Philanthropy and charitable trusts

Philanthropy through trusts: a structured and lasting approach

Modern philanthropy goes far beyond one-off donations. Wealthy families increasingly seek to structure their charitable engagement in a strategic, measurable and enduring way. The charitable trust provides an ideal legal framework for this approach: it ensures that funds will be used in accordance with the donor's objectives, even after their death.

In Switzerland, where the philanthropic tradition runs deep, the charitable trust effectively complements public-benefit foundations by offering greater flexibility in governance and beneficiary selection.

Types of philanthropic structures

Depending on the objectives, the amount of dedicated assets and the settlor's jurisdiction, several structures may be considered:

• Pure charitable trust: all assets are dedicated to charitable purposes. Income and capital are distributed exclusively to qualifying organisations or projects. This is the simplest and most transparent structure.
• Charitable remainder trust: the settlor or their beneficiaries receive income from the trust for a defined period (often their lifetime), after which the remaining capital is distributed for charitable purposes. This structure combines philanthropy with wealth planning.
• Charitable lead trust: conversely, the trust's income is distributed to charitable organisations for a defined period, after which the capital reverts to family beneficiaries. This structure may offer significant tax advantages upon transfer.
• Mixed trust with philanthropic component: a family trust can include a philanthropic clause providing that a portion of income or capital is devoted to defined charitable activities.

Philanthropic governance

The governance of a charitable trust is crucial to ensuring the effectiveness and legitimacy of philanthropic action. Several mechanisms help structure this governance:

• Philanthropic advisory committee: comprising family members, sector experts and professionals, it advises the trustee on project selection and fund allocation.
• Selection criteria: the trust deed and letter of wishes define priority areas, geographic zones, minimum and maximum amounts per project, and evaluation criteria.
• Impact reporting: the trustee implements monitoring and evaluation mechanisms to measure the impact of distributions and report to stakeholders.
• Intergenerational involvement: the charitable trust can serve as a tool for family cohesion by involving younger generations in philanthropic decisions.

Advantages of a charitable trust administered in Switzerland

Administering a charitable trust through a FINMA-licensed Swiss trustee offers unique guarantees: Switzerland's political neutrality and stability, rigorous regulatory supervision, confidentiality of arrangements and access to a world-class banking infrastructure for managing philanthropic assets.

Swiss Trustee works closely with families to design philanthropic structures that reflect their values and maximise the impact of their commitment. Our experience spans a wide range of philanthropic fields: education, health, the environment, scientific research, arts and culture.