Many nonprofits today look beyond U.S. borders to boost revenue. They recruit members, sell products, promote conferences and solicit donations. Before you “raise your flag” in a foreign country, though, take stock. Here are five areas to research before putting both feet in the water.
The market for your services and products. Before investing funds, make sure that the need for your nonprofit’s services or products is robust enough to justify the costs of doing business in the target country. What will the competition be like? A specialized teachers’ association, for example, may find no counterpart in that country, but a burgeoning number of teachers who are hungry for specialized information. Ample market research is essential before making a decision.
Laws and regulations. Of course, you’ll need to be aware of relevant laws and regulations before penetrating the target country. And if you plan to sell products or services there, investigate sales and tax issues thoroughly first. If the country engages in free trade, it may be easy enough to do business there. But if the country isn’t a party to a free trade agreement, high tariffs or taxes might scare you away. Consult with your legal and financial advisors as you chart your business plan. Foreign activities also may require analysis to ensure that your contributors retain their tax deductions and that you don’t jeopardize your organization’s own tax-exempt status.
Relationships. Strong relationships are at the heart of any not-for-profit’s success. And your understanding of the target culture will be a key to that goal. Setting up an advisory committee in the United States, which includes expatriates, is one way to develop insights into your new market.
If English isn’t the spoken language in the target country, it may be advantageous to bring your own translator during your initial visits — ideally someone from the advisory committee or elsewhere in your organization. This person should understand the nuances of the other culture, and also have your interests in mind. During your visits, be ready to learn from the local residents. They are the experts on their turf.
Representation. Opening up membership to individuals in other countries is often the first global step of a membership organization. If you go this route, use your advisory committee to discuss the needs and interests of the target country, and for ideas about translating published materials for the new members. Some organizations hold seminars and conferences in target countries and even open offices to establish roots.
If you appoint a member from the target country to your board, be willing to accept different approaches to issues. Board meetings usually continue to be held at U.S. headquarters. A board portal (collaborative software) will allow your board members to securely access board documents from any location. And Skype can be used to visually include the new member at meetings.
Currency exchange. What is the value of the U.S. dollar compared to the currency of the target nation? If U.S. currency is weak, it could work to your advantage in selling products and services. But, naturally, a strong dollar here will go further in all your business transactions in that country, such as leasing property or compensating foreign staff.
There’s also the practical issue of how potential customers will pay for your goods and services, or make donations. Many nonprofits now use PayPal to handle foreign payments, which can all be made in U.S. dollars. The online payment company provides a discount on their processing rates for donations to qualifying charities. Additionally, some accounting software can address various currencies and make the necessary conversions.