Step 1: A grantmaker uses the web-based NGOsource grantmaker member portal to make an ED request. The grantmaker also pays the ED processing fee.
Step 2: The portal sends an email to the NGO, asking the NGO to log into the online questionnaire.
Step 3: The NGO enters all of the required information and uploads English language versions of its governing and financial documents.
Step 4: Once all of the required information has been completed, an NGO service representative employed by a TechSoup Global partner NGO reviews the submission. The partner NGO works closely with TechSoup Global but serves as an in-language and in-region contact for the NGO. The NGO service representative verifies the data (asking the NGO for more information as needed) and then sends the submission to the U.S-based ED review team.
Step 5: The ED review team completes the equivalency determination, escalating issues or asking the NGO for clarification as needed.
Step 6: Once the ED review team makes its determination, the grantmaker and NGO are notified. If the NGO is certified as equivalent, then any NGOsource member grantmaker may download or print a copy of the ED certificate that is specific to the NGO and the member grantmaker.

1.2. How do U.S. grantmakers generally make grants to foreign NGOs?

In order to comply with IRS regulations, private foundations, donor-advised funds, and certain other U.S. grantmakers are required to either determine if a foreign charity is equivalent to a U.S. 501(c)(3) public charity or, if this is not possible, to ensure that their grant funds are being used for charitable purposes. Grantmakers currently employ two methods to make grants to foreign NGOs: Equivalency Determination and Expenditure Responsibility.

Here is a brief synopsis of the two IRS approved methods:

Equivalency Determination (ED) evaluates whether a foreign NGO is the equivalent of a U.S. public charity. The U.S. grantmaker must collect a prescribed set of detailed information, as described in IRS Revenue Procedure 92-94, about a grantseeker's operations so that the grantmaker can reasonably determine that the grantseeker would qualify as a public charity. ED requires significant up-front work by the grantseeker, including providing English versions of founding documents and detailed financial records. It also requires significant work by the grantmaker, who must determine whether the documents submitted meet IRS requirements. The grantmaker's review does not require independent verification or analysis. Further, the IRS does not require a grantmaker to use internal or external legal counsel in making the evaluation, although the grantmaker may do so. The grantmaker may also use external professionals qualified in ED.

From surveys that we have conducted, grantmakers report that the typical fees of an equivalency determination made by outside counsel ranges from US$5,000 to US$10,000.

Expenditure Responsibility (ER) is a set of grantmaking and monitoring procedures and requirements, designed to ensure that grant funds are used for charitable purposes. These procedures and requirements enable U.S. grantmakers to make grants to foreign NGOs that are not recognized as 501(c)(3) public charities by the IRS. Without ER, these grants would not be permitted. However, ER requires significant recordkeeping and reporting on the part of the grantee, which can be very time-consuming and may place undesirable limitations on the grantee's activities.

For more information about ED and ER, please consult the USIG website at http://www.usig.org/legal/er-ed.asp.

1.3. What are the limitations of ED?

Because of current U.S. government prescribed regulations, grantmakers cannot share EDs. As a result, each grantmaker must conduct an independent ED evaluation of grantseekers. The lack of agreed-upon standards for evaluating data means that evaluation methodologies vary widely. Overall, ED processing is an inefficient, redundant, and costly process for both grantmakers and grantseeking NGOs.

In addition, despite the best efforts of the grantmaker, the need to collect and translate myriads of documents often results in significant delays as the grantseeker attempts to comply with the complex requirements. Even after this lengthy process, many grantseekers will not qualify.

1.4. Why did NGOsource choose to focus on establishing a shareable repository of ED information?

Our surveys show that international grantmakers are interested in a shareable ED process. Our research indicates that streamlining the ED process will bring significant cost and time savings to the sector. Please refer to the charts below to see how grantmakers have become increasingly reliant on ED.

