{"id":221120,"date":"2021-06-30T12:42:42","date_gmt":"2021-06-30T17:42:42","guid":{"rendered":"https:\/\/www.globalgiving.org\/learn\/?p=221120"},"modified":"2022-12-27T15:06:52","modified_gmt":"2022-12-27T20:06:52","slug":"avoid-earmarking-when-partnering-with-an-intermediary","status":"publish","type":"post","link":"https:\/\/www.globalgiving.org\/learn\/avoid-earmarking-when-partnering-with-an-intermediary\/","title":{"rendered":"4 Rules To Follow To Avoid Earmarking When Partnering With An Intermediary"},"content":{"rendered":"

If your organization works with an intermediary grantmaker, you might already know how an intermediary, often a public charity, can open doors to international giving and enable more flexible grantmaking<\/a>. You may not be aware that working with an intermediary grantmaker requires keeping in mind complex charitable giving regulations, like those that restrict funders from \u201cearmarking\u201d a grant.<\/p>\n

As an intermediary grantmaker ourselves, we at GlobalGiving understand that these regulations can be difficult to understand\u2014and we are here to demystify them! Read on to learn what earmarking is and how to avoid it when partnering with an intermediary grantmaker.<\/p>\n

Working with an intermediary grantmaker<\/h4>\n

Before we dive into earmarking, let\u2019s start with some background on working with an intermediary grantmaker<\/a>. Typically, when partnering with an intermediary grantmaker, a corporate funder or foundation will refer a charitable grant to the intermediary for consideration. Then, the intermediary grantmaker will conduct due diligence<\/a> before deciding whether and how to award the grant. The intermediary grantmaker takes on responsibility for the grant, ensuring compliance with relevant regulations, monitoring the grant\u2019s progress, and working with the grantee to ensure the grant\u2019s success along the way.<\/p>\n

What is earmarking?<\/h4>\n

When working with an intermediary grantmaker, the funder referring the grant to the intermediary must refrain from earmarking the grant. When working with an intermediary grantmaker like GlobalGiving, earmarking occurs when the funder\u2014overstepping the role of its intermediary\u2014promises funding to a potential grantee through either oral confirmation or a written agreement.<\/p>\n

Why is it important to avoid earmarking?<\/h4>\n

If a corporate funder or foundation earmarks a particular grant, the United States Internal Revenue Service (IRS) may determine the funder should be held responsible for the grant instead of the intermediary grantmaker. In such a case, the funder might then be liable for penalty taxes under US law.<\/p>\n

Here\u2019s how to avoid earmarking when partnering with an intermediary: <\/p>\n