Articles and insights from my consulting practice — on trust, tax and foundation matters.

Non-profit foundations manage assets and apply them purposefully to fulfil their foundation's purpose. In doing so, they carry a high level of responsibility towards the public, funding partners and supervisory authorities.

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An Internal Control System (ICS) helps foundations meet this responsibility.

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An ICS is not a rigid set of rules, but a practical tool for the early detection of risks, the avoidance of errors and the creation of transparent processes. Its aim is to ensure that financial resources are used correctly, that decisions are traceable, and that the foundation is managed sustainably.

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For non-profit foundations, detailed legal requirements for internal control are often lacking. In practice, this leads to uncertainty regarding organisation, risk assessment and responsibilities. A well-structured ICS brings clarity here by defining responsibilities, documenting decision-making processes and systematically assessing risks.

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Typical risk areas for foundations include asset management, the allocation of grants, international projects, organisational processes and reputation. An ICS helps identify these risks early and reduce them through appropriate measures.

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In practice, an effective ICS is based on clear organisational structures, a conscious approach to risk, ongoing controls in day-to-day operations, transparent communication, and regular review and further development of the system.

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For the foundation board and management, an ICS is a valuable leadership tool. It supports well-founded decisions, strengthens transparency and contributes significantly to reducing liability risks. At the same time, it fosters trust among funding partners, supervisory authorities and the public.

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An ICS is not primarily a control instrument, but a leadership and decision-making tool. It helps the foundation board and management to:

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• make well-founded decisions,

• assess projects objectively,

• use resources efficiently,

• reduce liability risks,

• strengthen trust with supervisory authorities and funding partners.

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In the event of a claim in particular, a documented ICS can demonstrate that decisions were made carefully, objectively and in line with the foundation's purpose.

In summary, an Internal Control System makes an important contribution to the good governance of non-profit foundations. It strengthens the organisation, increases credibility, and supports the sustainable and responsible fulfilment of the foundation's purpose.

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More information on ICS is available in Volume 7 of CEPS Forschung und Praxis (University of Basel). → Read the publication (CEPS, University of Basel)