The Family Foundation

The requests arrive by telephone, and they do not stop.

School fees for a cousin's daughter, due on Monday. A hospital deposit at eleven at night. A burial in the village that the family is expected to carry. The town development association's levy. The church roof, or the mosque's borehole. A young man who has a plan and needs capital for a shop. A widow whose late husband once did the founder a kindness that nobody has written down but everybody remembers.

The founder gives, and gives seriously. Over a working life the sums are very large — larger, in many Nigerian families, than anything the family has ever invested. And they are given without a budget, without criteria, without any record, on the strength of who reached him and how the week has gone.

It is the family's largest unstructured expenditure and its most fragile institution.

It is also entirely mortal. On the day the founder dies, every one of those obligations ends at once — not by decision, but because the mechanism was a man. The dependants discover this in the same week as the funeral, and the family acquires a reputation for having withdrawn, which is not what happened and cannot be explained.

The essay on the second-generation question names the failure that sits behind this: a family with no reason to remain one, whose members hold wealth in common and cannot say what it is for. The foundation answers it. This essay treats the incorporated trustee under Part F of CAMA 2020 not as a registration to be obtained but as the institution through which a Nigerian family converts diffuse obligation into architecture — and, in doing so, gives its third generation something to be in a room about that is not the division of money.

Before designing anything, name what is already happening, because the informal arrangement has five specific defects and they are the specification for the formal one.

It has no budget. Giving is not weighed against anything, because it never appears anywhere as a total. A family that would deliberate for a week over a modest investment will disburse several times that sum across a year in amounts of fifty thousand naira, and never once see the figure.

It has no criteria. Funding follows persuasion, proximity and timing. The relative who asks well is funded; the relative in greater need who does not ask, or asks the wrong person, or asks in a bad month, is not. Nobody intends this. It is simply what happens when the only test is whether the request reached someone with authority on a day he was able to hear it.

It has no record. Nothing is written, so nothing can be reviewed. The same request returns because there is no way to know it was met last year. The family cannot say what it has given, to whom, or with what result — which means it also cannot know whether any of it worked, and cannot tell its own children what it has done.

It has no succession, as already said. And it offers the giver no protection, which is the defect Nigerian principals feel most acutely and mention least. Without a policy, every refusal is personal. There is no institution to point to, no published criterion to fall behind, no committee that decided. A man who has said no is simply a man who has said no, and the family relationship carries it. A foundation with stated criteria allows a family to decline institutionally — which is, for many principals, the single most valuable thing it ever does for them.

Part F of CAMA 2020 provides for incorporated trustees. Two or more trustees of an association or foundation may be incorporated as a body corporate with perpetual succession, capable of holding land, contracting, suing and being sued in its own name. That is the vehicle most Nigerian family foundations use, and the description matters more than it appears to.

There is an alternative. A non-profit may also be formed as a company limited by guarantee under Part A, which is more familiar to commercial counterparties and better suited to a body that will contract at scale — but its incorporation requires the authority of the Attorney-General of the Federation, which is a real gate rather than a formality. For most family philanthropy the incorporated trustee is the proportionate choice; for a foundation that will run an institution, employ substantially, or hold significant commercial arrangements, the guarantee company deserves consideration at the outset rather than a conversion attempt later.

Formation follows a defined route: the trustees are appointed, a constitution is adopted, the name is cleared, the application is advertised so that objections may be lodged within the stated window, and registration follows. None of it is difficult. All of it is procedural, and the procedural nature of it is exactly why families treat the foundation as a certificate rather than as an institution.

Two consequences of incorporation deserve to be stated plainly to any founder, because they are frequently discovered late. The first is that the assets belong to the body and not to the family. They cannot be recovered, redirected to family purposes, or wound back into the estate. The trustees' duties run to the purposes, not to the founder, and a trustee who prefers the founder's wishes to the constitution is in breach whatever the family thinks. The second is supervisory: the Commission holds express powers, on defined grounds, to intervene in the affairs of an incorporated trustee, including to suspend trustees and appoint an interim manager. The quality of a foundation's records is therefore not only a family matter.

The constitution is where most of this is settled, and it is treated by too many founders as a form to be filed. It states the name and the objects; the governing body and how trustees are appointed, removed and replaced; meetings, quorum and voting; how income and property are applied, and the prohibition on their distribution to members; the keeping of accounts; and — the provision worth reading twice — what happens on dissolution. Assets of a dissolved body do not return to the family. They pass to another body with similar objects. A founder who understands that clause at the drafting stage is a founder who has genuinely decided to build a foundation rather than a reversible arrangement.

