The United States is the largest philanthropic market in the world.

Over $100 billion is granted annually by foundations alone. Add major donors and donor-advised funds (DAFs), and the scale becomes difficult to ignore.

For many international NGOs, the first question is:

“DO WE NEED 501(c)(3)?”

“What structural pathway matches our realistic US ambition?”

Because a 501(c)(3) is not a fundraising strategy. It is an administrative tool. And a heavy one with quite some consequences. Strategy comes first. And alternatives exist. 

Below are five realistic pathways into the American philanthropic market — from light-touch access to full structural presence.

1. Direct Cross-Border Giving (No US Structure)

This is the lightest and often smartest starting point. Often this option is sufficient. Many US based donors do not require you to have a full presence or an entity in the US. They want to make sure you can be trusted and that the donations made are tax deductible.

There are US intermediary that offer this option, such as:

• Myriad USA (formerly KBFUS)
• CAF America
• Other cross-border giving platforms

How it works:

• A US donor gives to the intermediary.

• The intermediary performs due diligence.

• The intermediary re-grants the funds to your European organization.

• No US entity is created for you.

This is essentially tax-deductible infrastructure.It allows US donors to give efficiently without you establishing anything in the US. So when taxes are the primary issue of your donor and you do not have a US strategy that goes much further than accepting these and some more grants, this option is probabaly sufficient for you.

When this makes sense:

• You are testing the US market

• You expect limited US income

• You want minimal administrative burden

• You do not need US branding or board presence

This model gives you access to funding. It will not help to build a presence and track record in the US. Also, the model is not free. Most intermediaries charge a modest set up fee and a percentage of the funding raised by you.

A Note on Equivalency Determination (ED)

There is another mechanism international NGOs should understand: Equivalency Determination (ED). This mechanism is sometimes offered by foundations. 

An ED is not something you set up yourself. It is a legal assessment commissioned by a US private foundation to determine whether your organization is the equivalent of a US public charity under IRS rules.

If the foundation obtains a positive ED opinion:

• They can treat your NGO like a US 501(c)(3) public charity.

• They do not need to apply heavy “expenditure responsibility” rules.

• The grant process becomes smoother.

ED is often facilitated by:

• Intermediaries such as Myriad USA or CAF America

• NGOsource (run by TechSoup)

• Specialized US legal counsel

The key takeaway:

So also in this option US foundations can still fund you. Even without a 501(c)(3) or presence. An ED reduces friction — it does not replace strategy.

This is an often overlooked pathway.And perhaps an issue one to set up. 

Instead of building your own structure, you partner with an existing US 501(c)(3).

This can involve:

• Joint proposals

• Consortium arrangements

• Regranting agreements

• Shared fundraising

Many US foundations prefer funding US-based organizations working internationally.If your US partner is the primary grantee and you are positioned as implementation partner, you can unlock significant capital without establishing a US structure.

This pathway requires:

• Strong positioning

• Clear division of roles

• High trust partnerships

But it can be capital-efficient and strategically smart. 

More and more US based organizations are open for this, as a partnership will also allow them to expand THEIR fundraising to elsewhere in the world. 

2. Hosted Structure Under a Fiscal Sponsor (Often Branded as “Friends Of”)

A “friends of” structure is the middle between having no entity and your own 501(c)(3). And this is where and why terminology becomes confusing.

Organizations like Myriad USA or the Netherland America Foundation (NAF) can host a named fund or “Friends Of” structure within their existing 501(c)(3).

From the outside, it may look like “Friends of [Your Organization]”. In other words – it seems that you have a legal entity in the US.

But legally:

• The host owns the 501(c)(3).

• They file IRS reporting.

• They carry legal responsibility.

• You operate under their umbrella.

This model is often described as:

• Fiscal sponsorship

• Hosted Friends Of

• Umbrella arrangement

• Regranting partnership

Different names. Same legal reality.

