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<p>Foundations and non-profit organizations play a crucial role in the Philippines, serving as vehicles for charitable, religious, educational, cultural, and social welfare initiatives.</p>
<p>These organizations are established with the primary purpose of extending grants, endowments, and raising funds to accomplish their stated objectives, which are focused on the betterment of society rather than personal profit.</p>

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<div id="attachment_16683" class="wp-caption aligncenter"><img src="https://haspcms-fcb-lawyer.s3.ap-southeast-1.amazonaws.com/tinyeditor_uploads/E7BiJT5erPOYpzbIAnMnvxqQUcaXG62WwhBSELSY.webp" alt="Three volunteers with boxes of donations symbolizing a foundation which is a non-profit organization in the Philippines" width="893" height="316"><br>
<p id="caption-attachment-16683" class="wp-caption-text">All foundations are non-profit organizations, but not all non-profit organizations are foundations.</p>
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<p>There are two basic alternatives available to business owners and philanthropists in the Philippines when it comes to creating a non-profit organisation: foundations and non-stock, non-profit organisations (NPOs).</p>
<p>There are considerable distinctions between the two types of organisations, despite the fact that both types of organisations have the same objective of promoting social welfare and charity activities.</p>
<p>The registration criteria and structural characteristics of these organisations are unique.</p>
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<p id="caption-attachment-16682" class="wp-caption-text">Most sports organizations are non-profit in nature</p>
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<p>Non-profit organization in the Philippines offer unique benefits, including tax exemptions and the ability to reinvest profits into the organization&rsquo;s mission. These entities can be formed for a wide range of charitable, educational, and civic purposes.</p>
<p>The incorporation process for non-profits is similar to other corporations, but with some key differences:</p>
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<li aria-level="1">The Articles of Incorporation must clearly state the non-profit nature of the organization.</li>
<li aria-level="1">Initial requirements include a Name Verification Slip, Articles of Incorporation, By-laws, and a list of members and contributors.</li>
<li aria-level="1">Non-profits must have a minimum contribution of at least P1,000,000 to register as a foundation.</li>
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<p>Beyond the SEC, non-profits must also register with other agencies:</p>
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<li aria-level="1">Educational non-profits need endorsement from the Department of Education, CHED, or TESDA.</li>
<li aria-level="1">Organizations providing social welfare services must register with the DSWD.</li>
<li aria-level="1">All non-profits must register with the BIR as a non-stock/non-profit or NGO.</li>
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<p>By understanding the unique requirements for non-profit organization in the Philippines, individuals and groups can establish entities that drive positive change while benefiting from legal privileges and tax exemptions. To learn&nbsp;<a href="https://lawyerphilippines.org/how-to-put-up-a-foundation-in-the-philippines/">how to start a foundation Philippines</a>, you may also contact our team of specialized lawyers today.</p>
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<div id="attachment_16681" class="wp-caption aligncenter"><img src="https://haspcms-fcb-lawyer.s3.ap-southeast-1.amazonaws.com/tinyeditor_uploads/kntcXCONJTXh4h1jRdZWgLKLBIMxihghpyDkV6bg.webp" alt="Two elderly men playing a chess game on a park symbolizing a foundation non-profit organization in the Philippines." width="912" height="436"><br>
<p id="caption-attachment-16681" class="wp-caption-text">Some retirement homes in the Philippines operate as non-profit organizations or foundations.</p>
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<p>A foundation is a unique type of non-stock, non-profit organization in the Philippines. The defining characteristic of a foundation is that its corporate name must contain the word &ldquo;Foundation.&rdquo;</p>
<p>To establish a foundation, the Articles of Incorporation must specify the amount of capital, the names, nationalities, and residence addresses of the contributors, as well as the amount contributed by each. Additionally, foundations are required to submit:</p>
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<li aria-level="1">A Notarized Certification of Bank Deposit in the amount of not less than P1,000,000.</li>
