Updated for the Revised Corporation Code era and common regulatory practice. This article explains how to form and operate a Philippine “foundation” (a non-stock, non-profit corporation with a dedicated fund), the approvals you’ll need, governance and compliance, taxation, fundraising, cross-border issues, and practical pitfalls.

1) What a “Foundation” Is (and Isn’t)

Legal form. In the Philippines, a “foundation” is organized as a non-stock corporation under the Revised Corporation Code of the Philippines (RCC; Republic Act No. 11232). It exists for religious, charitable, educational, cultural, scientific, social welfare, health, environmental, or similar purposes.

Distinctives vs. other non-profits.

Dedicated fund. A Philippine foundation is expected to start with a substantial, permanent contribution to carry out its purposes (traditionally ₱1,000,000 minimum in cash and/or property, reflected in the Articles, with proof of deposit or valuation).
No owners; no dividends. It has members (optional) and trustees, but no shareholders and no profit distribution.
Asset lock. On dissolution, remaining assets go to another qualified non-profit or to the State, not to private persons.

2) Pre-Incorporation Planning

A. Choose your structure

Members + Board of Trustees (more democratic; members elect trustees), or Board-only (self-perpetuating board).
Trustees: at least 5 (you may have more); under the RCC, a majority should be residents of the Philippines.

B. Name and branding

Include “Foundation, Inc.” or “Foundation” in the corporate name.
Avoid words restricted by special laws (e.g., “bank,” “cooperative,” “microfinance” if you won’t be licensed for those).

C. Purposes and scope

List specific, measurable purposes (e.g., “to award 100 scholarships annually in public STEM high schools in Region V”), not generic catch-alls.
Clarify beneficiary class, geographic coverage, and program types (grants, direct services, research, endowments).

D. Initial fund & banking

Prepare proof of initial contribution (bank certificate for cash; appraisal or deed for property). Keep it ring-fenced as your foundation fund.

E. Governance roles (minimum)

President (must be a trustee).
Treasurer (must be a resident in the Philippines).
Corporate Secretary (must be a Filipino citizen and resident).
Optional but recommended: Executive Director (non-trustee), Compliance Officer, Internal Auditor.

3) Incorporation With the SEC

Primary regulator: Securities and Exchange Commission (SEC).

A. Core filing set

Articles of Incorporation (AoI) for a non-stock corporation expressly stating:
- Exact charitable/eleemosynary purposes.
- Minimum initial contribution (customarily ₱1,000,000 or more) and that it is permanently dedicated to the purposes.
- No distribution clause and asset disposition on dissolution (to another qualified non-profit or government).
- Trustees’ number and terms (you may use staggered terms for continuity).
Bylaws, covering at least:
- Board composition, quorum, voting, staggered terms, vacancies.
- Officers and duties; conflict-of-interest policy; related-party transactions (RPT) approvals.
- Meetings (annual meeting date; notice; proxies; remote participation).
- Membership rules (if any); admissions/expulsion.
- Fiscal year; committees; signatories; internal controls; whistleblower and anti-corruption provisions.
List of Incorporators and Trustees with IDs and addresses.
Treasurer’s Affidavit (that the contributions have been received and are in custody).
Proof of initial fund (bank certificate / valuation).
Registered office (principal address); if leased, attach lease and lessor’s ID/permit.
Data Privacy statements (good practice; see §10).

Tip: Use staggered board terms (e.g., 3-year terms, one-third elected annually) to protect continuity and comply with good governance practice.

B. Post-approval essentials

SEC Certificate of Incorporation will show your corporate name and registration number.
File Bylaws within 30 days from incorporation (if not submitted with the AoI).
Secure corporate books (minutes and stock/non-stock book analog; register of members/trustees).
Obtain your Corporate Identification Number (CIN) (embedded on the SEC certificate under current practice).

4) BIR Registration & Tax Basics

Primary tax regulator: Bureau of Internal Revenue (BIR).

A. Registration checklist

BIR Form 1903 (for corporations), Certificate of Incorporation, Bylaws, IDs, lease/Mayor’s permit, etc.
Certificate of Registration (BIR Form 2303) issuance.
Books of accounts (manual/loose-leaf/CAS) registration.
Official Receipts authority to print (ATP) if issuing receipts to donors/clients.
Tax types activated (commonly: income tax, withholding taxes, sometimes VAT/percentage tax if engaging in VATable activities).

B. Tax treatment of foundations

Income tax. A foundation’s income from activities substantially related to its charitable purposes may be exempt, provided no part inures to private benefit. Unrelated business income is taxable at regular corporate rates.
Donor’s tax & deductibility. To enable donor incentives (donor’s tax exemption and deductibility), secure:
1. PCNC accreditation (Philippine Council for NGO Certification), then
2. BIR Donee Institution status (Certificate of Qualification as Donee). Without these, donors may still donate, but with limited or no tax incentives.
Withholding taxes. Withhold and remit compensation withholding, expanded withholding on payees, and final withholding when applicable.
VAT/Percentage tax. Pure grants/donations are not subject to VAT; sale of goods/services may be. Analyze each income stream.

