeviciute hypothesizes that this surge is, at least in part, due to a growing focus on localization. Nearly 40% of fiscal hosts polled by Social impact Commons last year had recently sponsored projects that did work or made re-grants outside the US, even if only a handful were doing so regularly.
Often fiscal sponsorship is considered a temporary stopgap rather than a long-term solution, but Social Impact Commons believes that fiscal sponsorship can go far beyond transactional, back-office arrangements to a deeper level of shared infrastructure, or what it calls “management commons”, benefiting both partners while strengthening the wider philanthropic sector. Others have pointed out that values-based fiscal sponsors make philanthropy more equitable, by “refusing to adopt practices that replicate and reinforce the status quo”.
But when it comes to addressing power imbalances, Petkeviciute sounds a note of caution.
The largest US fiscal sponsors are now extremely large and often no longer able to accept new projects or to comprehensively support small, grassroots communities. We need locally rooted organizations – “eliminating the middleman” – rather than further growth of a few “Walmarts or Amazons”, she says. “It’s not about absorbing the assets, it’s about supporting the community in an intentional way.”
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