Grantmakers Use ED Broadly and See Potential in Sharing

Source: Survey December 2006

Increasing Use of Equivalency Determination vs. Expenditure Responsibility

Source: Survey May 2009

If approved by the IRS, what services would NGOsource provide to NGOs and member grantmakers?
NGOsource would provide the following services:

• Comprehensive analysis of grantseeker submissions to evaluate compliance with IRS regulations regarding ED.
• Grantmaker portal and optional email updates showing the current status of ED request processing.
• Escalation, if needed, to external legal counsel with expertise in international nonprofit law and IRS regulations.
• Issuance of an IRS approved NGOsource certificate for grantseekers meeting ED requirements.
• Support and assistance to NGOs to enable them to properly complete their ED submissions.
• A user-friendly questionnaire interface for NGOs that filters questions by both NGO and country so that NGOs are only required to answer relevant questions.
• Comprehensive list of FAQs plus examples to help NGOs provide accurate and appropriate submissions.
• Development and maintenance of the online questionnaire and website in multiple languages.
• Online tools to help an NGO convert its budget from its local currency to US$.
• Optional, fee-based referral service for document translations.
• NGOsource integration with the major commercial grants management software and services.

1.5. Does NGOsource evaluate the effectiveness of NGOs or review the quality of the services that NGOs provide to their constituents?

No. The NGOsource “certification” service focuses on determining whether an NGO meets the ED requirements of the IRS Rev. Proc. 92-94. Each grantmaker must determine for itself if the NGO's operations and programs are effective and worthy of its support.

1.6. Does NGOsource conduct USA Patriot Act OFAC checks of NGOs and their staff members?

No. OFAC vetting services are not provided by NGOsource for the following reasons:
• OFAC vetting is not an IRS requirement for equivalency determination. In September 2007, IRS Exempt Organization Division officials specifically recommended that OFAC vetting not be included in the private letter ruling to establish a centralized repository of NGO information.
• Grantmakers report that their risk assessment standards vary considerably, so agreement on a universal standard is unlikely. In addition, each grantmaker's program staff members are in a better position to research, determine, and decide on false positives than NGOsource staff.
• ED is reviewed annually, whereas OFAC checking is typically done prior to each payment.

1.7. Will NGOsource review the accuracy of financial information submitted by the NGOs?

NGOsource will review the financial information, but we will not be verifying the accuracy of financial information at launch. Our services will include:

The review team will check that the five-year financial numbers presented in the NGO questionnaire correspond with the organization's annual budget number.
The review team will check that the five-year financial numbers presented in the NGO questionnaire appear to be reasonable.
The review team will verify the source of the grants/funds and ensure that each organization is properly classified under the 2% rule for publicly supported organizations.
In the future, NGOsource anticipates that it will offer grantmakers the option of downloading the file containing all of the questionnaire responses. This will allow grantmakers to do a quick check of the financial numbers against financial statements, which are collected by many grantmakers as part of their standard granting due diligence process.

While NGOsource will be conducting some checks on the financial information, NGOsource will not be checking the submitted numbers in the NGO questionnaire against audited financials for the following reasons:

Under IRS Revenue Procedure 92-94, and how the Private Letter Ruling is drafted, we are not required by the IRS as part of the ED process to collect audited financials from the NGO. This is also how the agreement between TechSoup Global and Council on Foundations (COF) is structured, at the advice of the Advisory Council. Without these documents, we will not be able to conduct this level of verification.
Further, requiring NGOs to produce translated financial statements will be a significant hurdle in the ED process.

1.8. Can NGOsource handle Expenditure Responsibility for an NGO?

No. NGOsource does not offer an ER service at this time because such services are specific to an individual grantmaker. In addition, in our 2009 survey, 36 percent of international grantmakers said that they would prefer to use an ED process, rather than ER, if it were available via NGOsource.

2. SCHEDULE OF OPERATIONS

2.1. Is the development of NGOsource waiting on IRS approval?

No. We are taking the system into pre-release customer testing at the same time that we are seeking IRS approval of the service. A consortium of major international funders, who are providing the necessary financial support, have strongly encouraged and endorsed this approach. As a result, NGOsource will be able to begin operations soon after it receives the necessary IRS approval.

2.2. When will NGOsource become operational?

We will be ready to become operational in 2010. The formal launch date is dependent upon IRS approval.

3. USING NGOsource

Advantages of Using NGOsource

3.1. Up until now, our internal staff has been processing EDs. What are the specific advantages of our using NGOsource in the future?

Most importantly, NGOsource's goal is to shift liability for improper EDs from grantmakers to TechSoup Global under the pending Private Letter Ruling. If the IRS approves our procedures, grantmakers can focus more of their efforts upon social benefit work and decision-making instead of perceived risks. Grantmakers will also save time and costs on due diligence, data gathering, and ED review, allowing a grantmaker's internal staff resources to be re-deployed in your organization as needed. NGOsource will offer EDs at an affordable rate, and as more NGOs become part of the database, the costs of performing EDs will drop dramatically.

