Equivalency Determination PLUS
Equivalency Determination PLUS
Equivalency determination (ED) confirms that a non-U.S. organization is the legal equivalent of a U.S. public charity under Internal Revenue Code §§501(c)(3) and 509(a). With a valid ED, U.S. private foundations and donor-advised funds can treat grants as qualifying distributions, eliminating the need for Expenditure Responsibility. This allows them to fund global partners with confidence and speed.
- Regulatory assurance: EDs prepared to IRS Rev. Proc. 2017-53 standards provide an accepted alternative to Expenditure Responsibility.
- Flexibility: Enables general support and capital grants without ER oversight and reporting.
- DAF-friendly: DAF sponsors commonly rely on EDs to extend the same compliance protections to donor-advised grants.
- Faster access to partners: Using grantees with current EDs (including from reputable repositories) streamlines approvals.
The ED PLUS service
ED PLUS comprises two service components:
- The Equivalency Determination (ED) itself is issued by a Supported ED Provider (SEDP). Paragon facilitates the process as the SEDP’s authorized agent for document collection, client and grantee communications, delivery of the ED, and collection of SEDP fees. Paragon provides administrative coordination of the process, including end-to-end grantee communications and document collection.
- “PLUS” services deliver a targeted set of safeguards: anti-terrorist financing screening, facilitation of grant agreement signatures when required, re-verification of wire instructions, and an updated review of basic foreign country requirements. By combining these steps into one service, PLUS helps clients protect charitable assets, reduce the risk of fraud or diversion, and maintain audit-ready documentation.
Anti-Terrorist Financing Screening (ATFS)
ATFS is Paragon’s baseline anti-terrorist financing screening service. We handle all communications with the foreign grantee; collect and verify core organizational documents; confirm the organization’s current legal registration status; and obtain either a certified list of key staff, board members, founders, controlling entities, and financial institutions, or formal confirmation that no changes have occurred. We verify whether there have been any updates to banking relationships, screen all names and entities against OFAC, UN, EU, UK, FBI, Interpol, and other watchlists, conduct follow-up analysis on any potential matches, secure secondary information from the grantee as needed, and generate a written report with full supporting documentation for your file.
Why
An attorney issuing an equivalency determination must confirm that the grantee and its principals are not designated as terrorist entities by the U.S. government. Even once an ED is approved, anti-terrorist financing screening should be repeated for each grant payment, since risks can emerge at any time, such as changes in leadership, board composition, controlling entities, or banking relationships, or a lapse in legal registration. Global watchlists (OFAC, UN, EU, UK, FBI, Interpol, and others) are updated continually with new designations. By verifying updates, confirming no changes, and re-screening the grantee, ATFS protects funders against inadvertently transferring funds to sanctioned entities and provides clear, documented assurance for compliance reviews.
Grant Agreement Signatures and Communications
Facilitating signatures on the grant agreement by the grantee and client representatives via DocuSign. Facilitating communications between the grantee and client for any questions that may arise about the grant agreement. Using DocuSign helps ensure signatures are secure, time-stamped, and verifiable, creating a clear record for compliance and audit purposes. This service expressly excludes any legal review or analysis of the grant agreement.
Why
A signed agreement allows the grantor to reaffirm protective language around the charitable use of funds, compliance with anti-terrorist financing and sanctions laws, and adherence to reporting obligations. By requiring grantee and client signatures for each installment, the agreement ensures that funds are disbursed only under updated, enforceable terms, protecting the grantor against misuse, diversion, or reputational risk while aligning with IRS, OFAC, and broader international compliance expectations.
Wire Information and Confirmation of Receipt
This service includes the following steps:
- Securing wire information via DocuSign
- Verbal verification of wire details
- Confirming receipt of funds by the grantee
Paragon compiles these steps into a report, creating a clear record that the payment was authorized, transmitted, and received as intended.
