{"id":150689,"date":"2025-05-20T14:34:24","date_gmt":"2025-05-20T14:34:24","guid":{"rendered":"https:\/\/adamfayed.com\/?p=150689"},"modified":"2025-05-20T14:34:26","modified_gmt":"2025-05-20T14:34:26","slug":"foundation-in-nigeria","status":"publish","type":"post","link":"https:\/\/adamfayed.com\/it\/financial-planning\/foundation-in-nigeria\/","title":{"rendered":"Setting Up a Foundation in Nigeria"},"content":{"rendered":"

Nigeria has seen a significant rise in philanthropic initiatives aimed at addressing various social challenges across the country. Setting up a foundation provides a structured approach to achieving charitable goals<\/a> while ensuring legal compliance and operational sustainability.<\/p>\n\n\n\n

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Alcuni fatti potrebbero cambiare rispetto al momento della stesura del presente documento e nulla di quanto qui scritto rappresenta una consulenza finanziaria, legale, fiscale o di qualsiasi tipo, n\u00e9 una sollecitazione a investire.<\/p>\n\n\n\n

This comprehensive guide provides essential information about establishing a foundation in Nigeria, from understanding the legal framework to completing the registration process and fulfilling post-registration requirements.<\/p>\n\n\n\n\"Discover\n\n\n \"Subscribe\n \"Discover\n<\/map>\n\n\n\n

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NGO vs Foundation: What is the difference between an NGO and a foundation in Nigeria?<\/strong><\/h2>\n\n\n\n

In Nigeria, the terms “foundation” and “Non-Governmental Organization (NGO)” are often used interchangeably, which can cause confusion about their distinct characteristics. While both operate within the not-for-profit sector, there are subtle differences worth noting.<\/p>\n\n\n\n

A foundation in Nigeria is a non\u2010profit entity established to pursue charitable, educational, religious, scientific, social, or cultural objectives.<\/p>\n\n\n\n

Typically, a foundation is set up as an Incorporated Trustees entity under the Companies and Allied Matters Act 2020 (CAMA 2020)\u200b<\/a>. This legal form allows the foundation to acquire a corporate identity, hold property in trust, enter contracts, and sue or be sued in the foundation\u2019s name.<\/p>\n\n\n\n

Alternatively, an NGO can incorporate as a Company Limited by Guarantee (no share capital) under CAMA\u200b.<\/p>\n\n\n\n

In either case, the organization must be not-for-profit: its income and assets can only advance its stated purpose, and no part may inure to private shareholders or members.<\/p>\n\n\n\n

Foundations are governed by a board of trustees or directors who oversee the mission and ensure compliance with Nigerian law\u200b.<\/p>\n\n\n\n

Foundations typically focus on specific charitable purposes such as advancing religious, educational, literary, scientific, social, cultural, sporting, or other charitable initiatives. <\/p>\n\n\n\n

These organizations are usually established with endowments or sustainable funding models to support their long-term objectives.<\/p>\n\n\n\n

An NGO, similarly, is registered as an Incorporated Trustee under CAMA but may have a broader scope of activities beyond philanthropic work. NGOs often engage in advocacy, community development, and other intervention programs.\u00a0<\/p>\n\n\n\n

In legal registration terms, there is no distinction between foundations and NGOs in Nigeria, as both are registered through the same process with the Corporate Affairs Commission (CAC).<\/p>\n\n\n\n

The key difference often lies in their funding models and operational approaches.<\/p>\n\n\n\n

Foundations typically have a more structured endowment-based funding approach, while NGOs might rely more heavily on grants, donations, and project-based funding.<\/p>\n\n\n\n

However, both entities are considered corporate bodies under CAMA and must comply with the same legal requirements for registration and operation.<\/p>\n\n\n\n

Secondo il Nigerian Not-For-Profit Governance Code 2023<\/a>, the sector\u2014also referred to as the Benevolent Sector, the Third Sector, or the Civil Society Sector\u2014plays a critical role in Nigeria’s economy and governance landscape.\u00a0<\/p>\n\n\n\n

The code emphasizes the importance of good governance practices, transparency, and accountability for all not-for-profit organizations. This is regardless of whether they identify as foundations or NGOs.<\/p>\n\n\n\n

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Do foundations pay tax in Nigeria?<\/strong><\/h2>\n\n\n\n

The tax status of foundations in Nigeria reflects their not-for-profit nature, though with specific conditions and reporting obligations. Foundations in Nigeria enjoy certain tax privileges, but only if structured and operated correctly.<\/p>\n\n\n\n

Il Companies Income Tax Act (CITA)<\/a> governs the taxation of corporate entities, including not-for-profits\u200b.<\/p>\n\n\n\n

Historically, CITA \u00a723(1)(c) exempted from income tax<\/a> the profits of companies established for charitable, educational, religious, or public purposes, but only if those profits did not come from commercial trading\u200b.<\/p>\n\n\n\n

Capital Gains Tax Act (CGTA) similarly exempted gains on the disposal of charity property\u200b.<\/p>\n\n\n\n

Following the Finance Act 2020, FIRS<\/a> issued guidance clarifying these rules.<\/p>\n\n\n\n

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Are donations taxable?<\/h3>\n\n\n\n

Corporate donors (and individuals) can deduct donations<\/a> to the foundation only if the foundation is listed in the Fifth Schedule of CITA\u200b.<\/p>\n\n\n\n

FIRS guidance makes clear that corporate donors get tax deductions for gifts to qualifying NGOs, but individuals do not.<\/p>\n\n\n\n

Foundations should, if eligible, apply to be recognized by FIRS for public-purpose status, so donors can benefit.<\/p>\n\n\n\n

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Do foundations pay capital gains tax?<\/h3>\n\n\n\n

Under the Capital Gains Tax Act, gains on the disposal of assets used in charitable activities are typically exempt if the funds are used for the same purpose\u200b.<\/p>\n\n\n\n\"Discover\n\n\n \"Subscribe\n \"Discover\n<\/map>\n\n\n\n

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Are foundations VAT exempt?<\/h3>\n\n\n\n

Unlike some jurisdictions, Nigerian NGOs are not fully exempt from Value-Added Tax (VAT).<\/p>\n\n\n\n

Generally, VAT applies to taxable goods and services supplied by or to a foundation at the standard rate\u200b.<\/p>\n\n\n\n

However, goods used directly in humanitarian aid projects may be zero-rated\u200b. For example, medical supplies bought for a free clinic may enjoy zero-rating.<\/p>\n\n\n\n

If a foundation purchases goods\/services not directly for aid projects, it must pay VAT at 7.5%.<\/p>\n\n\n\n

Likewise, if a foundation charges fees for taxable services, it must account for VAT to FIRS.<\/p>\n\n\n\n

In all cases, foundations must register for VAT (if turnover is above the threshold) and file monthly VAT returns.<\/p>\n\n\n\n

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How to start a foundation in Nigeria<\/strong><\/h2>\n\n\n\n

Starting a foundation in Nigeria involves several strategic steps beyond the basic registration requirements.<\/p>\n\n\n\n

This comprehensive process ensures that your organization is not only legally compliant but also strategically positioned to achieve its charitable objectives.<\/p>\n\n\n\n

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1. Conceptualization and Planning<\/h3>\n\n\n\n

Before beginning the registration process, it’s important to:<\/p>\n\n\n\n