02-11243. Registration of U.S. Private Voluntary Organizations for Foreign Aid Programs

AGENCY:

Agency for International Development (USAID).

ACTION:

Proposed rule.

SUMMARY:

USAID proposes to amend its regulations by creating a less cumbersome and more streamlined registration process for private voluntary organizations (PVOs).

DATES:

Please submit comments on or before July 8, 2002.

ADDRESSES:

You may mail written comments concerning the proposed changes to Mary Newton, Registrar, USAID, Office of Private and Voluntary Cooperation, 1300 Pennsylvania Avenue, NW, Washington, DC, 20523-7600. You may submit comments electronically to [e-mail].

FOR FURTHER INFORMATION CONTACT:

Mary Newton, Registrar, Office of Private and Voluntary Cooperation, telephone [phone]; telefax [phone]; e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

 

A. Explanation of Proposed Changes

Following an extensive review of the registration process of U.S. private voluntary organizations (PVOs), we propose to amend the regulations to make the registration process less cumbersome and more streamlined for both applicants and the Agency. The major changes are as follows:

1. Defined the term “U.S. PVO” in section 203.2 so that an organization can determine if it needs to be registered. An organization that meets the definition must be registered to be eligible for a subvention or to receive a USAID grant or cooperative agreement. If an organization does not meet the definition, it is not considered a PVO for purposes of registration.

2. Combined two conditions regarding tax exemption and voluntary nature into one condition.

3. Deleted references to other types of nonprofit organizations. Only 501(c)(3) organizations are considered PVOs. Organizations registered before these changes are implemented will remain in the USAID Registry of PVOs.

4. Added requirement that the organization is incorporated at least 18 months before applying.

5. Separated conditions from documentation requirements for easier reference.

6. Reduced the number of documents required for application from 18 to 7 and for annual submission from 6 to 4.

7. Added Condition No. 8 on U.S. national security issues.

B. Regulatory Analysis

1. Executive Order 12866. USAID has determined that this regulation is not a significant regulatory action as defined in Executive Order 12866 and, accordingly, this regulation has not been reviewed by the Office of Management and Budget.

2. Regulatory Flexibility Act. It is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. Accordingly, a Regulatory Flexibility Analysis is not required.

3. Executive Order 13132. This regulation will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this regulation does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

4. Unfunded Mandates Reform Act of 1995. This regulation will not result in the expenditure by state, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one-year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

5. Small Business Regulatory Enforcement Fairness Act of 1996. This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Act. 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic or export markets.

6. Executive Order 12988—Civil Justice Reform. USAID has conducted the reviews required by section 3 of Executive Order 12988 and has determined that, this rule meets the applicable standards in section 3 to mitigate litigation, eliminate ambiguity and reduce burden.

7. Paperwork Reduction Act. This rule does contain information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3507 et seq.). We are in the process of obtaining the necessary approvals.

List of Subjects in 22 CFR Part 203

• Foreign aid
• Nonprofit organizations

Accordingly, 22 CFR part 203 is proposed to be revised to read as follows:

PART 203—REGISTRATION OF U.S. PRIVATE VOLUNTARY ORGANIZATIONS (PVOs)

203.1

Purpose.

203.2

Definitions.

203.3

Conditions of registration.

203.4

Documentation requirements for initial registration.

203.5

Annual documentation requirements.

203.6

Denial of registration, reconsideration and resubmission.

203.7

Termination of registration.

203.8

Access to records and communications.

208.9

Delegation of authority.

Authority: 22 U.S.C. 2381.

§ 203.1

Purpose.

(a) USAID registers U.S. PVOs for the following purposes:

(1) Registration is a statutory condition of eligibility for U.S. PVOs for subventions.

(2) Registration is a condition of eligibility for U.S PVOs for USAID grants and cooperative agreements.

(3) Registration provides USAID with information for computing the amount of USAID funding made available to U.S PVOs.

(4) Registration provides USAID with the information necessary to determine whether a PVO meets the statutory “20 percent privateness test.” The statue requires that a U.S. PVO must obtain at least 20 percent of its financial support (cash) for its international activities from sources other than the U.S. Government to receive certain USAID grants and cooperative agreements. The privateness test is an eligibility criterion for PVO programs; it is not a condition for registration.

(b) It is not the purpose of registration to allow registered U.S. PVOs to make, or enable to be made, any representation to the public concerning the meaning of being registered with USAID.

