The legal implication of giving is largely tied to tax laws. In the United States, grant makers are often given a tax exemption known as 501 (c) 3 status. This tax exemption comes with stipulations, one of which being that grant making resources cannot be used for lobbying purposes to influence legislation. Similarly, in Canada, under the Income Tax Act, registered charities (grant makers) can only use their resources for their own activities or to registered grantees, which are for the most part exclusively Canadian. For non-Canadian grantees, the funding organization must have direction and control of the resources allocated, failure of this may lead to a 105% penalty on the amount transferred and/or revoking of charitable status.
Grant making efforts can sometimes be impacted by sanctions and government policies. Grant makers within the European Union for example are required to follow strict regulations where funds are directed to grantees in countries facing sanctions. Similarly, the reverse situation applies in some countries. For example, In Algeria, organizations are not allowed to receive donations from foreign grant makers without prior approval from the government.
Lastly, grant makers must strive to address the topic of governance thoroughly. Given that most grant makers particularly philanthropies are solely accountable to their Board of trustees (versus shareholders, donors, tax payers etc.), strong efforts must be made to ensure that potential conflicts of interest are addressed well in advance of grants being awarded. Conflict of interest can come in the form of a grant makers staff, board members or their relatives benefitting financially from a grant.
In conclusion, grants provide the means to transfer money, technical assistance, and expertise to partners, organizations and stakeholders in exchange for their contributions to set objectives and goals.
Collaboration is not a natural state of being. These relationships need to be worked at, evaluated and re-envisaged from time to time and open to new partners. Communication between partners is key not just in shaping a shared vision and desired outcomes, but in terms of simple operations, administration and implementation.
In seeking the recipient organization to work with grant making organizations are expected to go through a competitive process as highlighted above and but intro consideration the legal implications as well as the roles of stakeholders and methods for managing communication.