PRESS RELEASE

27 September 2021

ORGANISATIONS IN RECEIPT OF DONATIONS

FONDATION DE FRANCE

Fiscal years 2014 to 2019

As part of its missions with regard to organisations in receipt of donations, the Court of

Accounts audited the use-of-funds statement for donations received from the public by the

Fondation de France from 2014 to 2019.

The Fondation de France is an exceptional organisation owing to the circumstances behind

its creation in 1968, its role in the philanthropy sector in France, the volume of its

redistribution activity and the size of its balance sheet (€2.4 billion in 2019).

The model that the Fondation de France has gradually developed gives a central place to its

role as an "umbrella foundation". As a "general sponsor", it also differs from the usual

profiles of foundations recognised as acting in the public interest, which are subject to the

specialisation set out in their purpose.

Following its audit, in accordance with the law, the Court issued an opinion on the

expenditure of the Fondation de France during fiscal years 2014 to 2019. It found that this

expenditure was in line with the objectives pursued by the public appeal for generosity and

the foundation's objectives, with two qualified opinions:

- The presentation of the use-of-funds statement artificially increases the expenditure

devoted to social missions by including annual allocations to equity and reserve accounts.

- The Fondation de France's ex-post audit of subsidies paid from donor-advised funds

is inadequate, exposing it to significant legal or management risks.

The Court makes 13 recommendations.

A rigorous organisational structure designed with a view to growth

The size of the Fondation de France's balance sheet and the weight of financial assets in this balance

sheet (95%) give it the characteristics of an institutional investor. The Fondation de France considers

that the management of the funds it receives is an integral part of its role, in the same way as the

collection and redistribution of funds. From this point of view, the challenges posed by the collection

of donations are adequately taken into account by the Fondation de France both in terms of yield and

processing security. However, although it has formalised its internal control system, it does not have

an internal audit department. This function would seem essential for an organisation of this size, in

view of the specific risks inherent in its role as an umbrella foundation.

A large number of donor-advised funds, subject to variable controls

Nearly 900 donor-advised funds have been created under private law contracts with their founders.

Their number is constantly increasing. The risks and challenges associated with this strategy of

continued growth appear to be underestimated. The size and governance of these funds and the

profile of their founders vary greatly. The Fondation de France is the only entity with legal personality

and is solely accountable

–

financially and legally

–

for all of their activities. In practice, the operational

autonomy granted by the Fondation de France to its donor-advised funds varies considerably. Most

often, it is the bilateral relationship established with the founders rather than the stipulations of the

incorporation agreement which determines the exact nature of relations between the donor-advised

fund and the umbrella foundation. As a result, the controls carried out by the Fondation de France on

the actions of donor-advised funds vary considerably in intensity.

Insufficient consideration of the risks associated with the activities of donor-

advised funds

The criteria of public interest and the operating principles of foundations recognised as being in the

public interest are fully applicable to the Fondation de France and,

a fortiori

, to its donor-advised funds.

However, the operating methods of the donor-advised funds and the control exercised by the

Fondation de France do not guarantee that these various essential requirements are always fully met.

The principle of direct management by the umbrella foundation acting in the public interest (laid down

by the law of 23 July 1987) is interpreted very loosely and this constitutes a source of structural risks,

which are further accentuated by the steady increase in the number of donor-advised funds. While the

creation of a donor-advised fund gives rise to careful investigation and quality support for the

founders, this is not the case for the control of their activities. The Court considers that control and

supervision mechanisms must be implemented.

Relevant proprietary programmes can be further developed

The review of the accounts showed that the Fondation de France's accounting and budgetary

management is adequate and detailed. The programmes set up internally by the Fondation de France

are conducted and managed in a very professional manner.

Emergency programmes, which are very

visible in the media and often attract large volumes of donations, are closely monitored. The sample

programmes examined during the audit highlight a concern for thoroughness but also for impact and

benefit for the public concerned.

Read the report

PRESS CONTACT:

Emmanuel Kessler



Communication Director



T

01 42 98 55 62



emmanuel.kessler@ccomptes.fr

Julie Poissier



Head of press relations



T 01 42 98 97 43



julie.poissier@ccomptes.fr

@Courdescomptes

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