Every other institution in this architecture holds wealth for the family. The foundation holds wealth irreversibly away from it — which is precisely why it is the one that states what the family actually believes.

Registration is the easy part. What follows are the six decisions that determine whether the registered body becomes an institution or remains a dormant certificate with a bank account.

The foundation is built to give money away. Its effects on the family that builds it are, nonetheless, the reason it appears in a cluster about staying wealthy.

It supplies the convener. By the third generation the beneficiaries of a family structure are cousins who meet at weddings and funerals, and every other occasion on which they gather is about the division of money. The foundation is the standing reason to be in a room together for something else — an agenda, a decision, a shared result — and shared work is the only thing that has ever reliably produced attachment between people who did not grow up in the same house.

It is also the best training ground the architecture contains. The essay on preparing the next generation treats that formation as a discipline; grant assessment is where the discipline can actually be practised. A twenty-four-year-old asked to assess applications, visit a school, form a view and defend it to a board of adults is doing real decision-making with real consequences at stakes the family can afford. No lecture on stewardship achieves in a year what one contested grant recommendation achieves in an afternoon.

And it states the values in a form that binds. A family's values are not what is said in tributes; they are what its institutions are obliged to do when nobody is watching. The foundation is the only part of this architecture that the family cannot quietly take back, which is exactly why what it says about the family is credible.

Two abuses are worth naming, because both are visible from outside and both destroy the only asset the institution has. The first is the foundation as reputation management — registered after a controversy, active in the year of a public campaign, dormant otherwise. The second is the foundation as patronage or payroll, distributing to those whose favour the family wants, or employing family members who need a position. Neither is subtle. Both are read correctly by everyone who encounters them.

A family's values are not what it says at funerals. They are what its institutions are obliged to do when nobody is watching. A foundation is a family's values, written down.

And made binding on people who never met the person who held them.

The sequence is short. Settle the purpose in writing before anything else, because everything downstream is drafted from it. Choose the trustees, including the outsider. Adopt the constitution. Clear the name, advertise the application, and register. Then open the account, publish the criteria, and run one small grant round properly rather than a large one loosely — because the habits established in the first cycle are the habits the institution keeps.

On tax, the position must be stated with care and confirmed as at the date of registration, because the Finance Acts amend this area frequently and any statement of it dates quickly. Three principles hold structurally. Exemption is not automatic and is not conferred by registration with the Commission; it attaches to bodies whose activities are of a public character and is asserted through the tax authority. It does not extend to profits from a trade or business carried on by the body, which is where foundations that run income-generating activities most often come unstuck. And the deductibility of a donation in the hands of a corporate donor depends on the recipient falling within the categories the tax legislation prescribes — so a family company intending to fund the family foundation and deduct the payment should confirm the point before budgeting on it, rather than after.

Register with the tax authority and file whatever the position requires, exempt or not. Non-filing is the most common failure of Nigerian family foundations and the easiest to remedy, and a body that has never filed will discover the omission at the least convenient moment, which is usually when it first needs to demonstrate that it is what it says it is.

The anti-money-laundering regime also reaches non-profits, and the expectations around beneficial ownership, source of funds and reporting now apply in ways they did not a decade ago. A foundation used as a conduit for family money — funds in, funds out, no programme in between — is visible to the regime as exactly what it looks like. The remedy is ordinary: real purposes, real grants, real records.

One decision remains that is not legal and is usually taken carelessly: whether to use the family name. A named foundation binds two reputations together in both directions. The family's standing lends the institution credibility it could not otherwise buy, and the institution's conduct — its filings, its grants, the year it went quiet — is thereafter read as the family's conduct. That is an argument for the name where the family intends to be held to it, and an argument against where the foundation will be run at arm's length by people the family does not intend to supervise closely. Either answer is defensible. What is not defensible is choosing the name for its sound and discovering the consequence at the first difficulty.

Start smaller than the family can afford. A foundation that grants a modest sum every year for ten years, against published criteria, with a report each year, becomes an institution. One that grants a spectacular sum in its first year and nothing in its third becomes a story the family tells about something it once did — which is where most Nigerian family philanthropy currently sits, and which is not philanthropy at all. It is generosity, which is a personal virtue, and dies with the person who has it.

Nigerian families already give more than they can account for. The giving is real; the institution is missing. A foundation supplies the purpose, the trustees, the criteria, the money and the record — and it is the one institution in this architecture that a family builds against itself, and cannot take back.

A family that cannot say what it gives, to whom, and why, does not have philanthropy. It has a telephone.