If your nonprofit’s 2024 plans include international expansion, take care. Rules that apply to U.S.-based nonprofit activities — such as soliciting donations, recruiting members, hiring employees and selling products — often are different overseas. You need to make sure the desire for your services or products is robust enough in your target countries to justify the costs of operating in them.
Ask questions and research thoroughly
Before adopting a global strategy, ask questions. For example, what will your competition be like? And would it be easier to partner with another organization already working abroad? Ample research on each country’s relevant laws and regulations is essential.
If you plan to sell products or services in a foreign country, investigate sales and tax issues. For instance, if the country engages in free trade, it may be easy to do business there. But if the country isn’t a party to a free trade agreement with the United States, high tariffs might prove an insurmountable obstacle.
Consult with legal and financial advisors as you chart your business plan. Foreign activities also may require analysis to ensure that your American contributors retain their tax deductions and that you don’t jeopardize your organization’s tax-exempt status.
Negotiate tricky issues
Your understanding of a target country’s population will be key to your success. Setting up a cultural advisory committee in the United States that includes expatriates is one way to develop insights into your new market. If English isn’t the primary spoken language in the target country, consider how that will factor into communications and the ultimate success of the venture.
Here are some other issues to work through:
Membership. Offering membership to individuals in other countries can be your initial step toward becoming a global organization. Some organizations hold seminars and conferences for these potential new members and even open local offices to establish roots.
Board of directors. If you appoint someone from the target country to your nonprofit’s board, be willing to accept different approaches to issues. At least some board meetings probably will continue to be held in person at your U.S. headquarters. But videoconferencing and collaborative software that you’ve likely already implemented in recent years can also help board members participate fully in meetings from outside the United States.
Exchange rates. The impact of currency exchange rates can be more significant than you might anticipate. If the U.S. dollar is weak, it could work to your advantage in selling products and services abroad. On the other hand, a strong dollar will likely go further when compensating international staff or leasing foreign property.
Analyze the implications
Foreign expansion can be costly and can strain staff resources. To help ensure you’re making the right move, have us analyze potential tax and financial implications before you book any reservations.
© 2024
