How to Set Up Your Own Foundation

If you have built your riches and want to leave a legacy, consider putting up a charity under your name
By Tina Arceo-Dumlao

You’ve reached the pinnacle of your career. You’ve massed tens, if not hundreds, of millions in personal wealth. Now it’s time to give back more – a lot more – to society. You can, of course, do a Buffet and give your money to an existing foundation. However, if you want to be more of a hands-on philanthropist, and you want your giving to outlast you (and enjoy tax deductions), why not set up your own?

Foundations are defined as organizations or institutions that are established primarily by an endowment fund and their purpose is to distribute grant money to volunteer organizations, non-government organizations, cooperatives, people’s organizations or even individuals.

They get their money primarily through contributions from benefactors as well as their own livelihood programs. Corporate foundations, meanwhile, get funds from the mother corporation that sets aside a percentage of their income for foundation work.

The Association of Foundations, which is the umbrella organization of all kinds of foundations in the Philippines – from the philanthropic to the corporate – states that foundations play a significant role in national development because they complement the work of the government in delivering social services to the poor.

These foundations include those that were set up by prominent figures in the business sector who have passed away. These include the Enrique Zobel Foundation, Aurelio Periquet Foundation, Ramon Aboitiz Foundation, and Jaime V. Ongpin Foundation, to name a few.

Putting up foundations has become the way for them to continue their good work long after their death. And while it is true that some put up foundations as a tax shelter – since donations to foundations are tax deductible to some extent – they were put up for a much greater purpose.

Most are involved in education, and the rest in community organizing, environment, health and nutrition, and enterprise development or livelihood. Others have also evolved to include policy advocacy in their work, as they realized that delivery of social services is not enough to have a lasting impact.

The League of Corporate Foundations, for instance, which groups the country’s largest corporate foundations, is fighting for greater corporate social responsibility in the private sector. LCF also has its own programs, such as the 57-75 movement for education and the CSR Institute, where individuals and representatives of corporations can learn more about how CSR can be successfully integrated in the running of a corporation.

Fake foundations
Organizations with the word “foundation” in their corporate name have long been regarded suspiciously by Filipinos, as what comes to mind are groups that are put up with the sole purpose of doing more than just earn a profit.

That incident brought home the point that not all foundations are created equal and there are those that do take advantage of the good reputation of others to scam others of their money or contributions.

Rules were predictably amended and today, the Securities and Exchange Commission requires that organizations must have a capitalization of P1 million to have the right to use the term “foundation” in their name.

Otherwise, non-profit organizations or non-government organizations need to shell out only P100,000, according to the Association of Foundations, which has been in operation for 36 years.

The idea behind the higher capitalization for the foundation is to make it harder for groups to become foundations so that what would be left are legitimate foundations working on different causes – mainly poverty alleviation – that potential donors and benefactors can help.

The foundation or NGO has to submit to the SEC a notarized certificate of bank deposit to be registered, along with the articles of incorporation that will spell out their primary purpose, the source of funds, and proposed use of those funds.

The SEC Web site (www.sec.gov.ph) features downloadable forms, online registration and reservation of corporate names, rules, and regulations. NGOs and foundations can also check if their proposed name has already been taken and even how much they have to pay in registration fees.

Another precautionary measure put in place to check against fake foundations is the need to be accredited by the Philippine Council for NGO Certification.  PCNC (www.pcnc.com.ph) is a private, voluntary, non-profit group whose main function is to certify NGOs or foundations as meeting established criteria for financial management and accountability in the serve of underprivileged Filipinos.

These were set up by six of the country’s largest NGOs that believed that they should check their ranks and rid their group of bad eggs. The group has been authorized by the Department of Finance to certify NGOs and foundations as qualified to seek funds.

Foundations have to be in operation for at least two years before they can seek accreditation with the PCNC. The accreditation assures potential donors that the foundation they are looking to contribute to is legitimate and has passed standards, such as financial controls and project completion.

23 comments on “How to Set Up Your Own Foundation

  1. If just the government will implement and actually audited the foundations, I think it will decrease the numbers of fake foundations where the goal is to evade tax or scams the public.

