Equivalency Determination, or ED, is one of two legally permissible methods for U.S. grantmakers to perform charity vetting services in order to distribute grants funds to an organization incorporated outside of the U.S. The ED process requires the U.S. grantmaker to investigate the recipient organization in order to determine if it is the equivalent of a U.S. public charity. The standard of “equivalency” is based on a review of legal, operational and financial documentation.
The Equivalency Determination process can be both time consuming and expensive, and in some situations, the determination of equivalency is not definitive. As a result some grantmakers prefer the alternative method, Expenditure Responsibility.
NGOSource is a joint project sponsored by The Council on Foundations and Techsoup to simplify grantmaking to NGOs around the world. Their efforts include improving Expenditure Responsibility and Equivalency Determination processes, in order to benefit all interested stakeholders.