SEC okays revised rules on foundations

Foundations applying for registration with the Securities and Exchange Commission (SEC) are required to deposit their funds in a bank regulated by the Bangko Sentral ng Pilipinas (CBSP) and to submit a statement of willingness allowing an audit into their operations.

These form part of the revised rules on foundations approved by the SEC Friday.

For purposes of the audit to be conducted, a registered foundation shall allow the Commission’s representatives access to its corporate and accounting books, records, names of beneficiaries, agreements entered into correspondences and all pertinent documents for the preceding five years.

The new requirements are in addition to the submissions of other documents such as a notarized certification of bank deposit of not less than P1 million, a sworn statement on the source and amount of funds and applications of funds, general information statement and audited financial statement.

These new requirements are aimed at curbing illegal foundations that have been making a killing in their solicitation activities.

Hubert Guevara, head of the SEC’s Compliance and Enforcement Department, said the new requirements are intended to ensure that donations are utilized according to the foundation’s purpose as stated in its articles of incorporation.

"Many of the foundations registered with the SEC have been observed to focus mainly on the fund-raising aspect of their project," Guevara said.

A foundation is defined by the SEC as a "non-stock, non-profit corporation with funds established to maintain and aid charitable, religious, educational, athletic, cultural, literary, scientific, social welfare or similar activities primarily through extending grants or endowments."

The SEC earlier said it was investigating 13 to 15 foundations for possible fraud and non-submission of reportorial requirements in violation of the Securities Regulation Code.

The Commission refused to identify these foundations, saying some of them are owned by well-known personalities.

Guevara noted that some foundations use the name of politicians to get on with their solicitation activities.

He said he has been receiving complaints against these foundations which allegedly have been illegally soliciting funds from the public.

He said the SEC is now working with the Bureau of Internal Revenue (BIR) to firm up the details on the responsibilities of the newly-created task force.

The joint task force, he said, will look into the operations of several non-stock, non-profit organizations believed to be posing as legitimate foundations.