  2. as it is, i believe there is already too much regulations in forming foundations in the country… this is actually one of the things that many well-meaning persons lament; they cannot set-up a foundation and start helping others just because they don’t have enough cash in their personal pockets… i mean, it would probably be great to just allow foundations to set-up without the required deposit so that they could start raising funds and help the country… Besides there are many foundations that satisfied the requirements, yet were totally bogus–an indication that having a deposit in the bank does not guarnatee the measure. So if the problem is on whether the foundatiion is bogus or not, well, the government, or the PCNC could always monitor the newly set-up foundations closely from its moment of inception. Anyway, if there are those who do not toe the line, we have laws that would punish them. I bleieve that cutting requirements and close monitoring would be the best solution so it will be easier for people who really wants to help.

  3. u all need to go back to school. or u are all just plain stoopid. foundations are protected by law, foundations can’t be audited nor closely monitored. why would you waste your time to audit or monitor a non profit org? duh!

  4. Ang foundation as long na tumutulong ka ok lang yun. kahit ibulsa mo 50% ng nag donate as long as binigay mo yung 50% or tinulong mo yung 50% ok yun. wag mo lang bulsa 100% na donation kasi yun na ang scam. nagbabayad ka kasi kuryente,tubig,tao at kung ano ano pa kung negsoyante ka ganyan naman lahat ng foundation. Makikitid kasi utak ng iba tao. Minsan bago kayo mag post o gumawa ng news magisip muna kayo.

  5. Tama ka NOSE. syempre may mga overhead expenses din ang foundations. Lahat naman may expenses, ultimo aso nga may budget din diba? But personally, I have encountered a bogus foundation. They extort money from some sort of a religious organization, only to spend the money on their personal expenses like house rentals, groceries. When my mother and I found out of their modus, naku lumayas na kami. We don’t want to waste our time and money volunteering only to find out na wala naman talaga silang concrete projects for the needy. GLS Foundation (Gerardo L. Santiago)yata yon, if I remember it right, 2002 pa kasi yon. For me, okay lang to make budget for the foundation’s overhead expenses and not for personal expenses.

  6. ngpplano kmi n bumuo ng foundation pra mtustusan nmin ung needs ng mga residente nmin sa rehab center..anu b tlaga mga requirements?pnu sisimulan?

  7. How to put up a Religious Foundation in the Philippines,,,
    i mean a foundation for those who wants to be a Father(padre sa church)
    What are the requirements, Capitalization, Features

  8. Ay, ang mahal naman pala ng fees. 100k? Pangmayaman lang pala ang foundation. What if we small people wanted to help too? I wanted to make a small site selling products for the benefit of poor kids in our country. Ang hirap kasi humanap ng foundation na you can trust 100% that your money will go to the right people. I know an “union” na NGO hoarding millions every year pero the money go in their pockets at pakonte konte lang ang project.

  9. Foundations could be helpful in many ways, but still we are hoping for a pure Foundation, the one that could truly address the needs of the Filipino people. (Some foundation kasi napapayaman lang ang mga organizers not the recipients.) Hope that our legislators could help think of a better laws or guidelines for this growing number of Foundations (sayang naman ang binibigay na pork barrels kung d man lang makapag enhance ng kahit isang law)

  10. Im only 34 and I want to establish my own foundation (non profit / charity) because at present Im helping some students in payatas. Knowing na mataas pala ang capital 100k para akong pinanghinaan ng loob. Gusto ko sanang magtayo ng legal na foundation so that i can convince my friends and relatives to support what im doing dahil alam ko makakatulong ako.

    Sana ibaba nila sa 10K hehehe……..

  11. Okay, here’s the deal:
    You can establish your foundation, kahit na PHP1000 lang ang capital mo. Will the government go after you? No. Unless you do something stupid and illegal.
    The reason for registering at SEC ay para maging legal entity ang foundation mo (incorporation): pwedeng humiram sa banko, magpautang, sign contracts, make deals, etc.
    Another reason for registering at SEC ay para ipakita sa lahat na ang foundation mo ay credible, so you can get funds from prospective donors. Ex. Gustong magdonate ni Bill Gates sa isang Philippine charity foundation, saan niya hahanapin ang listahan ng mga foundations kung hindi sa SEC?