(c) Registration does not bring an organization within the Ambassador's authority and responsibility for the security of U.S. Government operations and personnel abroad.

§ 203.2

Definitions.

As used in this part:

(a) Annual report means a yearly document that describes the PVO's program activities conducted during the same period as the audited financial statement.

(b) FAA means the Foreign Assistance Act of 1961, as amended, 22 U.S.C. 2151, et seq.

(c) U. S. general public means U.S. citizens and U.S. nongovernmental organizations, e.g., private citizens, groups, foundations and corporations. U.S. general public does not include government agencies in the U.S. or abroad, or international organizations such as the United Nations, or non-U.S. citizens or institutions.

(d) Headquarters means the principal executive office where legal, accounting, and administrative information may be accessed in the daily course of conducting business.

(e) Public Law 480 means the Agricultural Trade Development and Assistance Act of 1954, as amended, 7 U.S.C. 1691 et seq.

(f) Supporting Services mean the total of general and administration expenses plus fundraising and promotion expenses.

(g) Subventions mean the payment of transportation charges under section 123(b) of the FAA, 22 U.S.C. 2151u(b); the sale of the services or commodities, e.g., excess property, under section 607(a) of the FAA, 22 U.S.C. 2357(a); and the furnishing of agricultural commodities under section 202 of Public Law 480, 7 U.S.C. 1722.

(h) USAID means U.S. Agency for International Development.

(i) U.S. PVO means a private voluntary organization that

(1) Is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3));

(2) Works in, or intends to work in, foreign development activities;

(3) Receives some portion of its annual support from the private sector;

(4) Receives voluntary contributions of money from the U.S. general public; and

(5) Is not, for registration purposes, a university, college, accredited degree-granting institution of education, private foundation, hospital, organization engaged exclusively in research or scientific activities, church, or organization engaged exclusively in religious activities.

§ 203.3

Conditions of registration.

There are eight conditions of registration “ the first four conditions define a PVO, and the last four conditions establish standards by which the PVO is evaluated. An applicant shall be registered with USAID as a U.S. PVO if USAID finds that the applicant has satisfied the following conditions:

(a) Condition No. 1 (U.S.-based). Is U.S.-based in that it:

(1) Is organized under the laws of the United States;

(2) Has its headquarters in the United States; and

(3) Has been incorporated for not less than 18 months.

(b) Condition No. 2 (Private). Is not a governmental entity.

(c) Condition No. 3 (Voluntary). Is a voluntary organization in that it:

(1) Is a public charity and has tax exemption under section 501(c)(3) of the Internal Revenue Code; and

(2) Solicits and receives cash contributions from the U.S. general public.

(d) Condition No. 4 (Overseas Activities). Conducts, or anticipates conducting, overseas activities that are consistent with the general purposes of the Foreign Assistance Act or Public Law 480, 7 U.S.C. 1691.

(e) Condition No. 5 (Financial Viability). That it:

(1) Accounts for its funds in accordance with generally accepted accounting principles (GAAP);

(2) Has a sound financial position; and

(3) Makes its financial statements available to the public upon request.

(f) Condition No. 6 (Board of Directors). Has a board of directors:

(1) That meets at least annually;

(2) Whose members serve without compensation or honorarium for such services; and

(3) Whose majority is not composed of the PVO's officers or staff members.

(g) Condition No. 7 (Program and Supporting Services). That it:

(1) Expends and distributes its cash and gifts in-kind in accordance with the annual report of program activities; and

(2) Does not expend more than 40 percent of total expenses on supporting services.

(h) Condition No. 8 (General Eligibility). It is not:

(1) Suspended or debarred by an agency of the United States Government;

(2) Designated as a foreign terrorist organization by the Secretary of State pursuant to section 219 of the Immigration and Nationality Act, 8 U.S.C. 1189, as amended; or

(3) The subject of a decision by the Department of State to the effect that registration or a financial relationship between USAID and the organization is contrary to the national defense, national security, or foreign policy interests of the United States.

§ 203.4

Documentation requirements for initial registration.