Information Provided by NGOsource

3.2. Can we search NGOsource to find out whether a particular NGO has an ED certification?

NGOsource members and the public will be able to search the database by country, NGO name, and other search criteria. However, only current NGOsource members will have access to the determination status of a particular NGO.

3.3. Can we see all NGOs with ED requests that are currently being processed?

An NGOsource member can see the status of its current and previously requested EDs, but not requests that are in process by any other grantmaker. However, once an ED is completed, it will be added to an up-to-date list of NGOs, including certification status and date of expiration, that is visible to all members.

3.4. How are grantmakers kept up-to-date on the status of the EDs they requested?

NGOsource provides grantmakers up-to-date information in the following ways:
• Our password-protected, web-based grantmaker portal shows the up-to-date status of a member's ED requests. Statuses are presented in a graphical format with interactive drill-downs showing status details.
• Optional email updates can be sent to designated individuals as the status of EDs changes during processing. Updates can be either immediate, daily, or in a summary digest format.

ED Certification Process

3.5. What standard does NGOsource use to complete an ED? What are NGOsource's specific requirements for ED?

NGOsource adheres to the IRS Equivalency Determination standard for a U.S. public charity as prescribed by the applicable IRS regulations, including the pending NGOsource IRS Private Letter Ruling and IRS Rev. Proc. 92-94, as it may be amended by the IRS.

3.6. Is an electronic or printed copy of the ED certificate the only record that a grantmaker needs for legal and regulatory purposes?

If the IRS approves our procedures, an electronic or hard copy of the ED certificate will be the only record that a grantmaker needs for legal and regulatory purposes. Certificates will be available online and will be printable by grantmakers.

3.7. How long is an NGOsource ED certification valid?

If the IRS approves our procedures, the ED certification will be valid through the end of the NGO's next fiscal year.

3.8. What percentage of ED requests do you project to be successfully certified?

Based on our surveys, we estimate that 80 percent of requested EDs will result in a successful certification. For those that are not, we will provide the prospective grantmaker with an analysis of our conclusions.

3.9. What are the most common obstacles to an NGO being determined to be equivalent to a U.S. charity?

International grantmakers consistently report that the most common obstacles are lack of responsiveness from the NGO, lack of legal support for the NGO, and language and time zone barriers.

3.10. When does the ED requestor receive the ED review team's determination results?

We expect the average ED certification to take four weeks, and we hope to reduce this time. Also, if an NGO has been previously certified by NGOsource, a renewal of the ED certification will likely take less time to complete.

3.11. How is the ED requestor informed of the determination?

Grantmakers will receive an email informing them of the determination. Grantmakers may also check the status of requests via the grantmaker portal.

3.12. Who makes the ED certification decision?

Based on the materials submitted by the NGO, the ED review team makes the equivalency determination. The ED review team is based in the San Francisco offices of TechSoup Global. The team is composed of attorneys and other professionals qualified to conduct equivalency determinations.

Timing and Processing of EDs

3.13. What is the typical amount of time required by grantmakers or their contracted legal counsel to complete the ED process?

Average processing time reported by international grantmaking survey respondents ranged from a few weeks to a few months. Generally, the most time-consuming part of the process is the collection and translation of documents by the NGO.

3.14. Does NGOsource reduce the ED processing time?

NGOsource anticipates reducing the average processing time by streamlining the document submission process for NGOs and quickly reviewing the submission once it is completed. NGOs will receive a high level of customer service and technical support, and NGOsource expects to resolve any issues within three business days. As a general rule, NGOsource will complete the review and evaluation within four business days.

3.15. What typically accounts for the greatest delays in the ED processing workflow?

Communication challenges, especially time zone and language barriers, account for the greatest delays in the ED processing workflow. In addition, delays often occur while the NGO is translating documents or compiling five years of financial data.

Our current operation plan allows six weeks in the first cycle of the ED process. We hope that most NGOs will complete the submission in less than three weeks, but we are allowing for some NGOs to take longer. During our initial testing, we will assess to see if this is a sufficient time allowance.

If the initial submission is not certified and the NGO is asked to resubmit, four weeks are allotted for the resubmission. Generally, NGOsource will operate independently once it has received an ED request from a grantmaker. In rare instances, NGOsource may reach out to a grantmaker to request their assistance with retrieving information from a grantseeker. Grantmakers can assist by reiterating to the NGO the necessity of the ED process and the importance of timeliness in completing the ED submission.