  12. This article is very informative. A foundation then (say institution for aging persons) could accept “special” patients with a MINIMAL FEE, i.e. 50% of the actual expenses to pay facilities, caretakers, cleaners and admin. The other 50% is shouldered by the foundation by generating fund using donations, capital investments and so on.

    So it can be done with about a 5 million (php), BUT with a passion to serve. Without compassion and self-vocation then a foundation is merely a “front” for media and popularity. Idaan natin sa dasal sa Panginoon na bigyan tayo ng maayos na foundation para makatulong kahit man lang sa komunidad.

  13. I wish friends of the basic education in the Philippines will put up a foundation dedicated to assist grade 1 learners in public elementary schools finish grade 1 and assist them all the way to their last year in high school. This kind of assistance to identified children with different needs e.g. food or fare allowance, school supplies, basic clothing/uniform will increase cohort-survival rate and completion rate . This kind of focused assistance will give these children a fighting chance to have a better life.

  14. i am planning to put up a foundation..can you give me ideas?daming tulong na dapat bigyang pansin..what do you think we need most?

  15. My family has own foundation luckily my father build the foundation LEO ENDE PATA SUCCESS FOUNDATION,INC. mura palang nun P50k ..until now our foundation still operating in a little help to other’s sad to say many people who just ride on; then top our Foundation for their own kasakiman pagkatapos nila mapakinabangan ang lisensya basta nlang iwanan nla ang papa ko in stain and my father ang nasisi dahil pangalan nya ang nakaharap na compromise lagi ang papa ko..sa subrang bait ng ama ko lagi cya na uuto na loloko…sometimes i hate my father too much kindness he don’t think what will gonna happen next of his action..He will give whatever he has not even think kung merong matitira pa sa kanya.huh! Sana sa mga taong nanloloko sa Papa ko makarma din kayong lahat…

  16. I went to SEC to inquire, and i was given a checklist .

    Here are the Requirements:
    Prepare a Name for the Corporation
    Prepare Articles and By-Laws
    Incorporators/Board of Trustees:
    A. Complete Name
    B. Address
    C. CEDULA
    D. Date of Birth
    E. TIN

    and of course Reg. Fees, where i come from , the fees only amount to more or less P3000 that is because the By-Laws are already provided by them, and we just have to pay for it. I’m not sure how it is in some Areas . It’s better to check the nearest SEC office. Then the Membership Book, Documentary Stamps, Etc. included in that amount.

    Now for the Bank Deposit, I don’t think it will be asked out right.
    I think you have to have your projects first or the Org. needs to get started first and upon submitting reports and compliance to them, that’s when they need the Bank account.
    for NGO-NPO P100K
    for a FOUNDATION it has to be not less than P1M
    that is to ensure the legitimacy of the NGO/FOUNDATION

    hope this helps! :)

  17. I am a college student and my friend and I wanted to start up a non profit organization that would address youth-relevant issues. We’re just wondering if we really need to have the amount of 100k for starting up to complete our registration and give us credibility?

  18. Hi everyone,
    I’m working in London sa ngayon.gusto ko po sana mag tayo ng foundation sa province naming 6 na project nagawa ko na pero gusto ko sana mag apply. 1. Chapel in Mindanao 2.360 tsenilas sa school 3.Ondoy victims8 hundreds family nabigyan ng bigas etc sa Valenzuela 5.almost 500 children’s ondoy victims nabigyan ng toys and clothes.6. Projector in osmena church.

    Tanong ko po Kung kailangan ko ba dalhin ang mga picture to prove!
    My heart to help po talaga.
    Gusto ko sana tumulong sa mga school sa province sa Zamboanga del norte and Zamboanga del sur

  19. Hi Jessica,

    I will be putting up a foundation in the coming days. If you want to go on board, you may get in touch with me and we can discuss if you are interested to join my group of friends and colleagues who are also generous and willing to act just like you.

    Thank you and more power to you.

  20. Guys ang gaganda ng mga plans nyo gusto ko rin tuloy magtayo ng org dito sa community ko para my pupuntahan ung mga kabataan na hindi pa nakahanap ng employment. at hindi pa makapag aral. Allah Kareem.

  21. Hello po Zee,

    Thanks sa checklist, aside from it ano pa po ba ang kailangang asikasuhin to start a foundation?

    Thanks.

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