What you gain:

• Structured US presence

• Dedicated fund within a US 501(c)(3)

• Reduced compliance burden

• Faster setup

What you do not gain:

• Independent governance

• Your own IRS determination letter

• Full structural autonomy

This works well when:

• You expect growing but still moderate US income

• You want some branding without heavy governance

• You are not ready for an independent US board

It is often the most pragmatic middle step. It allows you to receive donations from US based donors, without having a fixed structure and permanent costs.

3. “Your Organization USA” – Independent 501(c)(3)

This is a structural shift. And this is where strategy is needed. This is a step you can take, but it will difficult to change it afterwards. In other words – only take this step when you believe it is really needed for the longer term. Not when one donor states on their website that you need a 501(c)(3) to be eligible for funding. 

A separate US nonprofit is incorporated:

• “Your Organization USA”
• “Your Organization America”
• Or similar

This entity:

• Has its own IRS determination letter

• Has its own US board and by-laws

• Files its own Form 990

• Exercises independent governance

• Exists solely to support your international organization

Now you are no longer hosted. You are present.This means you can no longer easily make changes – the new board is in charge. 

What this requires:

• US board recruitment

• Governance oversight

• Compliance management

• Financial reporting

• Administrative capacity

What this enables:

• Stronger long-term positioning

• US ambassadors advocating for you

• Greater donor confidence in some cases

• Ability to hire US staff

• Clear US identity

This option makes sense when:

• You expect substantial recurring US revenue

• You are building a multi-year US growth strategy

• You want structural permanence

This is no longer about receiving funds. It is about building a US platform. It is an expensive and heavy instrument, but can be well worth it if it is part of your longer term US strategy. But be aware; the new board is in charge as soon as the entity is created. This means they will be responsible for the strategy and fundraising. They will also (personally) be responsible for managing the grants raised. This will change the dynamics. Many things can be arranged and agreed upon in advance, but their will always be surprises. 

4. Strategic US Partnerships

Building strategic partnerships with existing US based organization is often a overlooked pathway.

Instead of building your own structure, you partner with an existing US 501(c)(3).They have track record, a strong name, staff and fundraising experience you do not have. By working together you can leverage each other strengths.  

A collaboration can involve:

• Joint proposals

• Consortium arrangements

• Regranting agreements

• Shared fundraising

Many US foundations prefer funding US-based organizations working internationally.So by working with a partner you can offer this. If your US partner is the primary grantee and you are positioned as implementation partner, you can unlock significant capital without establishing a US structure.

This pathway requires:

• Strong positioning

• Clear division of roles

• High trust partnerships

A partnership is ideally mutual. So be prepared that your US partner probably also wants to collaborate outside of the US. If you get a piece of their pie, they might want to get a piece of your pie as well. But if you believe that by working together both markets will grow, this is a great option for you (to start with). 

5. Full US Platform Strategy

The final option is the heaviest one. This goes beyond incorporation. This is building your own organization in the US. You will have an entity, an office and staff. You will take the responsibility to manage projects and become part of the US eco-system. The organization can become a member of your international “family”. 

It includes:

• Independent 501(c)(3)

• Board-led fundraising

• Dedicated US case for support

• US-based staff

• Events and cultivation strategy

• Long-term market investment

Few organizations need this at the beginning. But for some, it becomes the logical evolution. One way of doing it is by setting up your own US office. This takes time and resources, but you can control what it will look like and what it will do. It is also possible to partner with an existing organization in the US and allow them to become an affiliate of your organization. This means you can build on their experience and track-record. You also have all the infrastructure that is needed from day one. But you also have their history, which can be a blessing or burden.  

Our recommendation

Don’t make a legal decision before making a revenue decision. In other words – first decide what your structural fundraising will look like. The best ideas on this you will get from developing a fundraising strategy.

If you expect:

• Under $250k annually → cross-border or hosted model may suffice

• $250k–$1M recurring → hosted structure often optimal

• Multi-million structural ambition → independent 501(c)(3) may be justified

We recommend you to be conservative in your forecasts and start small. It is so much better to exceed your results every year than to come to the conclusion that the reality was different than your excel sheet predicted. 

And please remember: A 501(c)(3) does not create donors. Strategy creates donors. And the structure follows strategy.