An empirical study of the economic costs and benefits of charitable grant-making foundations in Switzerland compiled by SwissFoundations in collaboration with PwC Switzerland
charitable foundations exist in Switzerland
of all Swiss charitable foundations were set up in the past 20 years
after, in practice, the foundation is nothing but a good deal for society
Mr. Sigrist: 52, married, two children, Protestant, successful entrepreneur, living in the city of Zurich. He declares a net income of around CHF 2 million and assets of around CHF 100 million. In addition to his business activities in the IT sector, Mr. Sigrist would like to establish a foundation in Zurich with an endowment of CHF 20 million. He decides on a grant-making foundation dedicated to education and research. He aims for an annual payout of 3%, to b distributed annually at 100%.
How much Mr Sigrist’s endowed foundation costs society:
How much Mr Sigrist’s endowed foundation contributes to society:
Thus, in total, additional funds of around CHF 6.8 million flow to society from the charitable foundation over a period of 25 years. Based on absolute figures, the break-even point is reached after 214 days. From this point forward, the grants provided by the foundation permanently exceed the tax losses.
In total, additional funds of around CHF 69.5 million flow to society from the grant-making foundation. Offsetting this against the CHF 32.6 million in lost tax revenue, the resulting net added value is CHF 36.9 million. Using the absolute figures, the break-even point is already reached after 149 days.
Ms Dubois: 63, widowed and childless, Catholic, retired, living in the city of Lausanne. Ms Dubois sold her successful company for CHF 75 million and generates annual income of CHF 2.25 million from its proceeds. The nature-loving woman from the canton of Vaud would like to set up a spenddown foundation which, in addition to the targeted payout of 3%, would also distribute the foundation’s assets of CHF 50 million over a 25-year period to charitable purposes. The Lausanne-based foundation is to be active in the field of environmental protection.
How much Ms Dubois’ spend-down foundation costs society:
Were Ms Dubois to place her assets with a private investmentcompany that invests her money on the capital market instead of placing the funds in a foundation, a wide range of taxes such as stamp duty, tax on earnings, capital tax, property tax and income taxes totalling CHF 32.6 million would flow to society over a period of 25 years.
How much Ms Dubois’ spend-down foundation contributes to society:
*See Swiss Foundation Report 2019, www.stiftungsreport.ch
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