3.17. Can the NGO modify its submission?

During the submission phase, the NGO may modify its submission as often as necessary. Once the NGO marks the submission as complete, the NGO service representative reviews it for completeness. If it is not complete, the NGO updates the submission. This process will be repeated until the NGO service representative accepts the submission as complete. Upon review, the review team may choose to provide the NGO with one additional opportunity to modify its submission.

3.18. Can the deadlines be extended to allow for holidays?

Yes, the deadline may be extended to accommodate U.S., NGO, or partner NGO holidays.

3.19. Can you expedite processing when I have a tight deadline?

Expedited processing will not be available at launch, but this functionality will be offered in the future for an additional fee. The availability of expedited processing will also depend on current resources and workload.

Sharing of EDs

3.20. My organization and another grantmaker are both funding the same NGO. Can we share an ED and the ED request fee?

No. ED certificates cannot be shared. When NGOsource completes an ED, NGOsource issues a certificate to the particular grantmaker who requested the ED. This certificate is specific to the grantmaker and cannot be shared. However, another grantmaker may request its own certificate for the same NGO. In that case, the second grantmaker would pay only the $250 Current ED Fee, rather than the full ED Processing Fee of $1,445 to 1,760 (depending on volume). At this time, NGOsource will not offer the functionality to split ED submission fees, but this is being explored for a later release.

3.21. Is the ED certificate that NGOsource issues transferable to another grantmaker? What if the member is a philanthropic service provider?

Each ED certificate is specific to the named NGO and the named NGOsource member grantmaker and is not transferable. In each case, a certificate will be issued in the name of the entity making the grant, whether or not that entity is the NGOsource member.

3.22. Can we download copies of an ED certificate and all of the supporting ED information and documents into our grants management system?

Yes. The ED certificate and supporting information are in a PDF file format that can be easily downloaded for storage in your grants management system and for printing.

Unsuccessful Certifications and Escalation

3.23. If an NGO was unsuccessful in receiving ED certification from NGOsource, will members be able to see why it was not ED certified?

An NGOsource member will be able to see the reasons why its own ED request was certified or not certifiable. We are in the process of determining what selected information about non-certifications will be made available to other NGOsource members. Please note that a grantmaker may still consider using the Expenditure Responsibility process to issue a grant to an NGO that is not eligible under the IRS' specified ED requirements.

3.24. How does NGOsource indicate to members that an NGO is not ED certified?

If an NGO is unsuccessful in receiving an ED, the NGO will be listed as “Not ED Certified.”

3.25. Can the NGO or ED requestor contest a “Not Certifiable” decision?

At the conclusion of the review process, NGOsource will provide a report to the initiating grantmaker about each ED. If the NGO is deemed “Not Certifiable,” the report will explain which ED provisions were not satisfied. While NGOsource's determination is final, a grantmaker may submit a subsequent ED request if the NGO is able to rectify the stated problems in the future. The cost for the second review will be the same as the “Update” fee of US$800. Note that NGOsource expects that in the event of a non-certification, most grantmakers will use the Expenditure Responsibility process rather than request a new review.

3.26. What fraction of NGOsource EDs will potentially be escalated to external legal counsel? What are the most common reasons for this?

We anticipate that between one and five percent of ED submissions will require such escalation. We anticipate that complicated financial review as well as particular types of complex public charities will be the main drivers for escalation.

3.27. How and when will grantmakers be notified that their ED is a special case that is being escalated to external legal counsel?

Before escalating to external counsel, the ED review team will notify the grantmaker, provide an estimate, and get approval.

3.28. How much will escalation cost? Is the fee shared in some way with NGOsource?

Escalations will cost US$1,000 for up to four hours of external counsel time. This is significantly lower than regular attorney fees because the cost will be subsidized by NGOsource to build up the in-house expertise of the ED review team.

Renewal of Existing Certifications

3.29. How does NGOsource indicate to members that an NGO's ED status has now expired?

That NGO will be listed with an “Expired ED Certification” notation.

3.30. Suppose that at the time our board approves a grant for an NGO, its ED is current. But by the time we are ready to make the first grant payment to the NGO, the ED term has expired. Do IRS requirements permit us to still make the grant payment to the NGO?

Unfortunately no. The ED must be currently certified at the time of the grant payment. If the current certification is due to expire soon, and if the grantmaker expects a lengthy period before it can issue a grant payment, we recommend that the grantmaker request a new ED certification even though the current certification is still valid.

