| Foundations |
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Definition: |
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A Foundation is a non-stock, non-profit corporation established for the purposes of extending grants or endowments to support its goals and/or raising funds to accomplish charitable, religious, educational, athletic, cultural, literary, scientific, social welfare or other similar objectives and registered as a Foundation with the Commission with an initial aggregate contribution of not less than One Million Pesos (Php 1,000,000.00). |
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A non-stock, non-profit organization (NSPO) is an SEC-registered non-stock, non-profit organization that primarily engages in raising or disbursing funds for purposes such as charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social or civic fraternal purposes, or for the carrying out of other types of good works. This includes Foundations. |
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Powers: |
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A Foundation, by definition, is a corporation. As such, it has both the express powers as well as the implied powers of a corporation. Its express powers include, among others, the ability to have its own distinct corporate existence, to sue and be sued in its own name, to amend and adopt its own articles and bylaws, to own, encumber, and deal with real and personal property, and to transact with natural and juridical persons. Its implied powers, on the other hand, allow it to exercise such other powers as may be essential or necessary to carry out its purpose or purposes. |
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Benefits enjoyed by Foundations |
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Foundations which meet the following qualifications enjoy tax exemptions under the 1987 Constitution: |
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Under Section 28(3) Article VI of the 1987 Constitution, charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. |
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Under Section 4(3), Article XIV of the 1987 Constitution, all revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. |
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Foundations which meet the following qualifications enjoy tax exemptions under the Local Government Code: |
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Under Section 234, Chapter IV, Title II of the LGC, charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes are exempt from Real Property Tax. |
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Benefits enjoyed by an accredited Foundation’s donors |
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Donors to accredited Foundations enjoy, among others, the following benefits: |
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Allowable as income tax deductions under Title II, Chapter VII, of the National Internal Revenue Code (NIRC) are contributions or gifts actually paid or made within the taxable year to accredited domestic corporation or associations organized and operated exclusively for religious, charitable, scientific, youth and sports development, cultural or educational purposes or for the rehabilitation of veterans, or to social welfare institutions, or to non-government organizations, in accordance with rules and regulations promulgated by the Secretary of finance, upon recommendation of the Commissioner, no part of the net income of which inures to the benefit of any private stockholder or individual in an amount not in excess of ten percent (10%) in the case of an individual, and five percent (5%) in the case of a corporation, of the taxpayer’s taxable income. |
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Notwithstanding the provisions of the preceding subparagraph, donations to Accredited Non-government Organizations (‘nongovernment organization’ means a non-profit domestic corporation) under the following conditions shall be deductible in full: |
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Organized and operated exclusively for scientific, research, educational, character-building and youth and sports development, health, social welfare, cultural or charitable purposes, or a combination thereof, no part of the net income of which inures to the benefit of any private individual; |
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Which, not later than the 15th day of the third month after the close of the accredited non-government organizations taxable year in which contributions are received, makes utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, unless an extended period is granted by the Secretary of Finance in accordance with the rules and regulations to be promulgated, upon recommendation of the Commissioner; |
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The level of administrative expense of which shall, on an annual basis, conform with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, but in no case to exceed thirty percent (30%) of the total expenses; and |
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The assets of which, in the event of dissolution, would be distributed to another non-profit domestic corporation organized for similar purpose or purposes, or to the state for public purpose, or would be distributed by a court to another organization to be used in such manner as in the judgment of said court shall best accomplish the general purpose for which the dissolved organization was organized. |
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Under Revenue Regulation 9 – 2020, specific donations/gifts – donations of cash, critical healthcare equipment or supplies, relief goods and water, and use of property – when given for the sole and exclusive purpose of combating COVID 19 during the period of the state of national emergency under R.A. No. 11469, shall be fully deductible against the gross income of the donor-corporation/donor-individual and likewise exempt from donor’s tax when made to accredited non-stock, non-profit educational and/or charitable, religious, cultural or social welfare corporations, institutions, Foundations, non-government organizations, trusts or philanthropic organizations and/or research institution or organizations. |
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Exempt from the payment of import duties under the Customs and Tariffs Modernization Act (CMTA) are imported goods donated to any duly registered relief organization, not operated for profit, for free distribution among the needy, upon certification by the DSWD or the Department of Education (DepEd), or the Department of Health (DOH), as the case may be; (Customs Modernization and Tariff Act, Republic Act No. 10863, [May 30, 2016]) |
