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Foundations – A good deal for society

An empirical study of the economic costs and benefits of charitable grant-making foundations in Switzerland

With over 13 000 charitable foundations and total assets of almost CHF 100 billion, Switzerland is one of the world’s most important centres of philanthropy. The country has six times more foundations per capita than the USA or Germany.
Charitable foundations generate considerable value for society. They promote issues which government has not (yet) been able to address or has only considered in a limited capacity. Foundations are flexible, build bridges and drive innovation. They can tolerate higher levels of risk and foster new ideas that help shape our future. Foundations are also an expression of citizens’ voluntary commitment to the common good. They are a pluralistic element in a society where individuals actively take responsibility, rather than waiting for government to intervene in pending matters.
In return, the state grants foundations and their donors certain tax privileges. These apply when a charitable foundation is established and also while it is operating. Until now, no one has considered whether this arrangement pays off at a fiscal policy level. That is where this study, “Foundations – A good deal for society”, compiled by SwissFoundations, the association of Swiss charitable grant-making foundations, in collaboration with PwC Switzerland, comes in. Two model cases – those of Mr Sigrist and Ms Dubois – are used to calculate the amount of tax revenue forgone by society when a foundation is set up. This loss is then measured against the gain reaped by society in the form of donations from charitable grant-making foundations.

To provide a complete picture of the tax implications of foundations, establishing a charitable foundation is contrasted with two alternative investment options: investing assets on the capital market and transferring private funds to an investment company.
>> In practice, the foundation model reaches its break-even within one month and at the latest, after up to one and a half years. From this point forward, the foundation is nothing but a good deal for society.


The study was also published in German and French:

German version
French version