Key compliance: File annual income tax return (even if tax-exempt), quarterly withholding, SLSP/RELIEF if VAT, and annual information returns.

5) Fundraising & Public Solicitation

Public solicitation (door-to-door, online crowdfunding, events) generally requires a Permit to Solicit under PD 1564 (Solicitation Permit Law).
- National scope: apply with DSWD Central Office.
- Local scope: apply with DSWD Field Office and comply with LGU (Barangay/Municipal/City) permits.
Raffles/lotteries for charity require appropriate permits (e.g., DTI for promotional activities; PCSO for lotteries).
Foreign grants: ensure bank KYC, document grant agreements, and screen counterparties against sanctions/terrorism lists.

6) Sector-Specific Licenses & Accreditations

Depending on programs:

DSWD licensing/accreditation if operating social welfare agencies (shelters, child/youth/elderly care, adoption, community centers, disaster relief operations).
DepEd/CHED/TESDA permits for schools/training centers.
DOH/FDA permits for health facilities or distributing medicines/medical devices.
DENR permits for environmental projects (e.g., reforestation, wildlife).
LGU Mayor’s/Business permits for offices and field operations.
PCNC accreditation for donee status (see §4B).

7) Governance & Internal Controls

A. Board governance

At least 5 trustees; define independent trustees (not officers, employees, or major contractors).
Committee structure: Audit, Governance/Nominations, Programs/Grants, Finance & Investment, Risk & Compliance.
Conflicts of interest: written policy; disclosure annualization; abstention on conflicted votes; document arm’s-length terms for any RPTs.

B. Management & controls

Segregation of duties (request/approve/release/record).
Dual signatories for disbursements.
Grantmaking controls: eligibility rules, due diligence on grantees, grant letters with milestones, liquidation/monitoring.
Investment policy for endowments (risk, asset classes, ESG screens, custody).
Fraud & AML/CFT: screening, record-keeping, escalation protocols.

C. Transparency

Audited financial statements (AFS) annually by an independent CPA.
Publish annual reports with program impact metrics and full grants list where feasible.

8) Ongoing Regulatory Filings (Core Calendar)

When	Filing / Action	Regulator	Notes
Within 30 days of incorporation	Bylaws (if not filed with AoI)	SEC	Attach board resolution
Annually: within 30 days from members’/trustees’ meeting	General Information Sheet (GIS)	SEC	Update officers, trustees, beneficial ownership
Annually: per BIR calendar	AFS (if required by thresholds)	SEC/BIR	SEC requires AFS for larger entities; BIR always needs FS with ITR
Quarterly/Monthly	Withholding returns; VAT/Percentage tax	BIR	As registered
Annually	ITR and Summary Alphalist (SAWT/Alphalists)	BIR	Even if exempt
Before any new public drive	Permit to Solicit	DSWD/LGU	National or local scope
Every 3 years (typical)	Mayor’s Permit renewal	LGU	Plus Barangay clearance
As applicable	PCNC renewal	PCNC/BIR	To maintain donee status

(Exact SEC/BIR deadlines and thresholds depend on current circulars; always follow your actual COR and latest issuances.)

9) HR & Operational Compliance

Labor standards: minimum wage, hours, benefits, OSH.
SSS, PhilHealth, Pag-IBIG: register and remit for all employees.
Contracts: employment, volunteer waivers, IP & confidentiality.
Procurement policy: competitive bidding/3-quote rule for significant spends.

10) Data Privacy & Cybersecurity

Comply with the Data Privacy Act of 2012.
Appoint a Data Protection Officer (DPO); maintain privacy notices, processing inventories, breach protocols.
Registration with NPC may be required depending on scale/risk of processing (e.g., if processing sensitive personal data systematically).
For beneficiaries (children, health), implement enhanced safeguards and consent management.

11) Real Property & Foreign Participation

Land ownership is restricted to Philippine nationals (corporations with at least 60% Filipino ownership). A foundation with foreign control cannot own land but may lease long-term (e.g., up to 50 years, renewable).
Foreign foundations may operate via a SEC license to do business as a foreign non-stock corporation, or set up a local subsidiary foundation. They must appoint a resident agent and submit authenticated constitutive documents.

12) Intellectual Property & Communications

Secure IP registrations (trademarks) with the Intellectual Property Office for your name/logo.
For publications/data, clarify copyright and open-access terms.
For fundraising and donor recognition, avoid false advertising; use clear use-of-funds statements.

