Expanding Philanthropic Horizons: Using DAFs for International Giving

Home means more than one place for a growing number of clients. For some, it’s their place of origin. For others, it’s where they studied, traveled, volunteered, or built business relationships. As advisors, we’re increasingly working with clients whose hearts and philanthropic interests span borders.

Yet there is a common myth preventing many from maximizing their global impact—the assumption that international giving is restricted to remittances and bank transfers. The reality is that cross-border giving through a donor-advised fund (DAF) is not only possible, it delivers the same tax benefits as giving within the United States, amplifying the impact donors can make.

A Better Way of Giving Internationally

Meet Gabriela: a first-generation immigrant who built a thriving tech business in Miami while keeping her heart anchored in Guatemala, where she grew up. For years, she has supported the community school’s youth coding program with donations via bank transfers.

There is a better way to give internationally. Through a DAF, Gabriela can donate cash or appreciated assets like stock; make annual grants to the school in Guatemala; plan her giving strategically over multiple years; and claim the same tax deductions available for donating to U.S.-based charities.

Gabriela’s story isn’t unique. Millions of successful professionals maintain deep ties to communities in Latin America, Asia, Africa, and beyond. They want to support causes they understand intimately—from education initiatives in Brazil, to financial inclusion in Indonesia, to environmental conservation in Tanzania. What they often don’t realize is that a DAF can be the bridge.

How DAFs Enable International Giving

The mechanisms for international giving through a DAF are simpler than most donors realize. Funds can flow to qualifying organizations anywhere in the world through two primary pathways:

Grants to organizations with 501(c)(3) status or fiscal sponsorship: International organizations that have obtained U.S. 501(c)(3) tax-exempt status or established a fund at a 501(c)(3) fiscal sponsor (commonly known as a Friends Fund), can receive DAF grants as seamlessly as any U.S. charity. 

Grants to international organizations without 501(c)(3) status: DAF sponsors can conduct two IRS-approved due diligence methods:

1. Equivalency Determination (ED): Verifies that a foreign nonprofit operates equivalently to a U.S. 501(c)(3) public charity, qualifying it for general operating support.

2. Expenditure Responsibility (ER): Validates that a specific project (whether from a nonprofit, social enterprise, or other entity) meets IRS charitable standards and includes safeguards for proper fund deployment.

Understanding Sponsor Differences

International grantmaking capabilities vary significantly across DAF sponsors. Key variables include:

• Due diligence approach: Some sponsors manage due diligence in-house, while others partner with intermediaries.

• Eligibility requirements: Some sponsors restrict certain countries or asset types, or require larger grant minimums.

• Timeline and costs: ED or ER due diligence typically requires 4-6 weeks, with additional fees varying by sponsor.

Many sponsors welcome donor engagement during this process to navigate cultural nuances and build stronger grantee relationships.

Supporting Social Enterprises Through DAFs

Beyond traditional grantmaking, some specialized DAF sponsors provide recoverable grants. A recoverable grant is technically a grant that functions like a loan, with repayment conditions designed for a potential return of capital dependent on the success of the project. Recoverable grants allow your clients to support international social enterprises and revenue-generating projects that repay funds over time. 

This model is particularly powerful in emerging regions such as Latin America, Asia, and Africa, where social entrepreneurs often face loan rates of 15-35%. Consider the contrast of a recoverable grant at a 0-2% rate. This affordable patient capital empowers social entrepreneurs to build legitimate credit histories, generate sustainable revenue, scale proven business models, and create jobs in underserved communities. 

When projects succeed and repay the funds, the capital returns to the DAF for reinvestment in new initiatives, effectively multiplying your client’s philanthropic impact. For clients passionate about entrepreneurship and economic development abroad, recoverable grants transform their DAF into a tool for both cross-border philanthropy and impact investing, all within the same tax-advantaged structure they have access to in the U.S. 

Key Recommendations for Advisors

Bring up the conversation. Don’t wait for clients to ask about international giving; proactively discuss it as part of their overall philanthropic strategy, especially with first-generation Americans, frequent international travelers, or those with global business interests.

Explore their motivations. When clients express interest in international giving, explore whether their passion stems from personal connections, professional experience, or values alignment. Understand their desired level of engagement, from making grants and receiving updates, to site visits and ongoing relationships. 

Encourage family involvement. International giving offers unique opportunities to connect generations around shared heritage and values. Through DAFs, families can collaborate on grantmaking that honors their ancestral homelands or country connections, while building an intergenerational, cross-cultural legacy.

Leverage diaspora organizations. Many regions have established diaspora giving circles, networks, or community foundations that can provide valuable insights and vetted opportunities. Additionally, some sponsors allow multiple donors to pool their contributions into a single DAF.

Be realistic about expectations. Discuss their expectations for impact measurement alongside what organizations can reasonably report. Help clients define what success looks like and clarify timelines.

Expanding Philanthropic Horizons

For clients whose lives span borders, their philanthropic impact shouldn’t be constrained by geographic boundaries. DAFs make international giving accessible, strategically sound, and tax-efficient. As advisors, we have the unique opportunity to help our clients—whose hearts belong to more than one place—see the full scope of what’s possible across borders.

The next time a client mentions a cause close to their heart in another country, see it as an opening. Ask: “Have you considered using a DAF to support that work?” You might just expand their philanthropic horizons in ways they never thought possible.

Whether your clients’ hearts are in their homelands or places they’ve come to love through travel, volunteering, and work, DAFs offer a powerful way to make meaningful impact in the communities they care about.

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