Is it possible to change the purpose of a foundation?
Foundations are rigid structures. If the purpose has been decided and the foundation has been fully established as valid, changing the purpose is only possible subject to strict legal requirements.
The foundation is strongly influenced by the intentions of the founder who is set out in the foundation charter (see blog entry). The intention of the founder is manifested in the foundation’s purpose, which is the essence and identity of the organisation. Changing the purpose of a foundation is only possible once two requirements have been met:
- Objectively, the meaning and effect of the foundation’s purpose must have substantially changed (due to changes in the legal, economic, social, political or scientific conditions).
- Subjectively, the purpose must have become estranged from the intention of the founder due to the altered circumstances.
The first condition is met by foundations which have fulfilled their purpose or whose purpose has become obsolete. A foundation for the abolition of capital punishment in Switzerland will have served its purpose. An obsolete purpose would, for example, be fighting a disease which has mostly been eliminated in recent times.
The reason for changing the purpose can come from within the foundation itself such as if the foundation’s assets have been exhausted or, conversely, there are too many funds available for a very narrow purpose.
However, the new foundation purpose must largely be in the same field as the previous one. You start out with the hypothetical intention of the founder and attempt timely fulfilment of the foundation’s purpose. The new purpose could, for instance, be promoting human rights instead of the previous aim of abolishing the death penalty in Switzerland.
Supervisory authority or supreme governing body
To change purpose, the supreme governing body of the foundation (mostly the foundation council) submits a reasoned application to the relevant supervisory authority (Art. 86 ZGB (Swiss Civil Code). The supervisory authority must, in principle, only act upon the request of the foundation council and only change the purpose on its own initiative in a few exceptional cases.
Approval for changing the purpose will be given and provided to the foundation council and the commercial register once the supervisory authority possesses all the necessary information and all the legal requirements have been met.
Application from founder or testamentary disposition
A change to purpose can occur on the basis of a personal request from the founder or due to his/her will (Art. 86a ZGB). However, this is only possible if the option of amending the purpose is explicitly provided for in the foundation charter. In addition, at least 10 years must have passed since the establishment of the foundation or the last amendment requested by the founder.
If the foundation previously served a public or charitable purpose, the amended purpose must also fulfil this condition.
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