For example, if you send a single payment at the start of the funding period, then the ED certification must be valid on that date. If your funding is divided up into several payments at different times during the funding period, then the ED certification must be valid on each payment date. If the current ED certification expires before any of these payments, you must renew the certification before making that next payment.

4. MEMBERSHIP

4.1. My organization is a community foundation, corporate foundation, or government agency. Can I use NGOsource for ED certifications?

Yes. While we are not yet accepting memberships, pending IRS approval, we are actively developing relationships with community foundations, corporate foundations, and government agencies, who will be eligible for membership upon launch of the service. If you have questions about NGOsource pricing, please see the Payment and Fees section of the FAQs. For more information, please contact Gayle Carpentier, Director of Business Development, gcarpentier@techsoupglobal.org.

4.2. My organization is a philanthropic service provider. Can I use NGOsource for ED certifications?

Yes, although the membership must be registered in the name of the grantmaking organization, and the ED will be issued in the name of the grantmaker. If you were to handle grants from two grantmakers to the same NGO, you must set up two memberships and obtain two ED certificates. While we are not yet accepting memberships, we are actively developing relationships with philanthropic service providers. For more information, please contact Gayle Carpentier, Director of Business Development, gcarpentier@techsoupglobal.org.

4.3. My organization offers a donor-advised fund. Can I use NGOsource for ED certifications?

Yes. While we are not yet accepting memberships, we are actively developing relationships with donor-advised funds. For more information, please contact Sheila Warren, NGOsource Director, swarren@techsoupglobal.org.

4.4. My organization is a public charity. Can I use NGOsource for ED certifications?

Yes, ED certifications can provide an extra level of diligence for public charities making grants abroad. For more information, please contact Gayle Carpentier, Director of Business Development, gcarpentier@techsoupglobal.org.

4.5. I am an individual. Can I become a member?

Yes. While we are not yet accepting memberships, we are actively developing relationships with organizations and individuals. For more information, please contact Gayle Carpentier, Director of Business Development, gcarpentier@techsoupglobal.org.

4.6. I am an NGO. Can I use NGOsource to obtain an ED certification for myself?

Yes, although you would have to become a member of NGOsource, which would include paying standard fees to request an ED on your own organization.

4.7. Can NGOs have a reduced NGOsource membership fee and ED processing rate?

Although a reduced NGOsource membership fee or ED processing rate will not be available at launch, NGOsource is investigating whether to offer this in the future.

4.8. I am a non-U.S. based organization or individual. Can I become a member?

No. You must be based in the United States.

5. CUSTOMER SERVICE

5.1. How will TechSoup Global provide customer service to NGOs and grantmaking NGOsource members?

TechSoup Global will provide U.S.-based grantmaker members English-language telephone and email-based customer service using personnel at its San Francisco offices. TechSoup Global's growing network of partner NGOs provides email and telephone-based customer service to NGOs. Partner NGOs are matched with NGOs by language and time zone proximity. If an NGO's preferred language is not supported by any partner NGOs, customer service to that NGO will be provided in English.

5.2. When are TechSoup Global's support services available to grantmakers and NGOs?

TechSoup Global and its partner NGOs provide customer service 40 hours per week during normal business hours by telephone, email or other appropriate media to grantmakers and NGO users. Given the geographical dispersion of our partner NGOs, the business-hour overlap between that of the NGO and the partner NGO is substantial in most cases.

5.3. How does NGOsource assist the NGO?

NGOsource assistance includes web-based help, FAQs, and a glossary to assist NGOs in the submission process. Most NGOs will be directed to websites in the NGOs preferred language(s). Email and telephone support will also be available.

5.4. What if the NGO's Internet access is poor, making it difficult for it to use the website?

The NGO can download and print a form from our website, fill it out, and either mail or fax it to us. Our client service representatives will enter the data for the NGO.

5.5. Can the NGO fax its documents to NGOsource?

Yes. Our client service representative will scan the documents and attach an electronic copy of the documents to the NGO's submission.

5.6. Can the NGO mail its documents to NGOsource?

Yes. Upon receipt, our client service representative scans the documents and attaches an electronic copy of the documents to the NGO's submission.

