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Frequently Asked Questions on Foundations
A. GENERAL INFORMATION ABOUT FOUNDATIONS | |||||||||||||||||||||||||
1. | What is a Foundation? | ||||||||||||||||||||||||
A Foundation is a non-stock, non-profit corporation established for the purpose 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. (Revised Corporation Code, SEC Memorandum Circular No. 8, series of 2006); | |||||||||||||||||||||||||
2. | What is a non-stock, non-profit corporation? | ||||||||||||||||||||||||
A non-stock corporation, under Section 3 of the Revised Corporation Code of the Philippines (RCCP), is any corporation not organized as a stock corporation. A stock corporation is one which has capital stock, held by shareholders, and dividends which are, from time to time, distributed to said shareholders. A non-profit corporation is one where no net income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted to the institution’s purpose and all its activities conducted not for profit. A non-stock corporation, under Section 86 of the RCCP, is one where no part of its income is distributable as dividends to its members, trustees, or officers; provided, that any profit which a non-stock corporation may obtain incidental to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose/s for which the corporation was organized (RCCP, Sec 86). A non-stock corporation is formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes like trade industry, agricultural and like chambers, or any combination thereof, subject to the special provisions of this Title governing particular classes of non-stock corporations (RCCP, Sec 87); |
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3. | Can stock corporations register as a Foundation? | ||||||||||||||||||||||||
No, only non-stock corporations may register as a Foundation; | |||||||||||||||||||||||||
4. | Where may I apply my Foundation’s profits? | ||||||||||||||||||||||||
To remain non-profit, the Foundation should bring its profits back into the Foundation for the furtherance of the purpose or purposes for which the corporation was organized; | |||||||||||||||||||||||||
5. | What does “charitable” mean? | ||||||||||||||||||||||||
A corporation’s purpose is “charitable” when it provides free goods and services to the public which would otherwise fall on the shoulders of the government (NIRC, CIR vs. St. Luke’s Medical Center, G.R. No. 203514); | |||||||||||||||||||||||||
6. | Is “non-profit” the same as “charitable”? | ||||||||||||||||||||||||
No, simply being a “non-profit” corporation does not make a corporation “charitable”. A corporation may operate to grant benefits exclusively to its members yet still remain “non-profit”. To be “charitable”, the corporation must provide free goods or services to the general public to address a public need; | |||||||||||||||||||||||||
7. | How is a Foundation different from a regular Non-stock, Non-profit Organization or NPO? | ||||||||||||||||||||||||
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8. | Is accreditation mandatory for every Foundation? | ||||||||||||||||||||||||
No. Generally, a Foundation may register as such and execute its charitable purposes without the need of any accreditation. Once a Foundation secures its primary license (Certificate of Incorporation), it may proceed with its operations without having to secure any form of accreditation Accreditation, generally, grants Foundations with additional benefits or allows them to engage in charitable activities regulated by specific government agencies; |
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9. | Where can I go to have my Foundation accredited? | ||||||||||||||||||||||||
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10. | Are Foundations required to secure a secondary license (Certificate of Authority)? | ||||||||||||||||||||||||
No, they only need a primary license to operate as a non-stock corporation; | |||||||||||||||||||||||||
REGISTRATION OF FOUNDATION | |||||||||||||||||||||||||
1. | How do I register a Foundation? | ||||||||||||||||||||||||
First, obtain a primary license by filling out the form provided through the SEC – Electronic Simplified Processing of Application for Registration of Company (eSPARC) portal at https://esparc.sec.gov.ph/ ; | |||||||||||||||||||||||||
2. | What is the SEC – ESPARC Portal? | ||||||||||||||||||||||||
The SEC eSPARC is a facility catering to the application for registration of One Person Corporations (OPC) and Domestic corporations (stock and non-stock) with 2 or more incorporators who may either be natural person, partnership, association or corporations, singly or jointly with others but not more than fifteen (15) in number. The system allows the applicant or his duly appointed representative to submit the proposed company name and input details of the articles of incorporation for review of the Commission; | |||||||||||||||||||||||||
