More money being donated to foreign charities

International grant giving is becoming a larger piece of the total philanthropic pie, according to charity organizations and advisers.

At the National Philanthropic Trust of Jenkintown, Pa., the number of grants to charities outside the U.S. doubled to eight in 2007 from four in 2006.

The driving force is the immediacy of the news, particularly through the Internet, said Eileen Heisman, the organization’s president and chief executive.

“The media has made the world a whole lot smaller,” she said. “People can see the needs around the world like never before. You realize there is enormous … poverty.”

In addition, donors are traveling more to developing countries, an opportunity that gives them the chance to see how their dollars can make a difference, Ms. Heisman said.

The organization began giving international grants in 2001 and has awarded more than $2.6 million. The NPT has $700 million in assets under management in 1,300 donor-advised funds and supporting organizations. Last year, grants totaled $171.5 million.

Meanwhile, in a study of more than 1,000 foundations to be released next month, the Council on Foundations found that the total of international grants awarded in the United States grew to about $5 billion in 2006 from $4 billion in 2004.

One of the significant reasons for that increase is the emergence of large foundations’ putting more money into international grants, said Rob Buchanan, managing director of international programs at the Arlington, Va.-based organization.

“Family foundations are finding that younger generations, who have worked and lived all over the place, want to take the foundation in an international direction,” Mr. Buchanan said. “Also, there are younger people, in their 30s and 40s, who are setting up foundations today. They think in a very international way.”

In addition, The Chronicle of Philanthropy in Washington reported recently that from 2006 to 2007, corporate donations to foreign charities grew 21%.

Diaspora philanthropy is increasing, said Eric Kessler, principal and managing director of Arabella Philanthropic Investment Advisors LLC of Washington, which has nearly $1 billion in assets under advisement. The firm advises high-net-worth individuals and foundations on giving grants.

“The Indian-American family may be living in Naples, Fla., but their heart is in Mumbai,” Mr. Kessler said. “There are an increasing number of people who are focused on the community they left behind.”

“There is an interest in solving the world’s problems wherever they occur,” he said. “Borders are being erased in the philanthropists’ minds.”

Indeed, Giving USA Foundation of Glenville, Ill., estimated that donations to support international activities, like relief programs and direct aid, totaled $13.2 billion in 2007, representing an increase of 16.1% over 2006.

But awarding international grants can mean more paperwork, heightened scrutiny and extra fees, according to Ms. Heisman.

RESEARCH IS CRITICAL

Depending on the size of the grant at the NPT, fees can range from $250 for a $9,999 grant to $2,000 for a grant in excess of $1 million. That pays for the due diligence. Since the terror attacks of Sept. 11, 2001, the research and paperwork required have increased.

“Doing that due diligence is critical,” Mr. Kessler said. “You spent your career amassing your wealth. You should be willing to put some resources into seeing that’s it’s given away effectively.”

Investors need to know that they cannot make a gift directly to a foreign charity and get a tax deduction in the United States, said Greg Baker, president of the Indianapolis-based Renaissance Foundation, which has about $190 million in assets representing 1,500 donor-advised funds.

They need to go through an agency or charity based in the United States. And if they want help in narrowing the focus of the donation, they should meet with a financial or charitable adviser, he said.

There are risks involved and charities need to be researched, Mr. Baker said.

“These organizations in other countries are not subject to the same rules as in the U.S.,” he said. “There is always a concern that the organization would not be run quite as well from a business perspective.”

E-mail Sue Asci at [email protected].