6. LANGUAGES SERVED

6.1. What languages are spoken by NGOsource partner NGOs?

At launch, NGOsource will support English, Spanish, Hindi, Mandarin Chinese, and Cantonese Chinese. We plan to implement additional languages as we add partners to the program after launch, including French, German, Russian, Japanese, Taiwanese, Portuguese, Hungarian, and Polish.

6.2. What languages will be supported by NGOsource websites and by when?

We plan to offer at least six and as many as 12 of the 14 most-spoken languages within the first two years of operation.

6.3. Can NGOsource provide translation assistance to the NGO?

Yes. We will provide a list of translation referrals for the most commonly used languagues. Over time, we expect this list to grow. Grantmakers or NGOs will be expected to engage and pay translation service providers directly. We hope to offer optional fee-based translation services in the future. The cost will vary depending on the language and the amount of content to be translated.

6.4. Does NGOsource verify the accuracy of translated documents submitted by NGOs?

No. IRS regulations do not require verifying translations for ED certification. Since this would significantly increase the cost of the ED service, we do not perform translation verification.

6.5. My NGO's native language is not English and the original NGO's documents are not written in English. Does the NGO have to answer questions in English and translate their documents to English?

Yes. The IRS requires that all ED information be provided only in English. At launch, NGOsource will provide a list of translation referrals for the most commonly used languages. We hope to offer optional fee-based translation services in the future.

7. PAYMENT AND FEES

Payment and Fee Information

7.1. What are the NGOsource membership fee and the fee for processing an ED?

The following chart summarizes our basic fee structure for grantmaking foundations (as of November 30, 2009; subject to change). For other organizations and individuals, we are exploring membership and pricing options. If you would like to discuss fee arrangements further, please contact Gayle Carpentier, Director of Business Development, gcarpentier@techsoupglobal.org.

	Subscription Level
	1	2	3	4	5
Number of ED Requests per year	1 to 9	10 to 29	30 to 59	60 to 99	100+
Annual Membership Fee	$1,000	$1,900	$4,600	$10,000	$14,500
ED Processing Fee (for NGOs new to NGOsource)	$1,445 to 1,760 (varies by volume)
ED Update Fee (for NGOs with some data in NGOsource, but this data needs to be updated and reviewed)	$800
Current ED (for NGOs that have an up-to-date certified status that is still valid)	$250

7.2. What forms of payment does NGOsource accept?

We accept credit cards and checks. All payments must be received in advance of services rendered.

7.3. If NGOsource accurately determines that an NGO is non-certifiable, is the grantmaker still responsible for the full ED request fee?

Yes, the grantmaker must pay the fee to cover all work performed in collecting and reviewing the submission. The fee is due prior to the commencement of the review process and is the same regardless of outcome.

The fee remains the same regardless of country. The ED process (and work) is virtually the same for NGOs in countries with a treaty as for NGOs in countries that do not have a treaty. As NGOsource gains efficiency and its workload increases, we may re-evaluate this cost structure.

7.5. If an NGO was previously not ED-certified and if a new ED is requested for that same NGO, what is the ED request fee?

If the reason for the non-certification was that the ED request was terminated before the submission was complete and reviewed, then the full ED Request fee is charged. If the non-certification was based on a review of a completed submission, then the lower “ED Update” fee of $800 will be charged.

Membership and Special Packages

7.6. I have purchased a special package. What happens if I exceed the number of EDs allowed by the package?

Grantmakers may be offered special packages based on their profiles. For example, grantmakers may be interested in a “High Volume” package with volume discounts, or a “Starter Promotion Package” designed for grantmakers with a low volume of EDs.

An NGOsource member grantmaker will be notified prior to exhausting its allotted number of EDs in its special package. Grantmakers can request additional EDs by paying the standard ED request rates.

7.7. What if I exceed the number of EDs allowed for my membership level?

If an NGOsource member grantmaker exceeds the number of EDs specified for its membership level, NGOsource will bill the grantmaker for the incremental fee required to reach the next membership level.

7.8. If I have funds left over in my account at the end of my membership period, will they roll over to the next period?

ED funds roll over to the next period, but membership fees do not. ED funds for members using special packages will not roll over.

Cost Comparison

7.9. How do NGOsource fees compare with the actual costs of internal staff time and outsourced ED services that grantmakers typically pay to lawyers and philanthropic service providers?

Grantmakers report highly variable estimates for the actual costs of processing an ED, ranging from hundreds of dollars up to $10,000, depending on the complexity, the amount of information collected, the thoroughness of the ED review and the calculation used for internal or external staffing costs. It is very important to note that from our research has found that low-cost ED reviews often are not fully compliant with IRS regulations.

