In-kind distribution from a private foundation: valuation and equal treatment

A cash payment is visible through the amount transferred. In an in-kind distribution, the economic benefit lies in the asset transferred or the use granted. The resolution must therefore state whether ownership is transferred, a share is assigned or only a right of use is granted.

The foundation deed may designate beneficiaries, define a class or entrust an authorised body with determining a beneficiary. Beneficiary status does not automatically create a right to demand a particular asset. The purpose, distribution rules and authority of the deciding body must be reviewed separately.

A sale to a third party raises a different core question. The focus here is the benefit granted to a beneficiary and the way that benefit is recorded in the foundation file, not an ordinary disposal of foundation property.

The resolution should describe the asset precisely enough for its identity and condition to remain clear. For real estate, this includes the land register position, use, encumbrances, existing agreements and valuation date. For a shareholding, the percentage, articles, transfer restrictions and relevant economic information should be identified.

A valuation should not merely select a favourable figure. The method, underlying documents and circumstances affecting value must be visible. If the beneficiary assumes liabilities, obligations or continuing costs, the file should explain whether and how they change the economic benefit.

Tax treatment of benefits in kind and benefits of use requires a separate review. The foundation-law resolution should describe the economic transaction fully so that the tax analysis can work from the same facts, without replacing that analysis with an unsupported conclusion.

Equal treatment does not mean that every beneficiary must always receive the same asset or amount. Different rights, needs, timing and deed provisions may explain different benefits. The board must nevertheless be able to explain the difference from the governing documents and the facts.

The file should therefore identify comparable benefits, the applicable criteria and why the proposed in-kind distribution fits that framework. A decision explained only by family proximity or informal expectations does not provide a reliable basis.

Particular care is needed where a board member is a beneficiary, values the asset or participates in the decision. Conflict, access to information, recusal and any required approval belong in the same record. The article on conflicts within the foundation board addresses this process separately.