How Swiss Foundations Put CHF 159.6 Billion To Work
With Swiss interest rates at zero, foundations must decide how much cash to keep, how to invest their remaining assets and how much they can afford to spend on charitable work.
Switzerland’s 13’782 charitable foundations hold a combined CHF 159.6 billion in assets, according to the Swiss Foundation Report 2026. The money supports medical research, education, cultural institutions and social programmes, often through commitments that extend over several years. How foundations manage their money determines not only what they can distribute today, but whether they can continue funding these activities in the future.
The financial challenge has become greater as interest rates have fallen as the Swiss National Bank kept its policy rate at 0% in September 2026, leaving little opportunity to earn interest on ordinary Swiss-franc deposits. Foundations still need ready access to money for grants and operating expenses, but keeping more cash than necessary can reduce their investment income.
Professional foundations have generally responded by investing most of their assets. According to the SwissFoundations Benchmark Report 2026, participating foundations held an average of just 5% in cash, with the remainder invested primarily in equities, bonds and property. Their portfolios returned an average of 7.2% in 2025.
The findings show how established foundations manage their money, although the survey covers only 55 organisations. It cannot establish how much cash the entire Swiss charitable sector holds or whether smaller foundations receive competitive banking terms.
Switzerland’s CHF 159.6 Billion Foundation Sector
The Swiss Foundation Report 2026, published by the Center for Philanthropy Studies at the University of Basel, SwissFoundations and the University of Zurich, puts the sector’s assets at CHF 159.6 billion. Foundations supervised by federal authorities account for CHF 85.7 billion, while those under cantonal supervision hold CHF 73.9 billion.
These organisations have very different financial needs. Some manage large endowments and employ professional investment managers. Others operate with limited staff, depend on donations and rely on volunteer trustees to make financial decisions.
A foundation established to fund scientific research indefinitely must manage its money differently from an organisation financing a five-year programme. The first needs to preserve enough capital to support future grants, while the second may deliberately spend its assets as projects are completed.
These differences affect how much money foundations should keep in cash. Operating expenses, approved grants and payments due within the coming months require readily available funds. Money committed to projects over the next few years may be invested more cautiously, with investments maturing when payments are due. Funds that will not be needed for a long time can generally be invested across a wider range of assets, provided the foundation can withstand losses without cancelling its commitments.
Foundations also need to decide whether their cash reserves have become unnecessarily large. A foundation with CHF 10 million in its accounts and annual spending commitments of CHF 1 million has different needs from one preparing to distribute the same amount over twelve months.
Keeping sufficient money available is part of responsible management. Holding substantially more than planned expenditure requires a clear reason, particularly when deposits earn little income.
What Swiss Foundations Earn From Their Investments
The SwissFoundations Benchmark Report 2026 shows how professionally managed charitable investments performed. The study examined 55 foundations holding CHF 15.1 billion in combined assets. They earned an average investment return of 7.2% in 2025, compared with 8.1% in 2024. Their cumulative average return since 2021 reached 23.9%. The average participating foundation invested 49% of its assets in equities, 20% in bonds and 16% in property. Cash accounted for 5%, with the remainder held in other investments.
The figures show that foundations in the survey invested most of their money in financial markets while keeping a relatively small share in cash. They do not establish whether every foundation held enough readily available money for its planned spending.
Investment returns also varied according to how much risk foundations accepted. Those with more than half their assets in equities achieved average cumulative returns of 29.6% over the five-year period, compared with 23.9% across the full sample.
Higher equity allocations can improve returns over time, but they also expose foundations to larger losses during market downturns. An organisation that has promised substantial grants cannot necessarily wait for share prices to recover before making payments.
Foundations must therefore judge investment performance alongside their spending commitments. A strong annual return increases the value of a portfolio, but gains on investments that have not been sold do not automatically provide the cash needed for grants. Foundations may receive dividends and bond interest, draw on reserves or sell investments to meet those payments.
The amount available for grants depends on the portfolio’s total return, the foundation’s spending policy and how much capital trustees intend to preserve.
What Zero Interest Rates Mean For Foundation Cash
The Swiss National Bank’s decision to maintain its policy rate at 0% in September 2026 has kept returns on ordinary Swiss-franc deposits low. Banks set their own deposit rates and fees, so foundations may receive different terms depending on the institution and the size of their balances. Trustees can negotiate those terms, but switching banks cannot guarantee much higher returns when short-term interest rates across the market are close to zero.
Even small differences in interest rates can add up. A foundation holding CHF 5 million in cash would earn CHF 25’000 annually at an interest rate of 0.5%, before fees and taxes. At 0%, it would receive no interest. The comparison is illustrative, rather than a measure of income currently lost by Swiss foundations, and earning a higher return may require accepting different conditions or risks.
Banking costs also deserve attention because account fees, custody charges, investment-management fees and transaction costs reduce the amount foundations keep from their investments.
A 0.25% annual management fee on a CHF 20 million portfolio amounts to CHF 50’000. At 0.5%, the annual charge rises to CHF 100’000, assuming the fee applies to the full portfolio value. Foundations need to assess what services they receive in return and whether they could obtain better terms elsewhere.
Lower fees do not necessarily produce better investment results if cheaper services fail to provide the oversight or expertise the organisation needs. Trustees should compare costs alongside portfolio performance, risk and the quality of reporting.
The available Swiss research does not establish that charities generally pay excessive banking fees. It does show why costs deserve attention alongside investment returns, particularly for foundations that depend on their portfolios to finance grants.