NGOsource's fees are extremely competitive and are a fraction of the cost of external legal expenses, which can range from to US$5,000 to US$10,000 per ED.

There are different standards for measuring cost. For example, some foundations do not include the cost of program finance staff in calculating the cost of an ED. Significant variance also exists in the amount of work performed for each ED because IRS Rev. Proc. 92-94 does not provide detailed instructions as to what is required in performing an ED. We have learned that many grantmakers are providing significantly less NGO support and less thorough ED reviews than what NGOsource will provide and what the IRS requires.

Renewals

7.11. If a grantmaker doesn't continue to fund an NGO and the NGO wants to keep their ED current, can the NGO pay the ED renewal fee itself?

This payment option for the NGO is not available at launch, but we anticipate this functionality within the first two years of operation.

Since TechSoup Global is a registered 501(c)(3) nonprofit organization, can a grantmaker pay for NGOsource membership and ED processing fees as part of a grant to NGOsource?

Currently, payment for ED processing cannot be made in the form of a grant. However, we are offering a Major Supporters Package in which grantmakers that support NGOsource with at least $250,000 in funding over two years receive membership and an allotted number of prepaid ED credits.

7.12. Who pays the ED renewal fee if an NGO is supported by two or more grantmakers?

At launch, the first grantmaker that requests an ED renewal will be charged the ED fee for expired EDs. Subsequent requests for EDs for the same NGO will be charged the currently-certified fee. If there is sufficient demand for fee-sharing, we will implement a fee-sharing solution.

7.10. Can a grantmaker pay up front for both the initial ED and renewals of the ED for the full term of a multi-year grant (e.g., 3-5 years)? If so, then does NGOsource offer a discount on the subsequent years?

This feature will not available at NGOsource launch, but we plan to provide this functionality in the future and we will consider at that time whether offering a discount on subsequent years is feasible.

8. IRS APPROVAL, LEGAL IMPLICATIONS, AND LIABILITY

Upon the IRS' issuance of a favorable Private Letter Ruling, a copy will be published on NGOsource's website at techsoupglobal.org/ngorepository. Key sections of particular interest to lawyers and auditors will be clearly highlighted.

The Private Letter Ruling request clearly describes that the grantmaker may rely on NGOsource EDs. We are seeking a ruling that any liability incurred by the issuance of an invalid ED certification would belong to NGOsource.

9. SEEDING NGOsource

9.1. How many EDs do you realistically expect to have available online within the first year of operation? How many will be seeded from selected members?

We are expecting to have over 300 EDs in the first year, with fewer than 100 of them being seeded EDs as a result of our Alpha and Beta testing. TechSoup Global welcomes opportunities to partner with grantmakers to provide seeded data for NGOsource.

9.2. We've already completed EDs for NGOs that we're supporting. Can we and other grantmakers just provide these EDs to NGOsource for inclusion in the shared database of EDs?

Such EDs may be included in NGOsource, but we cannot mark them as ED certified unless we have conducted our own review. This is to ensure standardization of review in accordance with our pending IRS Private Letter Ruling request. Thus, until a grantmaker has requested a review against a seeded NGO and NGOsource has completed its own analysis, such EDs cannot be shared. The fee for certification in this case will be the “ED Update” fee of $800.

9.3. If selected grantmakers' EDs are used for seeding NGOsource, does the grantmaker get some reduced cost or a credit towards future EDs and renewals?

We would be happy to explore this option with you. Please contact Sheila Warren, NGOsource Director, +1.415.633.9376 or +1.800.659.3579 x376.

10. NGOsource MANAGEMENT AND OVERSIGHT

10.1. Does TechSoup Global have a contract to develop and manage NGOsource?

TechSoup Global has entered into a five-year contract (starting in May 2009) with the Council on Foundations to design, develop, and provide ongoing support for NGOsource. The contract includes detailed specifications for features and services as well as a service-level agreement.

10.2. Who is responsible for providing oversight to NGOsource operation?

The Council on Foundations (COF) will provide oversight with the help of an independent NGOsource project manager.

10.3. How often will NGOsource be audited? What types of audits will be conducted and by whom? Are audit results available to members?

Independent auditors will conduct annual financial, operational, and security audits. Audit results may be made available on a case-by-case basis.

