Many donors who work with Amigos of Costa Rica enjoy the benefit of receiving a receipt making their donation to nonprofit projects in Costa Rica eligible for a tax deduction in the United States. How are we able to give those receipts and what’s going on behind the scenes?
To satisfy a curiosity that perhaps you never knew you had, we’d like to tell you more.
What Fiscal Sponsorship Means
Amigos of Costa Rica supports nonprofits throughout Costa Rica as a fiscal sponsor. In the United States, the Internal Revenue Service (IRS) requires that a fiscal sponsor must maintain discretion over the use of funds received. Donors may suggest how funds are used, but they may not require that a fiscal sponsor grant funds to a specific project. First and foremost, the fiscal sponsor must ensure the proper use of donations received through maintaining formal oversight on all funds received.
How This Works in Practice
In practice, this means that Amigos of Costa Rica provides an extra level of security for donors. Through site visits, annual reporting, and continuous communication throughout the year, we work to ensure that the nonprofits you find on our website are organizations you can trust.
What happens in the very rare cases that Amigos discovers something that requires additional investigation? Our procedure is to pause, collect more information, involve our legal and accounting teams as necessary, and evaluate the situation.
In the event that we determine it would not be appropriate to allocate funds to the organization that the donor originally recommended, we will redirect the funds to an organization that still meets the charitable objectives of the original donation.
Reporting and Compliance
At Amigos, we see firsthand the long hours that the leaders of our affiliate organizations put in, day in and day out. As a result, we work hard to ensure that any reporting that we ask organizations to do achieves a higher purpose. If we ask for receipts showing how funds were spent or a projected budget for the following year, we are supporting organizations in developing their financial and accounting skills. If we ask for information about the impact of funds received, we are helping organizations develop the capacity to share their impact.
Sharing impact and demonstrating good financial management are two key elements for successful fundraising.
We always have 1:1 coaching available, templates to make the processes easier, and personalized support to help the nonprofits we work with continually improve.
Even with all this in place, it can be a challenge to juggle the diverse contexts that Amigos brings together. Sometimes this creates a level of cognitive dissonance that can be a bit jarring.
How can it be that the group of women volunteers who are running a small food bank on the edge of the Costa Rican rainforest need to meet IRS compliance regulations? Our team is fully bilingual, and has spent considerable time in communities outside of the Greater Metropolitan Area, or GAM—the cluster of cities in Costa Rica’s Central Valley. We understand these contrasts. And yet, here we are: supporting that food bank requires bridging these two worlds.
Supporting that food bank requires bridging these two worlds.
What Compliance Looks Like on the Ground
Sometimes compliance means that the members of an indigenous women’s collective carefully tape receipts in a notebook, then use a cell phone to scan those physical receipts and send them to us. From other affiliate organizations, we might receive computer-generated audited financial statements. One is no better than the other; we’ve long put the sharing of meaningful information above the format, and we respect the different conditions in which the organizations operate. We deeply understand Costa Rica, which helps us navigate vastly different scenarios to find solutions.
We’ve long put the sharing of meaningful information above the format, and we respect the different conditions in which the organizations operate.
Looking Ahead
One thing that we are excited about for the future is sharing more with all of you about what we know about the organizations we work with. We’ll have updated affiliate profiles online in the second half of 2026, which will include more information about the scale, development level, and impact of our affiliates.
If you’re ever interested in talking through your philanthropic goals with the Amigos team, we’d love to hear from you!
