Rwanda has risen to become a critical regional player and global trendsetter on various development indices enjoying an impressive economic growth over the past decade.

Globally, several philanthropists, especially from the technology industry have generated substantial wealth.  As companies like Facebook, Amazon and Tesla make more money, their giving tends to go up as well.

Companies and Grantors are seeking the support of a specific type of catalyst that we call the corporate social investor (CSI). The term refers to corporate foundations, corporate impact funds, corporate social accelerators, and social businesses that transcend traditional grant making and philanthropic foundations.

The Law n°059/2021 of 14/10/2021 governing foundations is among the needed legal reforms within Rwanda Regulatory universe, it comes at a time when the country has established an International Finance Centre (Kigali-IFC) setting standards that will attract global and African investors as well as positioning Rwanda as benchmark for Pan-African investment and financial hub. 

The new law gives a broad definition of foundations as a legal entity which may have one or more objectives which can be charitable or non-charitable.  Investors looking for an estate planning, protection and management of assets foundation may choose to set up a private-benefit foundation, while philanthropic investors may rather establish a common-benefit foundation or a mixed-benefit foundation.

There is also an option available to investors and philanthropists to register foreign foundations by extending their activities or re-domicile in Rwanda.  Establishment may be by a written declaration of establishment, by will or by registration (for a foreign foundation).

The law further emphasizes the necessity for every foundation to have a charter to regulate its life. Private, mixed or community benefit foundations have been accorded a registration process easy to form and regulate in Rwanda. 

Foundations have own assets or properties raising the question to the tax question, Rwanda is in the process of reviewing and or enacting a new income tax law that will regulate persons, corporate entities, hence any questions and/or cited gaps will hopefully be answered under the new income tax regime. 

The majority of foundations are set up to exist in perpetuity. This means that control over the foundation and its assets can be passed to countless generations of family, perpetuating their values, continuing their charitable work, and burnishing their name far beyond their lifetime. Today, Carnegie and Rockefeller are better remembered for their philanthropic legacies than for their accomplishments in the steel and oil industries. And because gifts are made from an endowment that generates investment revenue, the total gifts made by the foundation over time can far surpass the initial funding.

Nearly all companies engage in philanthropy as a means of giving back to the communities in which they operate. This includes financial contributions, product donations, in-kind services, and employee matching and volunteering. It is factual that in Rwanda, only a fraction of these companies take advantage of the additional benefits that come from adding a corporate foundation to their philanthropic efforts as you find many banks and telecoms signing direct cheques to events and conferences and stay wondering how to make an entry in their books. There are unique and powerful advantages to this corporate setting such as Tax Benefits, Asset "Catch Basin”, Expanded Philanthropic Options such as engage in a wide range of charitable activities that would not be tax deductible if handled directly by the company.

Developing Rwanda as a leading financial destination for international investments and cross-border transactions in Africa through the KIFC is a bonus to the Corporate social investors and the new law on foundations does not only ensure Rwanda provides alternative investments vehicles to investors but it also opens the activities of established Rwandan foundations to Global and African markets.

The above is general information, please consult your legal advisors for specific and detailed Legal advice.

The authors are corporate commercial lawyers with Fountain Advocates.