Nonprofits, especially those engaged in international humanitarian work, may find themselves shipping goods across international borders. And some may think their nonprofit status exempts them from following the export regulations that govern other businesses. But that’s not the case: Nonprofits must understand and adhere to export regulations, just like any other business entity. However, certain licenses and exceptions are in place to help facilitate humanitarian work.
This article will explain the key export regulations that nonprofits need to understand and provide resources to help nonprofits navigate this complex landscape.
Which Export Regulations Apply to Nonprofits?
Nonprofits shipping goods internationally need to be aware of U.S. export control regulations administered by the Department of Commerce, the Department of State and the Department of the Treasury. These regulations are designed to safeguard national security interests and keep certain goods out of the hands of unauthorized recipients. Nonprofits may be required to obtain export licenses or comply with specific restrictions, especially when exporting items to embargoed or sanctioned countries—not uncommon for groups involved in humanitarian work.
Identifying what products are subject to export regulations is an initial and crucial step in the export compliance process. Nonprofits may believe that donations or gifts are exempt from export controls. While donations are crucial for nonprofit work, the transfer of certain items through donations may still be subject to export controls. Here are some aspects of export regulation nonprofits should be aware of:
Export License Determination
A small number of exports require a license. How To Determine If You Need an Export License is a good resource for new exporters who need help navigating that process. First you will need to determine the correct classification of your item, also known as determining the Export Control Classification Number (ECCN). You will use the ECCN to determine whether or not there are any restrictions for exporting your products to specific countries.
Embargoes and Sanctions
There are strict rules about what you can ship to embargoed and sanctioned countries. You can find out more about these export regulations in our articles 6 Basic Steps for Export Compliance and The Three R’s of Export Compliance: FTR, EAR and ITAR. However, it’s not uncommon for nonprofit organizations to ship humanitarian aid to embargoed countries. Below we’ll explain some potential exemptions.
Embargoed countries include Cuba, Iran, North Korea and Syria. In addition, there are more nuanced restrictions like those against certain Russian industries and the Crimean region of Ukraine.
Restricted Parties
Unfortunately, providing aid to those in need can come with some risk of being exploited by denied parties, especially those in sanctioned regions. Restricted parties are individuals, businesses and other organizations that have been identified as engaging in activities related to the proliferation of weapons of mass destruction; are known to be involved in terrorism or drug trafficking; or have had their export privileges suspended.
All exporters should check all the parties in every export transaction against the various denied party screening lists to prevent incurring penalties. You can do this manually via the Federal Register, but be aware that the number of lists to be checked is large. To make it easier to stay in compliance and save time, try the Shipping Solutions Restricted Party Screening Wizard for free.
Exemptions for Nonprofits
While there are certain exemptions and licensing exceptions available for humanitarian activities, they are not blanket exemptions. Specific circumstances and items involved may still be subject to control or licensing requirements. These are some of the license exceptions to be aware of:
- Humanitarian General License: OFAC issues General Licenses that authorize certain types of humanitarian activities in sanctioned countries, allowing nonprofits to provide goods, services or financial assistance without specific individual licenses.
- Export License Exceptions: Nonprofits engaged in specific humanitarian activities may be eligible for export license exceptions under the Export Administration Regulations (EAR) administered by BIS. For example, the EAR includes the GFT—Gift Parcels and Humanitarian Donations license exception (Section 740.12), which allows for the export or reexport of certain items as humanitarian donations to meet basic human needs in countries in need. Learn more in our article Export Administration Regulations: Understanding Export License Exceptions.
- Third-Party Exemptions: Nonprofits collaborating with government agencies or other organizations that have obtained necessary export licenses or exemptions may be able to export controlled items under the umbrella of that organization’s authorization.
The Shipping Solutions Export Controls Wizard can help you find out which export controls may apply to your product and if exceptions are available.
Requirements for Shipping Your Goods
Some organizations will use a freight forwarding company to help with the actual shipment of goods (and to navigate the license requirements listed above). Audra Weddle is the International Shipping Director at Convoy of Hope, a nonprofit humanitarian organization that delivers food and other aid around the world to fight poverty and hunger. Her advice to nonprofits: “Talk to your freight forwarder. They should guide you on what documents are needed, if a cargo inspection is needed or any other special requirements.”
But even if you’re working with a freight forwarder or another shipping partner, there are some aspects of international shipping you should understand:
Export Documentation
Accurate export forms are essential to avoid delays and regulatory violations. Depending on what, how and where you’re exporting, you may need to prepare several different export forms. The free Beginner’s Guide to Export Forms whitepaper explains more than 20 of the most common export forms and the typical information required on each. In addition, you can download PDF samples of the export documents from the Shipping Solutions website.
Weddle uses Shipping Solutions at Convoy of Hope to create the commercial invoice, packing list and certificate of origin for their international shipments. Some of the documents specific to nonprofits that Weddle also said she uses include:
To learn more about using Shipping Solutions export documentation and compliance software to create accurate export documents and stay compliant, register for a free demo of the software.
Incoterms 2020
Incoterms 2020 rules outline when the responsibility for the goods transfers from the seller to the buyer in an international transaction. They can be used strategically to help with your shipment. For example, Weddle said that Convoy of Hope will use the Incoterm Delivered Duty Paid (DDP) when shipping to program countries and Carriage Paid To (CPT) for non-program countries. Under DDP, the exporter bears all risks and costs associated with delivering goods to the named place ready for unloading and cleared for import. Under CPT, the transfer of risk from the exporter to the importer happens as soon as the goods are delivered to the international carrier. You can download an Incoterms 2020 Rules Chart of Responsibilities for a summary of the 11 different terms.
Resources to Assist Nonprofits with Exporting
- U.S. Department of Commerce, Bureau of Industry and Security: BIS offers guidance documents, FAQs and online training. They also provide resources on export licensing, restricted party screening and compliance best practices.
- U.S. Department of the Treasury, Office of Foreign Assets Control: OFAC administers and enforces economic and trade sanctions programs. Nonprofits engaged in international activities should review OFAC’s website to ensure compliance with sanctions regulations.
- U.S. Export Assistance Centers: USEACs provide export assistance and resources to businesses, including nonprofits. They offer counseling, export training, market research and connections to export service providers.
- Industry associations and chambers of commerce: Joining industry-specific associations or local chambers of commerce can provide nonprofits with resources and networking opportunities. These organizations often offer educational programs on exporting and compliance with export regulations.
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