Umbrella foundations - an attractive solution for living generosity
Umbrella foundations offer an attractive option for founders who wish to pursue charitable goals without setting up their own foundation. They are also a solution for foundations that have become so small that continuing to exist under an umbrella foundation is the better solution.
What is an umbrella foundation?
An umbrella foundation is a foundation that generally has a broad charitable purpose and is exempt from taxes. It offers founders the opportunity to set up an endowment fund with their own name, which they can use to pursue their desired funding objectives. The structure is extremely flexible and is characterised by the following advantages.
Simple establishment
An endowment fund is established by means of a simple written contract between the founders and the umbrella foundation. Public notarisation is not necessary and tax exemption does not have to be obtained as the umbrella foundation is already tax-exempt. It is therefore quicker and cheaper to set up. It is possible to set up an endowment fund within a few days.
Individuality and flexibility
The purposes of the endowment fund are defined in the establishment agreement. This gives donors the opportunity to support specific projects that correspond to their personal interests and values. The founders also have the option of adapting and realigning the purpose of their endowment fund or its organisation. In the case of an independent foundation, this option only exists if the change of purpose has been reserved in the foundation statutes and ten years have passed since the last change. The foundation supervisory authority must also give its approval. An endowment fund, on the other hand, can be reorganised by simply amending the contract as long as the new funding purpose is within the umbrella charitable purpose of the umbrella foundation.
Cost efficiency and focussing on the essentials
Establishing and managing your own foundation can be expensive and time-consuming. Umbrella foundations offer a cost-effective alternative as they already have an established infrastructure and professional administration. Tax exemption already exists and the costs for administration, auditing and reporting to the supervisory authority are only incurred once for the umbrella foundation and only have to be borne proportionately by the foundation funds.
This allows founders to concentrate on their funding objectives while the umbrella foundation takes over the administrative tasks.
Tax advantages
Umbrella foundations are generally tax-exempt, which means that donations and the establishment of a sub-foundation fund can be deducted from taxable income within the maximum permissible deductions. Once an endowment fund has been set up, the donated assets are no longer subject to wealth tax. The possibility of setting up an endowment fund quickly enables the transfer of assets before the end of the deadline for wealth tax. this can represent a considerable financial advantage for founders and increase the attractiveness of the foundation.
Professional administration
Umbrella foundations offer professional management of foundation funds, including the investment of assets and monitoring the use of funds. This ensures that the funds are used efficiently and for the intended purpose. The investment of assets can be self-determined. The foundation fund can define its own investment objectives and investment strategies. Professional management also means that the umbrella foundation advises its endowment funds on matters of foundation management and the direction of donations. Some umbrella foundations also have international networks, which make it safer and more favourable to direct donations in an international context.
Discretion
Founders who operate under the umbrella of an umbrella foundation often remain anonymous as they are not entered in the commercial register. This offers additional protection of privacy and can be an important aspect for many donors. However, the reverse is also possible, namely the independent external appearance of an endowment fund with its own name. Foundation funds can have their own website and they can also appoint their own decision-making body, which appears externally. A combination of both options is also possible. You want to be able to work discreetly with one endowment fund and appear in public with another.
Conclusion
Umbrella foundations offer an efficient, flexible and cost-effective way of pursuing charitable goals. They are particularly attractive for founders with small or medium-sized assets who wish to benefit from the advantages of professional management and tax advantages. Invethos AG is closely associated with the umbrella foundation fondation générosité, of which it is a co-founder, and with the umbrella foundation Corymbo. You will find more information on these umbrella foundations under the links below.
Sources & Directory
Corymbo Foundation - fondation fondazione fundaziun
Foundation Fund || Fondation Générosité || Bern
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