Why
Reconfirming and verifying wire details prior to each payment helps prevent costly errors and fraud, such as misdirected or spoofed wires, and ensures funds are documented as received as intended. By securing wire instructions in writing, verbally confirming no changes, and obtaining confirmation of receipt from the grantee, the client reduces diversion risk and maintains clear, defensible records for compliance reviews.
Basic Foreign Country Requirements Review
This is a three-step review: (i) check the ICNL Civic Freedom Monitor for the relevant country; (ii) review the Council on Foundations (COF) Country Note; and (iii) request that the grantee identify which requirements apply when receiving foreign funding. Because these rules can change between payments, the review reconfirms applicable obligations each time. Information is included only if published by ICNL or COF. For countries not covered by these sources, clients may request Paragon’s Enhanced Foreign Country Requirements Review (EFCR). This review is informational only and does not constitute legal advice.
Why
Reviewing foreign country requirements before each grant payment is important because many jurisdictions impose registration, reporting, or approval obligations on nonprofits that receive foreign funding, and sometimes on U.S. grantmakers as well. Since these rules can change quickly, monitoring them before each disbursement provides an important safeguard. Failure to comply may delay transfers, expose the grantee to penalties, or risk suspension of operations. By consulting authoritative sources (ICNL, COF) and confirming or reconfirming requirements with the grantee, this review provides clients with current reference points on restrictions that may affect a grant’s legality or safety, helping protect both funder and grantee.
Documentation Provided
- ED Written Advice and supporting records (provided by the SEDP)
- Anti-Terrorist Financing Screening (ATFS) report with screening logs and exhibits.
- If requested, DocuSign facilitation of grant agreement signatures
- Verified wire instructions, and confirmation of receipt.
- Foreign Country Requirements Summary with supporting evidence.
All deliverables are compiled into a package structured to support board oversight and regulatory review.
Related ED Services
ED Re-certification (EDR PLUS): EDR PLUS renews an expiring or expired ED through the original issuing SEDP, with Paragon coordinating updates and providing the same “PLUS” safeguards described above
Repository ED with Updated Watchlist Screening: A repository equivalency determination (“repository ED”) is an active, unexpired ED held in the issuing SEDP’s repository that can be newly issued to a different requesting grantmaker by that same SEDP. As part of this service, Paragon coordinates the reassignment, performs an updated Anti-Terrorist Financing Screening (ATFS), and directly contacts the grantee to confirm that no changes to legal status, governance documents, or other key facts have occurred; where needed, Paragon obtains updated information and supporting documents.
Timeline and Delivery
Paragon prioritizes efficiency while maintaining excellence, accuracy, and documentation integrity in facilitating the delivery of Equivalency Determination (ED) projects. Upon receipt of all requested documentation and information from the grantee, ED projects are generally completed within two weeks, depending on attorney follow-up and grantee responsiveness. Timelines may vary if translation, additional verification, or further coordination is required. Paragon provides clients with status updates at each stage, from document collection through delivery of the final ED package, to ensure transparency and predictable completion.
Pairing with Complementary Risk-Based Services
Discounted pricing is available on Paragon’s Four-Tier Due Diligence Framework when paired with either our ED PLUS suite of services or Expenditure Responsibility (ER) support. The framework offers progressively deeper levels of anti-terrorist financing and integrity screening, from a baseline Tier 1 check through to a comprehensive Tier 4 review. This approach enables funders to integrate proportionate due diligence into their broader compliance process at reduced cost. Importantly, ED PLUS already incorporates baseline Anti-Terrorist Financing Screening (ATFS) (Tier 1), ensuring this essential safeguard is automatically included within the equivalency determination package.
Proven Track Record
Founded in 2012, Paragon has facilitated the vetting of thousands of grantees across more than 100 countries, including higher-risk jurisdictions identified by FATF, the OECD, and Transparency International. Our analyst-led process delivers practical cross-border due diligence and risk screening that evaluates mission alignment, governance, financial controls, sanctions and watchlist exposure, and country risk to help protect funder reputation. We provide structured, defensible documentation to support board oversight and strengthen cross-border giving.