Why Foundations Cannot Invest Every Franc
Foundations have financial obligations that make access to cash as important as investment performance. Many approve funding several years before the money is paid. A foundation supporting a university research programme may commit to annual payments regardless of how financial markets perform. Others need money available for salaries, property maintenance or urgent charitable projects.
Trustees must account for these commitments before deciding how much money to invest. Cash can be divided into three broad categories according to when it will be spent: operating funds for immediate payments, reserves for commitments over the next few years and long-term capital intended to finance future charitable work.
The amounts in each category depend on the foundation’s activities and sources of income. An organisation receiving predictable annual donations can manage its cash differently from one that relies almost entirely on investment returns.
Investment risk also matters. Money needed within months should not ordinarily be exposed to the same market fluctuations as an endowment intended to support charitable work for decades.
A foundation that invests short-term reserves in equities could be forced to sell during a market downturn to honour existing commitments. Even relatively safe investments may lose value if they must be sold before maturity.
Foreign-currency deposits introduce another risk. Higher interest rates in euros or dollars may appear attractive when Swiss-franc deposits offer little income, but an adverse exchange-rate movement can reduce the amount available for grants paid in francs.
Holding foreign currencies may make sense where a foundation has corresponding spending commitments abroad. Otherwise, trustees must assess whether the additional interest justifies the possibility of losses when converting the money back into Swiss francs.
What Foundation Boards Should Expect From Their Banks
Swiss foundations remain responsible for their investment policies even when they appoint banks or external asset managers. The Swiss Foundation Code recommends that boards manage assets professionally, keep costs under control and consider security, diversification, returns and access to cash when setting their investment strategy. It also calls for regular reviews and measures to prevent conflicts of interest.
These responsibilities involve practical decisions because trustees need to know how much money the foundation expects to distribute, which assets can be sold when payments fall due and whether investment managers are taking risks consistent with those requirements.
Banking agreements should clearly state what the institution charges for custody, transactions, investment management and other services. Foundations should also understand the terms attached to deposits and when they can withdraw their money.
Comparing banks becomes particularly relevant when a foundation has accumulated substantial balances through donations, investment proceeds or delayed spending. Accounts opened years earlier may no longer offer the most suitable terms.
The investment policy also needs regular review. If market gains increase the equity share of a portfolio beyond the agreed allocation, trustees may need to adjust their holdings. If a foundation approves a large new programme, it may need to raise cash before the first payment becomes due.
Banks and investment managers can advise on these decisions, but foundation boards must decide how much risk they can accept in pursuit of returns.
How Investment Decisions Affect Charitable Spending
An organisation that spends too much of its capital during strong market years may struggle to maintain grants after losses. Another that keeps most of its wealth in cash may protect the nominal value of its reserves while earning too little to maintain their purchasing power over time.
Even modest inflation can affect the amount a foundation can fund. At annual inflation of 1%, CHF 10 million held without interest would retain its nominal value but lose roughly CHF 100’000 in purchasing power over one year.
Foundations established to operate indefinitely must account for inflation when deciding how much income to distribute and how much to reinvest. Those intending to spend their assets over a defined period can take a different approach, gradually spending their capital according to their remaining commitments.
The SwissFoundations benchmark suggests that many established foundations already use diversified portfolios to support long-term funding. Their returns in 2025 were positive, but future grants cannot be based on the assumption that financial markets will deliver similar gains every year.
Boards must consider what happens when returns fall short of expectations. They may need sufficient reserves to maintain agreed funding, revise future grants or adjust how quickly they spend their capital.
Switzerland’s CHF 159.6 billion foundation sector holds enough money for investment decisions to have substantial financial consequences. The appropriate approach differs from one organisation to another, depending on its purpose, spending obligations and ability to withstand losses.
With Swiss interest rates at zero, cash alone offers limited income. Foundations still need enough of it to meet their commitments, while investing money they will not need immediately according to a clear financial plan. Regular reviews of banking costs, cash reserves and investment performance help trustees determine how much they can distribute without putting future charitable work at risk.
ROTHARIA/Philantropy/The Practical Guide
How To Structure Your Charitable Giving In Switzerland
Wealthy individuals planning substantial donations should decide how much to give, how the money will be managed and who will oversee its distribution before transferring assets to a charitable organisation.
1. Choose how you want to give.
Direct donations suit those who want to support existing charities without taking on administrative responsibilities. Donors seeking a long-term programme can establish their own charitable foundation or create a named fund within an existing umbrella foundation. The latter allows donors to recommend projects while the host foundation handles administration and retains final legal responsibility.
2. Check the tax treatment before transferring assets.
Qualifying donations to Swiss tax-exempt charitable organisations are generally deductible up to 20% of net income for federal income-tax purposes, subject to statutory conditions. Cantonal rules may differ. Large donations, particularly those involving shares, property or foreign assets, warrant specialist tax advice before the transfer.
3. Agree on how the money will be invested.
Ask how much the organisation keeps in cash, which assets it holds and what it pays in management, custody and transaction fees. If the donation is intended to finance grants over many years, establish how the investment policy will support those payments without taking excessive risks.
4. Decide how much control you want to retain.
Establishing an independent Swiss foundation involves irrevocably dedicating assets to a charitable purpose. Donors who use an umbrella foundation can retain an advisory role, but they do not own the donated assets or have unrestricted authority over distributions.
5. Require regular financial and grant reporting.
Ask for annual information on investment returns after fees, grants distributed, cash reserves and progress against the agreed charitable objectives. Where family members participate in decisions, define their responsibilities and how future generations will become involved.
Before committing a substantial sum, compare the full costs of running an independent foundation with those of a hosted charitable fund. The Swiss Foundation Code provides guidance on investment oversight, governance and the responsibilities of foundation boards.
