The best way to set up a foundation in Switzerland is with realistic goals, a well thought-out concept and clear planning. With these tips, you can set up a successful foundation that does good in the long term.
Switzerland is a foundation-friendly country. Anyone wishing to set up a foundation here benefits from comparatively few restrictions and a flexible framework. This is one of the reasons why there are over 13,000 foundations in Switzerland. However, precisely because setting up a foundation seems so easy, careful preparation is crucial. Subsequent adjustments to the purpose or structure of a foundation usually involve considerable effort or are not possible at all.
Anyone wishing to set up their own charitable foundation should therefore obtain comprehensive information, make the most important decisions carefully and ensure that they have a solid legal and financial basis.
How do I set up a charitable foundation in Switzerland?
The establishment of a foundation begins long before the actual act of formation. If you are already familiar with the definition and functioning of a foundation, you can get to grips with the content and strategic planning. Among other things, this means clearly defining the purpose of the foundation, thinking through the organizational structure and realistically planning the financing. Only in this way can future founders work effectively with the foundation in the long term – or fail when it comes to recognition by the authorities.
It is therefore helpful to draw up a business plan at the start: What initial capital is realistic? What one-off and running costs will be incurred? What income or endowments are possible later on? And how can the funds be used efficiently and for the intended purpose?
Foundation purpose: What does the foundation stand for?
The central component of every foundation is its purpose. It determines what the foundation may – and may not – do. The following also applies to charitable foundations: the purpose must be in the public interest. The formulation of this purpose requires experience and care, as it can only be changed later under strict conditions. It is therefore advisable to define the purpose of the foundation together with specialized lawyers or consultants. It should be clear, feasible and at the same time flexible enough to remain relevant in the future.
A so-called reservation of purpose can also be included in the founding document. This is a clause that allows subsequent adjustments under certain conditions. It also makes sense to include a mission statement or organizational regulations that provide the foundation board with guidance and serve as a strategic basis.
Important:
The purpose of the foundation must be proportionate to the existing or planned assets. If, for example, you pursue a very broad, ambitious purpose with little capital, you run the risk of the foundation not being recognized or not being able to act in the long term.
Foundation capital: how much is needed?
The legally recommended minimum capital for a foundation in Switzerland is CHF 50,000, but this does not only have to be in monetary form. Tangible assets such as real estate and works of art or shares in companies are also permitted, but must be carefully evaluated and checked in terms of liquidity and earmarking. The foundation capital must always be fully contributed when the foundation is established. Subsequent endowments are possible, but do not form part of the foundation capital.
Tip:
In practice, it has been shown that a minimum of CHF 50,000 is hardly enough to run a foundation sustainably. Experience shows that a foundation needs at least CHF 5 million in foundation capital in order to operate sustainably and make regular distributions – without jeopardizing the capital itself.
Costs: What expenses does a foundation have?
Before setting up a foundation in Switzerland, founders should consider one-off and recurring costs. These depend on the size and complexity of the foundation. As a rule, one-off expenses of CHF 10,000 to 15,000 are expected. This includes legal and notarial fees, fees for entry in the commercial register and the handling of foundation supervision. However, the costs can vary depending on the canton and complexity.
Then there are the running costs: bookkeeping, annual accounts, auditing duties, administration and, depending on the structure of the foundation, the operation of an office. Foundations that are run entirely on a voluntary basis are less expensive. However, a professional structure is usually indispensable as funding activity grows.
The right time: setting up a foundation during your lifetime or in your will?
A foundation can be established either during your lifetime or in the event of your death – i.e. through a will or an inheritance contract. In practice, many founders prefer a mixed form: the foundation is set up with a small initial capital during their lifetime and then topped up after their death. This allows founders to play an active role in shaping the foundation. And their will is also implemented after their death.
Foundation bodies: Who takes responsibility?
Although a foundation is considered an independent legal entity that acts independently of the founder, it is not itself capable of acting. Therefore, every charitable foundation needs functioning bodies.
At the center is the Board of Trustees, usually consisting of three to five people. At least one member must be resident in Switzerland. The foundation board bears strategic responsibility and ensures that the purpose is fulfilled in accordance with the founder’s wishes. The foundation board members often work on a voluntary basis, but they can also be remunerated.
The foundation board is often supported by an administrative office, particularly in the case of operational foundations with their own project work. The office is responsible for implementing the funding strategy, communication, administration and contact with the beneficiaries.
Every foundation is also subject to foundation supervision. This regularly checks whether the foundation is implementing its purpose correctly. Depending on the geographical focus, either the cantonal or the federal supervisory authority is responsible.
The start-up process in four phases
The establishment of a foundation takes place in several stages that build on each other. A clear overview of the foundation phases facilitates the process and ensures that the foundation is legally, organizationally and financially sound right from the start.
1. Purpose and planning
First of all, founders must concretize their vision and define all the cornerstones: What is the foundation’s goal? How can it be achieved? What funds are available? When should the foundation be established?
2. Legal preparation
In the second step, the foundation charter and regulations are drawn up. These include the purpose, assets, domicile and composition of the Board of Trustees.
3. Official foundation
The actual founding act takes place by means of a public deed at the notary’s office – alternatively by means of a will or inheritance contract. The foundation is then entered in the commercial register and thus acquires its legal capacity. The foundation supervisory authority and the tax authorities are also involved in this step.
4. Administration and operation
Once the foundation has been established, the operational side of things begins: accounting, reporting, project funding, communication. If you want to work professionally, you should think about the right structure and digital tools for foundation management at an early stage.
Advantages and disadvantages of having your own foundation in Switzerland
A charitable foundation offers many opportunities. At the same time, the effort involved should not be underestimated. Founders should consider the opportunities and challenges before setting up a charitable foundation in Switzerland:
Advantages
– Tax exemption due to non-profit status
– Long-term effectiveness beyond your own lifetime
– Legal autonomy and independence
– Clearly regulated estate planning
Disadvantages
– High initial costs and ongoing administrative effort
– Permanent earmarking of assets
– Strict legal framework
Set up correctly from the start
Anyone wishing to set up a foundation will find good legal and tax conditions in Switzerland. Nevertheless, without solid planning, the potential of a foundation is rarely fully exploited. As the largest foundation platform in Switzerland, Spheriq supports you with digital tools so that your vision becomes an effective and long-term reality.
