The most important decisions that determine the success of a foundation are generally made before it is established. Subsequent changes are time-consuming and often no longer possible. Careful planning and preparation are thus called for.

Before setting up a foundation, it is advisable to check whether similar organisations exist that already cater to the intended purpose of the envisaged foundation. Sometimes it may be better to support an existing organisation as this is a quicker option and saves resources. It can also help avoid unnecessary competition among charitable organisations.

Explore alternatives to a foundation

Before setting up a foundation, be sure to gain an overview of related one-time and running costs. This will involve critically examining whether the predicted income will be sufficient to pursue the foundation’s purpose in the long run. If you have any doubts, you may want to consider alternatives such as a sub-foundation under an umbrella foundation, a spend-down foundation or a donation.

There are numerous umbrella foundations based in the Canton of Zurich that offer founders efficient and inexpensive options to set up foundations with self-determined charitable purposes under their umbrella.

Financing

In practice, most supervisory authorities will require an initial investment of CHF 50,000. In addition to cash, tangible assets may also be contributed to a foundation. The establishment of a spend-down foundation allows for full use of the foundation’s assets – which may be a more plausible option, particularly if assets are not all that large. The reason for this is because foundations that are set up for an indefinite period without sufficiently large assets will, at some point, no longer be in a position to pursue meaningful grant-giving.   

How do I set up a foundation?

Thanks to a liberal foundation law, it is very easy to set up a charitable foundation in Switzerland and in the Canton of Zurich.

The process of setting up a foundation in the Canton of Zurich will include the following steps:

1. Definition of the foundation’s charter and regulations, specifying its purpose, endowed assets and foundation board
2. Choice of the foundation’s headquarter
3. Preliminary examination (optional) of the foundation’s charter and the foundation’s regulations by the competent supervisory authority (in accordance with the foundation’s geographical focus)
4. Certification by a notary public
5. Entry in the commercial register
6. Application for tax exemption with the Zurich Cantonal Tax Office 

What do I need to consider with regard to the foundation’s purpose?

The purpose of the foundation is the most important guiding principle of your foundation. Accordingly, it should be formulated with care and consideration. As a rule, it is advisable to define the foundation’s purpose as broadly as possible so as to ensure it can be pursued long-term. The foundation board is responsible for regularly specifying the foundation’s purpose within the scope of the foundation’s strategy, and for ensuring its implementation.

With that in mind, it is advisable for the founder to devise a mission statement and organizational regulations in advance, which will provide strategic guidance to the foundation board from the outset. Once a foundation has been established, its purpose may only be amended for compelling reasons and by approval of the competent supervisory authority. Most foundation experts will recommend including a “Subject to the reservation of change of purpose” in the foundation’s charter.

How much does it cost to set up a foundation?

A distinction needs to be made between one-time initial costs and recurring costs. Initial costs for setting up a foundation include

• Legal and other advisory fees 
• Fee for entry in the commercial register
• Notarisation fee
• Fee for the supervisory authority

Various factors play a role in regard to recurring costs, such as the size of the foundation, the scope of its funding activities, whether a professional office will be set up or whether the members of the foundation’s board of trustees will manage the foundation themselves on a voluntary basis. The costs for auditing and foundation supervision need also to be taken into account.

How do I put together the board of trustees?

The founder appoints the first board of trustees at the time of establishing the foundation. It is advisable to start with between three and five board members and increase the number of trustees later on, if need be.  At least one member of the foundation’s board of trustees must be resident in Switzerland.

The board of trustees is the supreme body of the foundation, comparable to the board of directors of a public limited company. Its primary tasks are the strategic and organisational management of the foundation, in keeping with the foundation’s declared purpose. The supervisory authority and the Zurich Cantonal Tax Office allow remuneration of foundation board members.

Detailed information for leading and managing a grant-giving foundation in Switzerland can be found in the internationally reputed Swiss Foundation Code, which is available online free of charge in German, English, French and Italian.

Who can assist with setting up a foundation?

The information Desk of the Canton of Zurich and the Senior Expert Network of SwissFoundations are available for initial advice on how to set up and establish a charitable foundation in the Canton of Zurich.

With a view to precluding avoidable mistakes, as well as simplifying the founding process and saving costs, advice from legal experts with in-depth knowledge of foundation law should be sought when drawing up the foundation charter and prior to submitting the relevant documents for preliminary examination by the authorities.