Setting up a foundation in 2023
Foundations are non-profit organisations which support charitable activities for the common good. They are often created with money donated by individuals, families or corporations and generally make grants or operate programmes with the income earned from investing this money. When setting up a foundation, you should consider the following:
- Like a corporation, a foundation is considered a legal entity, and its details are available for viewing on public registers. The main difference between a foundation and a corporation is that a foundation does not have any shareholders. Assets that are held in the name of the foundation are to be used for purposes clearly defined in its constitutive documents. The administration and operation of the foundation is set out in contracts, not fiduciary principles;
- The contributions raised in operating the entity must be deemed tax deductible in order to qualify as a foundation. Setting up a foundation which is private is an efficient and flexible solution, as donors may receive an instant tax deduction for donations promised for the future;
- When setting up a foundation, it is important to choose the jurisdiction carefully. Several crucial factors need to be considered when choosing the jurisdiction, including:
- Will the courts in that jurisdiction recognise a ruling from the court of your residence or citizenship?
- Does the jurisdiction have the confidentiality or transparency laws you need;
- The assets must be properly secured;
- The jurisdiction must be politically stable;
- Is the jurisdiction black listed by the Organisation for Economic Co-operation and Development (OECD)?
- When setting up a foundation, it is important to set out its goals and operations clearly. Since the administration of the foundation is based on purely contractual obligations, these contracts must be completely tight and protected;
- The process of setting up a foundation, and administering it, is stricter than that of a public charity. In some jurisdictions a foundation may be required to divest a percentage of the year-end fair market value of its assets, or pay an excise tax on earnings;
- A foundation may be legally limited (by mandate from the foundation donor) in terms of where its charitable donations may be placed. When setting up a foundation, it is important consider that some foundations may be restricted to providing donations to specific causes or geographical areas.
If you are considering setting up a foundation, Healy Consultants can help you reach your goals – whether they are charitable or financial. A well-structured foundation in the right jurisdiction is a great way to achieve these ambitions.
Healy Consultants' fees for setting up a foundation
Our fees vary according to the jurisdiction of the foundation. Please view this page for details.
The procedure for setting up a foundation
- Our client settles our fees to set up an offshore foundation and signs Healy Consultants engagement letter;
- Healy Consultants provides our client with a detailed engagement plan with which to set up an offshore foundation. This project plan provides a roadmap for the engagement minimising unwanted surprises and meeting client expectations;
- Healy Consultants collects all due diligence from our client;
- Our client and Healy Consultants work together to draw up clear goals for the offshore foundation, as well as choosing the most suitable jurisdiction in which to set up an offshore foundation;
- Our client and Healy Consultants agree the tax implications involved to set up an offshore foundation. Clients planning to set up a foundation should note that the contributions raised in operating the entity must be deemed tax deductible in order to qualify as a foundation. To set up an offshore foundation with instant tax deductions for donations promised for the future, the foundation will need to be private. Some jurisdictions required offshore foundations to divest a percentage of the year-end fair market value of its assets, or pay an excise tax on earnings;
- If required, Healy Consultants assists our client to draw up the contractual obligations of the foundation. Clients planning to set up an offshore foundation should note that the administration of an offshore foundation is based on purely contractual obligations, which must be tight and protected;
- Healy Consultants prepares the documentation required for the foundation to registered in the chosen jurisdiction and sends to our client for signature and return to our offices;
- Healy Consultants legally completes the set up an offshore foundation for our client with the correct structure and foundation documents. You do not need to visit the chosen jurisdiction in order to set up an offshore foundation as Healy Consultants’ officers will complete all the formalities on the ground on your behalf;
- After completing the offshore foundation setup for our client, Healy Consultants e-mails an engagement feedback survey to the client.