(a) In order for USAID to determine if the applicant meets the conditions of registration, an applicant shall submit in duplicate to USAID, Office of Private and Voluntary Cooperation, 1300 Pennsylvania Avenue, NW, Washington, D.C., 20523-7600, the following documents with a cover letter stating the reason the organization is applying for registration, its agreement to the conditions of registration, and its agreement to provide such other information as USAID may reasonably require to determine that the applicant meets the conditions of registration. This information is required for the purpose of determining that the applicant meets the conditions of registration:

(1) Articles of incorporation or charter on state letterhead with state seal and authorizing state official's signature;

(2) Bylaws or other documents establishing corporate structure;

(3) IRS Form 990 or 990-PF (for availability see 26 CFR 601.602) and a copy of IRS letter of tax exemption;

(4) Audited financial statements (for the most recent fiscal year) and an Office of Management and Budget (OMB) Circular A-133 (for availability see 5 CFR 1310.3) audit, if applicable, prepared on an accrual basis in accordance with generally accepted accounting principles (GAAP) certified by an independent certified public accountant (CPA);

(5) Annual report or similar document which describes overseas program activities and lists all board members;

(6) USAID Form 1550-2 for the same reporting period as the financial statements; and

(7) Classification list of activity sectors and countries.

(b) In addition, each applicant shall submit such other information as USAID may reasonably require to determine whether the organization meets the conditions of registration.

(c) USAID may revise this list of documents from time to time.

(d) Other USAID officials may request the same or similar information at a later date for purposes of determining the PVO's eligibility for a particular grant of cooperative agreement.

§ 203.5

Annual documentation requirements.

(a) In order to maintain its registration, each registered PVO shall submit annually, within 180 days after the close of its fiscal year, the following:

(1) Audited financial statements for the registrant's most recent fiscal year and an OMB Circular A-133 audit, if applicable, prepared on an accrual basis in accordance with GAAP by an independent CPA;

(2) Annual report or similar document describing overseas program activities and listing all board members;

(3) USAID Form 1550-2 for the same reporting period as the financial statements; and

(4) Classification listing of activity sectors and countries.

(b) PVOs also must submit any amendments, if applicable, to their articles of incorporation, charter or bylaws and any changes in the organization's tax-exempt status.

(c) In addition, each registrant shall submit such other information as USAID may reasonably require to determine that the organization continues to meet the conditions of registration.

(d) USAID may revise this list of documents from time to time.

§ 203.6

Denial of registration, reconsideration and resubmission.

(a) Notification of denial of registration. If USAID decides to deny an applicant registration, USAID will inform the applicant in writing of the denial with a specific statement of those conditions and documentation requirements of registration that the applicant has failed to satisfy.

(b) Reconsideration. An applicant may, after receipt of a notification of denial of registration, resubmit its application for reconsideration within the timeframe as designated by USAID. USAID will inform, in writing, the applicant resubmitting its application of USAID's decision upon resubmission.

(c) Resubmission. An applicant may at any time resubmit a new application for registration.

§ 203.7

Termination of registration.

(a) USAID may terminate registration for any of the following reasons:

(1) Relinquished voluntarily by the registrant upon written notice to USAID;

(2) Terminated by USAID if registrant does not submit annual documentation within 180 days after its fiscal year end;

(3) Terminated by USAID if registrant has no overseas expenditures within three consecutive years;

(4) Terminated by USAID for failure of the registrant to comply with conditions of registration;

(5) Terminated by USAID if registrant uses promotional material or advertisement suggesting the fact of registration is an endorsement; or

(6) Terminated by USAID if registrant refuses to transfer to USAID any records, documents, or information that are referred to in this regulation and are within registrant's control, or copies of such records or documents, within a reasonable time after requested by USAID.

(b) Termination by USAID shall include prior written notice to the registrant of the grounds for the proposed termination and opportunity for the registrant to file a written statement within 30 days of receipt of the written notice as to why its registration should not be terminated. USAID will inform, in writing, registrant requesting such reconsideration of USAID's decision. In addition, USAID may, at its own discretion, reconsider a termination of registration at any time.

§ 203.8

Access to records and communications.

(a) All records, reports, and other documents that are made available to USAID pursuant to this part shall be made available for public inspection and copying pursuant to the Freedom of Information Act and other applicable law.

(b) All communications to applicants and registrants by USAID are made to the organization's principal executive office, not the organization's registered office or other address.

§ 203.9

Delegation of authority.

The Assistant Administrator for the Bureau for Democracy, Conflict and Humanitarian Assistance is delegated by the Administrator the authority to administer the registration process, including the authority to waive, withdraw, or amend any or all of the provisions of the regulations in this part.

Dated: April 30, 2002.

Karl Schwartz,

Chief, Information and Program Support Division, Office of Private and Voluntary Cooperation, Bureau for Democracy, Conflict and Humanitarian Assistance.