<li aria-level="1">A statement of willingness to allow the Securities and Exchange Commission (SEC) to conduct an audit.</li>
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<p>The minimum deposit requirement is in place to ensure that the foundation has the necessary financial capacity to carry out its intended purposes.</p>
<p>After incorporation with the SEC, a foundation must also register with the Department of Social Welfare and Development (DSWD), Department of Science and Technology (DOST), Department of Health (DOH), National Commission for Culture and the Arts (NCCA), and other government agencies or bodies that can certify the Foundation based on its purpose. The DSWD will assess the organization&rsquo;s administrative, technical, and financial capabilities to operate its social welfare and development programs and services in the Philippines. DSWD registration is a prerequisite for accreditation with the Philippine Council for NGO Certification (PCNC). The PCNC is responsible for certifying whether a non-profit organization meets the established minimum criteria for financial management and accountability in serving underprivileged Filipinos.</p>
<p>The PCNC&rsquo;s certification is crucial, as it allows the organization to be recognized as a &ldquo;donee institution&rdquo; by the Bureau of Internal Revenue (BIR). Donations made to these certified NGOs are exempted from donor&rsquo;s tax and are deductible from the taxable income of the donors. We have discussed the process on how to register a foundation or non-profit organization in the Philippines in our separate&nbsp;<a href="https://lawyerphilippines.org/how-to-put-up-a-foundation-in-the-philippines/">article</a>.</p>
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<div id="attachment_16680" class="wp-caption aligncenter"><img src="https://haspcms-fcb-lawyer.s3.ap-southeast-1.amazonaws.com/tinyeditor_uploads/t24qMqIb1uHHih4soAaW5HMBjD0VIMDHWeauew0h.webp" alt="Logo of SEC as the regulating body of profit and non-profit organization in the Philippines" width="896" height="441"><br>
<p id="caption-attachment-16680" class="wp-caption-text">SEC Regulates all profit and non-profit organizations in the Philippines</p>
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<p>To ensure compliance, it is essential to understand the requirements for SEC registration of non-profit organizations in the Philippines before proceeding with the application process.&nbsp;</p>
<p>According to the SEC, the minimal contribution that is necessary for registration is one of the most prominent distinctions that can be made between foundations and non-profit organisations (NPOs). The minimum amount of money that must be contributed to a foundation in the Philippines is one million pesos (P1,000,000.00), which must be accompanied by a certificate of bank deposit that has been certified. NPOs, on the other hand, are non-stock organizations in the Philippines that do not have to meet any minimum contribution requirements in order to register.</p>
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<div id="attachment_16678" class="wp-caption aligncenter"><img src="https://haspcms-fcb-lawyer.s3.ap-southeast-1.amazonaws.com/tinyeditor_uploads/4TyR0np1b8dGjt2MZRvNgdTvIlNZhtcvtPSajKdn.webp" alt="Gawad Kalinga Foundation is a non-profit organization in the Philippines that donates food packs to poor families" width="891" height="382"><br>
<p id="caption-attachment-16678" class="wp-caption-text">Gawad Kalinga Foundation is a Non-profit organization in the Philippines focusing on helping poor, homeless families</p>
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<p>The necessity that the word &ldquo;Foundation&rdquo; be included in the corporate name of a foundation is still another important distinction. This title is required for foundations, and they must incorporate it into their names in order to convey the fact that they are legally recognised. Non-profit organization in the Philippines, on the other hand, are not obligated to incorporate any particular title into their corporate name.</p>
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<p id="caption-attachment-16677" class="wp-caption-text">An Article of incorporation of a Non-profit organization must expressly state the nature of its operation as a non-profit</p>
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<p>Articles of Incorporation, also known as the &ldquo;charter,&rdquo; is a document created in the process of incorporation. It contains the primary purpose of the organization, location, names of initial trustees, and any other provisions agreed upon affecting the organization. This legal document is to be submitted to the Securities and Exchange Commission (SEC) and allows the creation of the corporation.</p>
