Philanthropy is an increasingly prominent dimension of wealth planning for high-net-worth families in Switzerland. Beyond the generous gesture itself, it can be structured to maximise impact, ensure continuity and optimise tax deductibility. This article presents the two main approaches — direct giving and donor-advised foundations — along with the role of the Zewo label.
Direct giving or donor-advised foundation: two distinct logics
Direct giving
The simplest form of philanthropy is a direct donation to a public-benefit organisation. It is immediate, requires no structural overhead and is tax-deductible within certain limits. Under Swiss law, donations to legal entities that are tax-exempt owing to their public-benefit purpose are deductible up to 20% of net income for federal direct tax purposes (art. 33a DFTA). Cantons set their own caps, generally close to this federal level.
Limits of direct giving: it does not allow long-term planning, strategic orientation of beneficiaries or the creation of a durable family vehicle for philanthropy.
The donor-advised foundation
A donor-advised foundation (Förderstiftung in German) is an ordinary foundation under art. 80 et seq. of the Swiss Civil Code, whose purpose is to support public-benefit causes through donations and grants. It receives an initial endowment, invests the capital to generate income and distributes that income — and potentially part of the capital — to beneficiary organisations.
Key advantages:
- Long-term strategic vision: the foundation can define clear thematic priorities and maintain them over decades.
- Family vehicle: family members can sit on the foundation board and participate directly in philanthropic decisions, creating a space for transmitting values across generations.
- Deductibility of the initial endowment: the initial contribution to a recognised public-benefit foundation is deductible within the same limits as direct donations.
- Tax exemption of the foundation: a public-benefit foundation is generally exempt from income and capital tax, allowing funds to be invested in a tax-efficient manner.
Constraints to anticipate:
- The foundation requires supervision by the cantonal (or federal) supervisory authority.
- The endowed assets must be sufficient for the foundation to pursue its purpose over time; otherwise the structure is not viable.
- The statutes irrevocably define the foundation's purpose; later amendments are possible but regulated.
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The Zewo label: a quality mark for beneficiaries
When a family wishes to make donations to third-party organisations, the question of beneficiary transparency arises. The Zewo label is Switzerland's reference certification for public-benefit organisations collecting donations.
A Zewo-certified organisation commits to:
- Using donations effectively and in accordance with their declared purpose
- Reporting transparently on its activities and finances
- Upholding strict ethical standards in communications and fundraising
For a private donor, the Zewo label is a reliable quality filter. For a donor-advised foundation, it is often an eligibility criterion for the organisations it supports.
Tax deductibility: the essentials
Donations to tax-exempt organisations are deductible up to 20% of net income for federal direct tax, with varying cantonal limits. Donations in kind — artworks, listed securities — may also benefit from favourable treatment, subject to correct valuation and acceptance by the beneficiary organisation.
For families endowing a foundation over several years, multi-year giving planning can optimise deductions within legal limits. Coordination with a tax adviser is essential.
Ridger's role in philanthropic coordination
Ridger is not a foundation and does not make philanthropic decisions on behalf of its clients. Its role is to coordinate and make visible the philanthropic dimension within the overall wealth reporting framework:
- Integration of philanthropic commitments into the consolidated wealth statement
- Tracking of annual distributions and their effective tax deductibility
- Coordination with tax advisers to optimise cantonal and federal deduction limits
- Support in the preparatory thinking before establishing a donor-advised foundation
Structured philanthropy is an integral component of a coherent wealth strategy. To discuss this in full confidence, we invite you to contact our team.