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.
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.