<p>When trying to create Articles of Incorporation for an organization, it is essential to maintain clarity and closeness to the purpose and activities of the organization.&nbsp;</p>
<p>The intended purpose of the entity must be explained clearly and expressly before it can be validated by the SEC.</p>
<p>Other provisions of the document should also be clear and specific. There are also certain provisions that must be placed exactly as indicated in the corporation code. Due to the restrictions and to promote better governance and social responsibility, all provisions stated in the Articles of Incorporation and the bylaws should be disclosed to the public. Once the document has been drafted and agreed upon by the incorporators, it must be notarized before submission to the SEC.</p>
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<div class="et_pb_text_inner"><strong>1. Determine Organization Type:</strong><br>Decide whether to establish a foundation or a non-stock, non-profit organization (NPO).<br>A foundation vs a non-profit organization are similar but distinct types of entities in the Philippines.<br>A foundation is more expensive as it requires at least Php 1,000,000.00 to start and is generally funded by its founders.<br>A foundation can provide grants to other organizations and generally employs its workers.<br>On the other hand, a non-profit organization has much lower capital requirements and is funded by its operations.<br>It does not provide grants to other organization and its employees are most often volunteers.
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<p><strong>2. Prepare Required Documents:</strong><br>&bull; Notarized Articles of Incorporation<br>&bull; Notarized By-laws<br>&bull; Notarized Certification of Bank Deposit (minimum of P1,000,000) and statement of willingness to allow the Commission to audit the organization<br>&bull; List of contributors, including detailed information or list of members as applicable<br>&bull; Name Verification Slip<br>&bull; Treasurer&rsquo;s Affidavit<br>&bull; Joint Affidavit of 2 Incorporators<br>&bull; Federations, Religious and Condominium Corporations, etc. have additional requirements.</p>
<p>Note that there are also on-going requirements.<br>For instance, Sworn Statements from the president and treasurer of the sources, amount and application of funds of its programs, and a Certificate of Existence of program from the barangay and city hall for those receiving money from Philippine government institutions or for those receiving donations that are about Php 500,000 in aggregate from one donor. (MC 15-2016)<br>There is also regular financial reporting to the BIR.</p>
<p><strong>3. Name Verification</strong><br>Obtain a Name Verification Slip from the SEC to confirm the availability of your intended organization name.<br>If your chosen organization is a foundation, then the name must include the word foundation.<br>If the organization chosen is a non-profit organization, then the name must include the word non-profit organization.</p>
<p><strong>4. Articles of Incorporation and By Laws</strong><br>Clearly articulate the organization&rsquo;s purpose, office location, and names of the initial trustees.<br>Generally, foundations are founded around the desire to reach athletic, charitable, cultural, educational, literary, scientific, social welfare religious, or other related goals.<br>The Articles of Incorporation and By laws must both be notarized.</p>
<p><strong>5. File with SEC</strong><br>Submit all necessary documents along with the applicable fees to the SEC for processing, which can be done online.</p>
<p><strong>6. File with the BIR</strong><br>Registration at the BIR must be completed.</p>
<p><strong>7. Local Government and the like</strong><br>Registration at the Barangay and City Hall of the city in which the foundation will be founded must be done, along with registration at SSS, Pag-ibig and Philhealth</p>
<p><strong>8 Additional Registrations</strong><br>Depending on the nature and focus of your organization, register with relevant agencies such as the Department of Social Welfare and Development (DSWD) as applicable.<br>Note also that registration at The Philippine Council for NGO Certification is needed so that the BIR will allow donations to be tax deductible for donors. This can take some time.<br>Common Mistakes to Avoid<br>&bull; Failing to provide a clear definition of the organization&rsquo;s purpose in the Articles of Incorporation.<br>&bull; Insufficient funding to meet the requirements for foundations.<br>&bull; Neglecting to complete necessary additional registrations with relevant government agencies.</p>
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Navigating the Registration Process for Non-Profit Organizations in the Philippines