Governments around the world have increasingly regulated how nongovernmental organizations (NGOs) receive and use foreign funding. While these laws are enacted outside the United States, they have direct and indirect consequences for U.S. charities that fund, partner with, or operate alongside organizations abroad.
For U.S. nonprofits engaged in international work, foreign funding regulation has become a core compliance and risk-management issue rather than a purely local concern.
Global Regulatory Trends Affecting NGO Funding
Several recurring themes appear in foreign funding laws adopted or expanded over the past decade:
- Mandatory registration or licensing for NGOs receiving foreign funds
- Public disclosure of foreign donors
- Restrictions on advocacy or political activity by foreign-funded organizations
- Expanded government authority to audit, suspend, or dissolve NGOs
- Criminal or civil penalties for technical noncompliance
These measures are often justified on grounds of national security, anti–money laundering enforcement, or transparency. Regardless of intent, the result is increased operational risk for cross-border philanthropy.
Examples of Foreign Funding Laws in Practice
India: Foreign Contribution Regulation Act (FCRA)
India’s Foreign Contribution Regulation Act (FCRA) imposes strict controls on NGOs receiving foreign funds, including U.S. charitable grants. Amendments adopted in 2020 significantly tightened these rules by:
- Requiring NGOs to open designated bank accounts for foreign contributions
- Prohibiting sub-granting of foreign funds to other NGOs
- Expanding government suspension and cancellation powers
Source: Ministry of Home Affairs, Government of India – FCRA
https://fcraonline.nic.in/
U.S. charities funding Indian organizations have seen projects halted when local partners lost FCRA registration, even temporarily.
Russia: “Foreign Agent” Laws
Russia has enacted and expanded laws requiring organizations that receive foreign funding and engage in broadly defined “political activity” to register as “foreign agents.” This designation carries onerous reporting obligations and reputational consequences and has been used to justify enforcement actions against NGOs.
Source: Human Rights Watch, “Russia’s Foreign Agent Laws”
https://www.hrw.org/tag/foreign-agents-law
While U.S. charities may not operate directly in Russia, similar legislative frameworks have appeared in other jurisdictions.
Hungary and Central/Eastern Europe
Several countries in Central and Eastern Europe have proposed or adopted laws increasing disclosure requirements for foreign-funded NGOs. Although some measures have been challenged under EU law, the compliance burden and uncertainty remain significant for international funders.
Source: Court of Justice of the European Union, Case C-78/18
https://curia.europa.eu/juris/liste.jsf?num=C-78/18
Anti–Money Laundering (AML) and Counter-Terrorism Rules
Beyond country-specific NGO laws, global standards promoted by the Financial Action Task Force (FATF) encourage heightened oversight of nonprofit organizations as part of AML and counter-terrorism financing regimes.
Source: Financial Action Task Force, Recommendation 8
https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html
These standards influence national regulations and increase scrutiny of international charitable flows.
Why These Developments Matter for U.S. Charities
U.S. charities are affected even when they remain fully compliant with U.S. law.
First, foreign grantees may face legal obligations triggered solely by receiving U.S. funds. If a foreign partner loses registration or fails to comply with local requirements, projects funded by U.S. charities may be suspended or terminated.
Second, U.S. charities are increasingly expected by regulators, donors, and auditors to understand the legal environments in which their foreign partners operate. This expectation affects fiduciary oversight and risk assessment.
Third, some foreign laws require public disclosure of donors. This can conflict with donor privacy expectations or raise safety concerns in sensitive regions.
Finally, foreign funding restrictions often overlap with U.S. sanctions, export controls, and counter-terrorism laws, increasing the complexity of compliance.
Common Compliance Risks for U.S. Charities
Recurring problem areas include:
- Assuming that local partners will independently handle all regulatory compliance
- Using grant agreements that do not address changes in foreign law
- Failing to monitor regulatory developments after grants are awarded
- Underestimating how advocacy, education, or public communications may be regulated abroad
When enforcement increases, these gaps can quickly become mission-threatening issues.
NGO Best Practices in Light of Global Trends
U.S. NGOs engaged in cross-border philanthropy should consider several practical steps.
- Policies governing international activities should explicitly address foreign funding risks and define procedures when legal conditions change.
- Due diligence should include a basic review of the regulatory environment affecting foreign partners, not just financial and programmatic capacity.
- Grant agreements should require compliance with applicable local laws, prompt disclosure of government inquiries, and allow suspension or modification of funding if legal risks escalate.
- Boards and senior leadership should be educated about the legal implications of international funding, particularly where work involves advocacy, human rights, or politically sensitive issues.
- Finally, charities should treat monitoring as an ongoing obligation rather than a one-time pre-grant exercise.
Conclusion
Foreign funding laws for NGOs are no longer isolated or purely local concerns. They are part of a broader global regulatory environment that directly affects U.S. charities engaged in international work.
Charities that proactively adapt their governance, documentation, and oversight practices will be better positioned to pursue their missions across borders while managing legal and reputational risk.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.