Mobile Menu
Articles

A Strong Foundation for Philanthropy: The use of Cayman Foundation Companies as Not-for-profit Enterprises

Since the introduction of the Foundation Companies Act in 2017, Cayman foundation companies have been utilised in a variety of different structures. While their introduction was intended to attract clients from civil law jurisdictions (who may be more familiar with foundations as opposed to trusts), foundation companies are fast becoming the go-to structure for philanthropic and not-for-profit enterprises incorporated in the Cayman Islands.

This article will explore the unique advantages that a Cayman foundation company offers when establishing a philanthropic or not-for-profit enterprise, and how this structure compares to charitable trusts and companies limited by guarantee (which have historically been the preferred structures for not-for-profits).

When establishing a not-for-profit (“NFP”), it is understandable that the focus of its founders is on the mission that they have set out to achieve.  How an entity is structured will invariably affect how it is governed, and therefore how successful it is in achieving its mission. Despite this, the structuring of NFPs is often overlooked or treated as an afterthought resulting in an organisational structure that is not well-placed to achieve its objectives.

Because NFPs have unique goals, questions pertaining to their legal structure and governing documents are often more complex than those applying to commercial-profit-maximising companies.  Traditionally, NFPs in common law jurisdictions are often established as either a charitable trust or a company limited by guarantee, with each legal structure offering distinct advantages and disadvantages.  The key distinction between the two is that unlike a company, a trust does not have separate legal personality and so cannot sue or be sued, or hold property in its own name.

 

To continue reading full articles in PDF format:
A Strong Foundation for Philanthropy: The use of Cayman Foundation Companies as Not-for-profit Enterprises

 


Robert Lindley
Partner, Head of Cayman & BVI Private Client & Trust

British Virgin Islands, Cayman Islands   +1 345 814 7360


Peter Ch’ng
Partner

Hong Kong   +852 2842 9593
Mobile  +852 6469 3378


Wesley O’Brien
Associate

Cayman Islands   +1 345 814 7350


Accolades
_

"I enjoy working with them - they are very dependable, reliable and responsive."
- Chambers Global