Global Non-Profits expanding to the USA: Key strategies for success

By Israel Tannenbaum; Partner, Withum (HLB USA)

According to some research, non-profits have grown to become a sizeable part of the US economy, with global Not-For-Profits (NFPs) taking a very close look at their involvement in the sector. Yet these global entities must tread carefully as they move forward so they don’t make any costly missteps.

The Washington Post reports that non-profits have grown much faster than any other segment based on employment statistics, dwarfing the employment that for-profit private sector jobs provide (33% versus 9%). With this level of growth (measured from 2017 to 2021), it’s even more critical for global operations to understand regulatory requirements, build local partnerships and develop communication strategies, among other tasks.

So, how should they proceed?

Understanding the challenges for NFPs establishing in the USA

Global NFPs should begin by looking closely at the regulations:

Understanding regulatory requirements

Global non-profit organisations must understand the various tax regulations across the country, which are often multifaceted and contingent upon organisational structure, activity, and tax-exempt status.

Grasping the nuances here is crucial to maintaining compliance and maximising financial resources. For example, to acquire tax-exempt status under section 501(c)(3), the organisation must adhere to specific guidelines and manual reporting obligations. Executives will also need to be mindful of triggering unrelated business income tax (UBIT), which calls for cautious planning and reporting.

One of the primary annual reporting documents is Form 990, which provides transparency around finances, activities, and governance. The company may also need to comply with laws similar to the Foreign Corrupt Practices Act, which often calls for strong internal control measures to prevent corruption.

Building local partnerships

Successful global NFPs often establish strategic partnerships with local non-profits, businesses, or government agencies. This activity will help them gain invaluable insight into the local landscape, regulatory frameworks, and cultural nuances.

Through these partnerships, they can share resources, build capacity, plus maximize their reach and sustainability. Also, these strategic deals will bolster credibility and trust within the community, so the NFP appears as a trusted ally rather than an outsider.

Through coordinated efforts and the alignment of goals, global NFPs can navigate complicated challenges more efficiently. This collaboration will help drive meaningful change.

Respecting local cultures

Sensitivity to local cultures is also critical if a global NFP is to operate successfully within diverse communities. This understanding will help inform every aspect of an organisational operation, from the programme design through implementation and communication strategies to stakeholder engagement.

Companies can tailor services to meet unique demands within diverse populations, demonstrating respect for cultural diversity and improving the likelihood of a positive outcome. They should also tailor communication methods according to linguistic and cultural nuances, which will help avoid misunderstandings.

Developing the best communications strategy

A global NFP will need to take a multifaceted approach to build a strong communication strategy. As they engage with local communities, donors, and other stakeholders, they’ll need to leverage various channels and platforms. This will help them create dialogue, give out the necessary information, and cultivate relationships.

Certainly, social media is a powerful tool for connecting with diverse audiences, and companies can use the major platforms to share stories, raise awareness, and solicit feedback in real time.

However, local media outlets could play a crucial role in helping the NFP to sway public perceptions. The company should collaborate with journalists to communicate its mission and impact effectively. They can use tools such as interviews, features, and press releases to expose their initiatives and engage the broader community in more meaningful dialogue.

The strategies also present an opportunity to stage community events and interact directly with stakeholders. Such events could include forums, workshops, or volunteer programs. These activities can raise awareness about important issues and mobilise community members to take action.

Efforts in all these areas help to show that the NFP cares and is ready to make every effort. In turn, it can cultivate a dedicated supporter base and develop advocates to champion the cause.

Measuring impact

As the global NFP prepares to roll out these strategies, it needs to measure the impact of its efforts. In doing so, the company can then assess efficiency and effectiveness while allocating resources as wisely as possible. Further, executives can demonstrate a high level of accountability to their various stakeholders.

To measure impact, the NFP can use frameworks such as the “theory of change.” This focuses on causal pathways, including activities, outcomes, and impacts, and guides program design. The company can also look at the “social return on investment” metric to quantify social, environmental or economic values generated by their initiatives. This metric can give them a comprehensive understanding of any initiative, especially regarding return on investment.

Finally, they could consider adopting “impact reporting and investment standards,” which focus on a standardised framework for measuring and reporting social or environmental performance. This particular activity can help the company compare performance with others and foster further transparency between organisations.

Measurement and analysis should be front and centre for a global NFP so they can track progress, learn from successes or failures, and use tailored strategies. When the company has such clear information, it can fully understand its impact. It can also gain credibility and strengthen any partnerships or attract more funding from donors, investors, or philanthropists who may be committed to driving positive societal change.

How HLB can help your NFP thrive

The dedicated team at HLB fully understands the complex dynamics and challenges within the not-for-profit sector. Our experts have significant experience in all the business verticals within which NFPs operate and are very conscious of the issues that NFPs often face compared to profit-oriented companies. You can find out more information about our not-for-profit engagement and learn about our advisory services.

At HLB, we pride ourselves on being good listeners, so we certainly understand your challenges and can tailor-make solutions to meet your organisational objectives. So, if your global NFP is thinking about expanding into the US market, reach out to our experts today for further guidance. We can help you develop your plan to operate an NFP within the USA.