Here is your first Forum » Foundations

A foundation is a non-profit organization whose primary purpose is charitable and/or research-related. The actual scope of permissible activities for foundations varies significantly between jurisdictions, but the general goal of each foundation is to serve the public good without making a profit. Foundations base their work on the appropriate distribution of donated assets. These assets can be collected both publicly and privately.

However, today foundations are often used as a means of protecting assets. Therefore, here we are discussing offshore foundations used for asset management. In this sense, foundations are commonly used to accept transfers of foreign funds and assets (including assets such as real estate, intellectual property, bank deposits, company shares, investment portfolios, etc.). Foundations are recognized as independent legal entities and combine the characteristics of corporations and trusts.

There are a variety of legal consequences for foundations, depending on the legal system in which they are registered. In some countries, foundations are prohibited from conducting any type of business; in some, e.g. Germany, economic activity is permitted if it serves the main purpose of the foundation. In the United States, the law distinguishes between private foundations (which distribute donations from specific individuals) and community foundations (which distribute public donations). Private foundations have more control over their charitable activities, but also receive fewer tax benefits.

Functions of a foundation
The main function of a foundation is to engage in charitable work and to distribute donations. An additional aim is to raise the assets needed for these donations and to choose recipients. Assets can be acquired either privately (from specific individuals) or publicly (from the general public). Public donations are usually collected with the aid of publicity campaigns and advertising. Some jurisdictions also allow foundations to obtain assets from business activity, if it can be proven that this economic activity is of a truly non-profit nature.

There are a number of functions that are prohibited to foundations, the main one being economic activity aimed solely at generating a profit. In some jurisdictions, e.g. Italy, foundations are also prohibited from dedicating their charitable activities to purposes other than those declared upon registration.