10.4. Will NGOs and members be regularly surveyed so that NGOsource can receive candid feedback and use this information for continuous process improvement?

Yes. User feedback will be solicited on an ongoing basis. This information will be shared with both the Council on Foundations and the Advisory Council and used to make improvements.

11. PRIVACY AND DATA SECURITY

11.1. How secure is the NGOsource service?

NGOsource offers customizable security settings for NGOs and will be hosted on secure enterprise servers.

How does NGOsource address safety and security concerns for staff at NGOs working on human rights, rule of law, and other issues that may place them in confrontation with government officials, gangs, etc.? Who has access to the site? What information is made available and what information is protected?

The NGO has the option to refuse a request for an ED submission. An NGO's detailed submission information is only available to NGOsource members who have requested EDs for that NGO. All Internet data transmissions are implemented with Secure Socket Layer (SSL). On the NGO portal, only the NGO can see its own data. On the grantmaker portal, the general public can only see highest-level data, which is limited to organization name and country and does not include contact information.

11.2. What information about an NGO is published NGOsource for other members to see?

NGOs are allowed to select their data security and privacy options at registration. At a minimum, NGOsource members will be able to see the NGO's name and country. NGOs can choose to allow members to see contact information, list of activities, budget, and other sensitive information.

11.3. Can an NGOsource member see who else made a grant to its NGOs?

Yes, as this information is considered public and is readily available through other sources.

11.4. Who will be allowed to see my NGO's information?

NGOsource staff will be allowed to see NGO information. TechSoup Global is also under contract with the Council on Foundations to provide access to information to COF upon request. NGOs will be able to select their data security and privacy options at registration, and will have the option of protecting their contact name, address, and other sensitive information.

12. NGOsource IMPACT / PARTNERSHIPS / SUPPORTERS

12.1. Some foundations that do international work give their grants to U.S.-based international groups instead of engaging in direct cross-border grantmaking. What impact will NGOsource have on this?

A cross-section of over 100 different international grantmaking organizations responded to the NGO Repository's Spring 2009 survey. Here's how they predicted NGOsource will impact international grantmaking:

16% - Will result in more international grantmaking.
28% - Will result in making “More direct grants and less by re-granting through U.S. intermediary organizations.”
36% - Shift from expenditure responsibility to equivalency determination grants.

12.2. How will NGOsource maximize the number of NGOs that will benefit from ED-related funding opportunities?

The first step in maximizing the number of NGOs in NGOsource will be to gain a large market share of the EDs being requested by grantmakers. We are making a significant marketing investment to help spread the word about the availability of NGOsource and the benefits it will provide once it is approved by the IRS. The second step will be to grow the overall volume of EDs. By offering a low-price, high-quality, easy-to-use service, we expect to convert many ER grants into ED grants. The last step will be to encourage grantmakers to grant to new NGOs, rather than to previously certified NGOs. We plan to periodically review NGOsource's fee structure to consider whether pricing incentives can and should be used to promote grants to new NGOs.

NGOsource should not have an effect of discouraging grants to NGOs that are not part in NGOsource for a number of reasons:
• At launch and in the first few years of operation, NGOsource will take time to build a large database of certified NGOs. Grantmakers will also be encouraged to add more NGOs into NGOsource.
• Many grantmakers recognize that ED is not ideal, or even possible, for all NGOs. For example, grantmakers may want to fund an initiative of a for-profit corporation, which requires Expenditure Responsibility (ER).
• Some grantmakers may choose ER in order to exercise control over funds to some grantees.
• Many grantmakers are inundated with funding requests from small, start-up international NGOs. Some grantmakers routinely select a number of these new NGOs to fund. We do not anticipate that NGOsource will change such decisions.

12.4. What strategic partnerships has NGOsource established with other organizations?

NGOsource has established a strategic partnership with the Foundation Center to link the names of NGOs that have current certifications to:

(1) Foundation Directory Online interactive world maps.
(2) Cross-border International interactive map that is available at no cost to all Council on Foundations members and Foundation Center members (login and password required).

In addition, vendors representing 90% of the grants management software sector have agreed in principle to work with NGOsource on seamless database communication. NGOsource is also constantly looking for other key strategic partnership opportunities.

12.5. Will NGOsource require ongoing funding or will it become a self-sustaining operation?

NGOsource expects to become self-sustaining after launch, although it will remain in close connection with the Advisory Council.

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1. SERVICES