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How Indian NGOs Can Set Up a 501(c)(3) Charity in the USA

what is 501(c)3 organization

Indian NGOs often struggle to tap into US-based donors due to trust, compliance, and payment barriers. One proven solution is to set up a US-registered 501(c)(3) nonprofit that can legally raise funds in the United States and then transfer grants to an Indian NGO that is FCRA-compliant.

The good news?
👉 You do NOT need a commercial office in the US.
👉 The director’s home address is acceptable to start with.

Let’s break it down step by step.

What Is a 501(c)(3) Organization?

A 501(c)(3) is a US-registered nonprofit organization recognized by the Internal Revenue Service.

It allows the organization to:

  • Raise donations in the US

  • Offer tax deductions to US donors

  • Apply for US grants and foundations

  • Legally send funds abroad for charitable purposes

Can an Indian NGO Promote a US 501(c)(3)?

Yes — but the US nonprofit must be a separate legal entity.

The correct structure is:

  • US 501(c)(3) → Fundraising & compliance in the US

  • Indian NGO (FCRA-registered) → Program implementation in India

The US charity sends funds to India as foreign grants, fully aligned with Indian law.

feed the needy

Step-by-Step: How to Set Up a US 501(c)(3)

1️⃣ Incorporate a Nonprofit in the USA

Choose a state like Delaware, Texas, or California.

You will need:

  • Nonprofit name

  • 1–3 directors (can include Indian citizens)

  • US address (director’s home address is acceptable)

  • Registered agent (low-cost services available)

📌 No rented office is required at this stage.

2️⃣ Get an EIN (Employer Identification Number)

Apply online with the IRS.
This is required for:

  • Banking

  • Tax filings

  • 501(c)(3) application

3️⃣ Apply for 501(c)(3) Status

File:

  • Form 1023-EZ (small nonprofits) or

  • Form 1023 (larger / complex activities)

Approval time:
⏱️ 1–6 months (depending on application type)

4️⃣ Open a US Bank Account

Once EIN is issued:

  • Open a nonprofit checking account

  • Enable Stripe / PayPal / Donorbox

  • Accept donations from US individuals & companies

5️⃣ Create a Grant Relationship With the Indian NGO

The US charity:

  • Signs an MoU / Grant Agreement

  • Transfers funds only to an FCRA-approved bank account

  • Maintains documentation for audits

Indian NGO Compliance Checklist 

To receive funds legally:

  • Valid FCRA registration

  • Active designated FCRA bank account

  • Proper utilization reports

  • Annual FC-4 filing with the Ministry of Home Affairs

⚠️ Without FCRA, foreign funds cannot be accepted.

Real-World Example: Aadhi USA & Help Foundation, Kurnool

A successful working model already exists.

  • Aadhi USA
    is a US-registered 501(c)(3) charity

  • It legally raises funds in the United States

  • Funds are sent to Help Foundation,
    an FCRA-compliant Indian NGO based in Kurnool, Andhra Pradesh

This structure:
✔ Builds trust with US donors
✔ Ensures full legal compliance
✔ Enables sustained international funding

Common Questions (FAQ)

❓ Can the US charity use a home address?
Yes. The director’s residence is acceptable for incorporation and IRS filings.

❓ Can Indian citizens be directors?
Yes. At least one US-based director is recommended but not mandatory in all states.

❓ Can all funds be sent to India?
Yes — as long as they are used for charitable purposes and properly documented.

❓ Is this legal?
100% legal when US IRS rules and Indian FCRA rules are followed.