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Going Abroad? More Practical Considerations for Nonprofits Seeking International Expansion

Posted by Lakshmi Sarma Ramani on November 30, 2017 at 8:40 AM
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Below is part 2 of our series on International Nonprofit Expansion. For part 1, click here.

6. Can you collect information from or about citizens and use it to further your activities in the United States?
Red-World-Change-Keyboard-Button-451853435_4000x2250.jpegUS privacy laws are structured differently from those of many other countries. If you operate outside of the United States and want to collect information about citizens of a country, your standard practice in the United States may not meet the standards or laws of the foreign country. You may not be able to collect the information for the expected use, nor will you be able to store the data on a US-based server, or transfer the data to the United States for use in the United States. Countries have varying requirements for the collection, use, and transfer of data. For example, the privacy laws in Europe and Canada differ from those in the United States. Advice from an experienced data privacy expert who is familiar with cross-border transactions is critical
to ensure that you are complying with requirements for data collection, use, transfer, and storage, and the right to be forgotten. One helpful global resource can be found at www.dlapiperdataprotection.com.

The new European Union General Data Protection Regulation (GDPR) should also be considered, since its fines and penalties apply beyond Europe. See www.eugdpr.org for more information.

Citizens of many countries have an expectation of privacy as a consumer that is much different than expectations in the United States. You may not be allowed to contact them for fundraising purposes without ensuring that you have properly collected and retained their information. You should be especially mindful about collecting information from or about children in other countries.

Personal information in other countries could include a person’s name and address, credit card number, and image or voice. Cultural sensitivity is also very important to take into account, as well as whether collection, use, retention, or transfer of any information that could identify a person is legal.

7. Are the legal structures of another country like those within the United States?


In the United States, unless you are told you can’t do something, or something is considered illegal, you usually can conduct certain activities within the bounds of the law. However, outside of the United States, you can’t often do something without explicit permission. Don’t assume that you can perform your mission within a country simply because you don’t see any prohibition against the conduct. Cultural sensitivities and legal education and knowledge are critical to ensure that you are not breaking the law. Many governments are increasingly turning their attention to the regulation of charitable activities, as is further detailed in the NonProfit Quarterly, which can be found here: https://nonprofitquarterly.org/2016/07/25/regulation-nonprofit-philanthropy-international-non-profit-organizations/.

8. Will your intellectual property rights be protected?


When you send your staff into another country, you may assume that you own what they create because of how intellectual property rights ownership tends to be structured between employees and employers. However, without having a clear writing that complies with local law, US IP structures may not apply in the host country. You should also be mindful of IP laws for volunteers and independent contractors that you use or hire in host countries.

Separate from creation of IP, many countries have significant counterfeiting operations, even if they are signatories to the Madrid Protocol. Once you bring a brand into a new country, you should consider registering your trademark to at least have an option to protect your brand if it is used or counterfeited in another country. You should also consider whether your intellectual property is infringing on existing IP in another country.

9. Can you operate using your US entity and US staff?


Once you know that you can operate within a country, you will need to determine whether you can operate from your US entity located in the United States, whether you will need a representative office, or whether you should set up a local entity. These decisions often tie to revenue-generating activities, but they could also be impacted by the risk profile of the activities in which your organization engages. Whether you send staff, hire a contractor, or use volunteers will also be a determining factor, and could also impact whether they are considered your agent. It is important that you ensure that you consider the labor laws of a country to better understand what the implications are of individuals working on your behalf, and that you are in compliance with those laws.

10. Will you have to share financial information with a foreign government that you may not be required to share with the
US or state governments?


Foreign governments have very different expectations for companies that operate within their borders. They may require much more, or different, information about your operations.

If you seek to begin operations in a foreign country, you should expect to have to provide information about your financial structures, revenue streams, and expenses. You should not assume the type of information or level of detail expected by a foreign government to enable you to operate within its borders.

11. Will your idea translate readily to other cultures or languages?


Some charity names or brands don’t translate to have the same or similar meaning in other languages, or have no translatable meaning in other cultures. They could also be confused with existing names or brands within a country. Before you embark on expanding your mission to a new country, spend time finding out if your idea will work within the legal and cultural framework of a different country or culture, so that you can increase the chance of success.

In summary, it is critical that 501(c)(3) tax-exempt organizations consider a range of issues prior to implementing plans for international expansion. The questions presented in this 2-part series are intended to help you think through various aspects of going abroad, as you seek legal counsel to guide your decisions.

 

*This blog series was originally published as one article titled, "International Nonprofit Expansion," in the ACC Docket, November 2017.

 

Lakshmi Sarma Ramani is a Member of Outside GC's Washington D.C.-based team. With close to 20 years of legal experience, Laksmi is an expert in all aspects of the laws and operations of tax-exempt organizations. Lakshmi's LinkedIn profile is available at https://www.linkedin.com/in/lakshmi-sarma-ramani, and she can be reached at lsramani@outsidegc.com

 

 

 

 

 

 

 

 

 

Topics: Nonprofits, Trade Associations

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