3. | Can a Foundation register as a One Person Corporation (OPC)? | ||||||||||||||||||||||||
No. Section 116 of the RCCP defines OPCs as “a corporation with a single stockholder.” By implication, OPCs are exclusively stock corporations, precluding non-stock corporations such as Foundations to organize as such; | |||||||||||||||||||||||||
B. REPORTORIAL REQUIREMENTS OF A FOUNDATION | |||||||||||||||||||||||||
1. | What are the reportorial requirements of a Foundation and when do I have to file them? | ||||||||||||||||||||||||
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2. | What other documents are needed to be filed with the financial statements? | ||||||||||||||||||||||||
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3. | Who may sign compliance submissions for the Foundation in the absence or incapacity of the person designated by Foundation rules and regulations? | ||||||||||||||||||||||||
Where the rules call for the signature of a particular officer (i.e. President), but said officer is out of the country or otherwise incapacitated (i.e. hospitalized, quarantined, unconscious, etc.) to sign submissions for the Foundation, the following persons may sign on behalf of the unavailable officer: |
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Please note that no one shall act as president and secretary or as president and treasurer at the same time, unless otherwise allowed in the RCCP; |
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4. | What if the signatory is abroad? | ||||||||||||||||||||||||
Signatories may seek assistance with the Philippine Consulate in the country where they are sojourning. Notarization and other services are provided by such consulates allowing the Foundation’s signatory to sign their compliance submissions there (Note: With the effectivity of the Apostille Convention within the Philippines on 8 May 2019, the Apostille has since replaced the Authentication Certificate – commonly known to the public as “red ribbon” – affixed by Philippine embassies and consulates to documents intended to be used abroad. The change aimed to reduce the processing time for such documents.) Alternatively, they may have their authorized representative, discussed in Number 3 above, sign on their behalf; |
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C. GROUNDS FOR REVOCATION OF PRIMARY LICENSE | |||||||||||||||||||||||||
1. | What are the grounds for the revocation of a Foundation’s primary license? | ||||||||||||||||||||||||
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D. MONITORING OF FOUNDATIONS | |||||||||||||||||||||||||
1. | Who is in charge of monitoring Foundations? | ||||||||||||||||||||||||
The Corporate Governance and Finance Department (CGFD) of the SEC shall monitor compliance of Foundations with existing laws, rules, and regulations and endorse infractions thereof to the SEC Enforcement and Investor Protection Department (EIPD); | |||||||||||||||||||||||||
2. | Why do Foundations request for monitoring? | ||||||||||||||||||||||||
Foundations usually request for monitoring clearance to secure a Certificate of No- Derogatory Information (CNDI). Foundations likewise need to request for monitoring should they decide to amend their Articles of Incorporation or By-laws; | |||||||||||||||||||||||||
3. | What is a CNDI? | ||||||||||||||||||||||||
A CNDI is a certification issued by the SEC upon the request of the Foundation. The certification states that the SEC has received no derogatory information which would prevent the Foundation from exercising its primary franchise; | |||||||||||||||||||||||||
4. | What is the purpose of securing a CNDI? | ||||||||||||||||||||||||
The CNDI is often requested by Foundations to secure certain certifications, benefits, and/or clearance from various government and non-governmental agencies which require the submission of the same prior to the issuance of said certifications and/or clearances; | |||||||||||||||||||||||||
5. | Which agencies require the submission of a CNDI and for what purpose? | ||||||||||||||||||||||||
The following are some agencies which require the submission of a CNDI: | |||||||||||||||||||||||||
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6. | How does a Foundation request for Monitoring clearance from the SEC CGFD? | ||||||||||||||||||||||||
The Foundation may likewise request for monitoring through this link: For more information on the matter, the Foundation may proceed to the “Request for Monitoring” tab of this web corner; |