More Impact per foundation franc: Principle of cost coverage

More Impact per foundation franc Principle of cost coverage

Cost efficiency and foundation size

Those who dedicate their assets to a charitable purpose want to achieve the greatest possible effect per foundation franc. Cost efficiency is as crucial in philanthropy as it is in the business world.

In times of turmoil on the capital markets, many foundations are no longer able to meet their grant making commitments or ideas, or only to a limited extent. Even in good stock market years, the return on investment might be offset by high administration and management costs, which often leads to stagnation and inactivity of a foundation.

Anyone who intends to fulfil the envisioned purpose of the foundation in the long term, and who makes realistic calculations, will quickly realize that an independent foundation is only worthwhile establishing with assets above 10 million Swiss francs.

Umbrella foundation as a solution

What is the solution if it’s a foundation's returns on assets are not or no longer sufficient for a credible funding activity? It can either cooperate or merge with other foundations, or (re)structure itself as a consumption foundation, meaning that the foundation will use its assets effectively over a limited period of time.

An ideal solution is the establishment of a dependent foundation (endowment fund) - or the conversion into one. The umbrella foundation Fondation des Fondateurs offers a simple, effective and flexible cooperation model: several foundations place themselves under the common roof of a legal entity and share the costs.

  Independent foundation Endowment fund within Fondation des Fondateurswith FdF
Legal

 

  • independent

equivalent

  • endowment fund resp. dependent foundation
  • separately managed assets
Name giving

 

  • own foundation name

equivalent

  • own foundation name (fund name)
Foundation purpose

 

  • definable within the framework of foundation law

equivalent

  • definable within the framework of foundation law
  • wihtin the framework of the deed of foundation of Fondation des Fondateurs
Set-up

 

  • preparation of the foundation deed
  • determination of the Foundation's legal seat
  • notarial authentication
  • application for supervision by the foundation supervisory authority
  • application for tax exemption
  • entry in commercial register

simpler

  • contract with Fondation des Fondateurs
Governance

 

  • volatile, especially after the retirement of the founding generation
  • solely dependent on the foundation board

more solid

  • sustainably secured
  • multiple checks & balances
Grant-making process

 

  • project selection by the foundation board or management
  • funding decision by the foundation board

 

more flexible

  • project selection by fund advisory board or management
  • funding decision by the founder or fund advisory board
  • confirmation of funding decision by the foundation board of Fondation des Fondateurs
Accounting, audit, filing of accounts

 

  • own bookkeeping, auditing and reporting to the foundation supervisory authority

more independent

  • accounting, auditing and reporting to the foundation supervisory authority by Fondation des Fondateurs
Reputation, awareness

 

  • depending on the foundation's own communication efforts and on the verifiable funding impact
  • can at best be achieved in the medium term

more connected

  • benefits from the image of the umbrella foundation and its connections in the Swiss philanthropy sector right from the start
Dealing with Authorities

 

  • independent, cumbersome and expensive

unbureaucratic

  • no direct contact, is handled entirely by the umbrella foundation
Costs

 

  • set-up costs
  • annual costs

more cost-effective

  • significantly lower set-up and annual costs
Assets
  • reasonable as of CHF 10 million
  • reasonable as of CHF 20’000