13) Winding Up, Mergers, and Conversions

Voluntary dissolution without creditors: board resolution + members’ approval (if any) + SEC petition; with creditors: supervised liquidation.
Asset lock: remaining property must go to another qualified non-profit or the State (as stated in AoI).
Mergers/Consolidations between non-stock entities require SEC approval; notify BIR and other regulators, transfer permits, and update donors and grantees.

14) Model Clauses You’ll Likely Need

Purposes Clause (sample)

“The corporation is organized exclusively for charitable, educational, scientific, and social welfare purposes, including the making of grants to organizations and individuals for such purposes, within the Philippines.”

Non-Distribution / Inurement

“No part of the net income shall inure to the benefit of any member, trustee, officer, or any private individual, except reasonable compensation for services actually rendered and reimbursement of reasonable expenses.”

Dissolution Clause

“Upon dissolution, after payment of liabilities, remaining assets shall be distributed to another non-stock, non-profit corporation organized for similar purposes and qualified as a donee institution under Philippine law, or to the Government of the Republic of the Philippines, as the Board may determine.”

Fund Dedication

“The initial contribution of ₱[amount] in cash/property is permanently dedicated to the foundation’s purposes and shall be administered pursuant to an approved investment and spending policy.”

15) Step-by-Step Checklist (From Idea to First Grant)

Define mission, programs, and beneficiary class.
Recruit at least 5 trustees; line up officers (Filipino Corporate Secretary; resident Treasurer).
Open a temporary bank account (using incorporators’ IDs and draft AoI/bylaws) and fund the initial contribution.
Secure your principal office/lease.
Prepare and file SEC AoI & Bylaws (include asset-lock, no-inurement, initial fund).
Receive SEC Certificate; record corporate books; adopt Board Policies (COI, RPT, procurement, grants, investments, AML/CFT, whistleblower).
Register with BIR; obtain COR (2303); register books; apply ATP for official receipts; set up e-filing.
Apply for LGU permits (Mayor’s, Barangay, occupancy clearances).
If you will solicit from the public, obtain DSWD Permit to Solicit (and renew/close out with liquidation report).
Apply for PCNC (if you want donor tax benefits) then BIR Donee certificate.
Set up accounting & audit; appoint external auditor; adopt investment & spending policy for endowment.
Launch programs; document M&E (monitoring & evaluation) metrics; publish annual report.
File SEC GIS & AFS and all BIR returns on calendar.

16) Common Pitfalls (and How to Avoid Them)

Skipping the asset-lock language → leads to SEC delays; include dissolution and no-inurement clauses verbatim.
Under-documented initial fund → attach bank certificate and board acceptance.
Treating all income as exempt → classify income streams; pay tax on unrelated business income.
No solicitation permit for online campaigns → obtain DSWD/LGU permits before going live.
Weak RPT controls (e.g., services from insiders) → require independent approvals, market testing, and disclosures.
Missing GIS/BIR filings → calendar deadlines; assign a Compliance Officer.
Data privacy blind spots when handling beneficiary info → appoint DPO, do PIA (privacy impact assessment), train staff.

17) Practical Timelines & Budgeting

Incorporation & BIR: typically several weeks depending on completeness and regulator workload.
PCNC + BIR Donee: expect additional months for accreditation, audits, and board interviews.
Annual operating budget: plan for audit fees, compliance costs, permits, insurance (D&O, general liability), and M&E.

18) Quick Decision Tree: Is a Foundation Right for You?

Want donor tax incentives for supporters? → Foundation + PCNC.
Only internal/family endowment, no public solicitation? → Foundation still fits; solicitation permit may be unnecessary.
Community enterprise with member-owners? → Consider a cooperative (CDA) instead.
Time-bound project without perpetual fund? → Consider a non-stock NGO (non-foundation) or project under a fiscal sponsor.

19) Document Starter Pack (Outline)

Articles of Incorporation (with special clauses above)
Bylaws (board, officers, meetings, COI, RPT, committees, finances)
Board Resolutions (bank signatories; policies adoption)
Treasurer’s Affidavit & bank certificate
Investment & Spending Policy (endowment rule, e.g., 3–5% payout)
Grantmaking Manual (eligibility, due diligence, milestones, liquidation)
Procurement Policy (thresholds, 3-quote rule)
Data Privacy Manual (DPO, retention, breach response)
Code of Conduct & Anti-Corruption Policy
Risk Register (program, financial, legal, reputational)

20) Final Notes

A Philippine foundation thrives on clear purpose, clean governance, and consistent compliance.
Build early relationships with SEC, BIR, DSWD, LGUs, PCNC, and a competent independent auditor.
Keep transparent reporting to beneficiaries and donors: it’s your best compliance shield and fundraising asset.

Disclaimer

This article provides general information on establishing a foundation in the Philippines and is not legal or tax advice. For a specific project, consult Philippine counsel and your tax adviser to tailor documents and filings to current rules and your facts.