The idea of establishing of the YAYASAN SABAH was mooted by Sabah's first Head of State, Tun Datu Haji Mustapha Bin Datu Harun, at Mesapol, Sipitang on November 9, 1965. In his speech he stated:

Yayasan Sabah will act as an instituition that would strive initially to remedy the educational deficiencies in Sabah and subsequently to devise a system of redistributing the state's timber wealth to all of the populace. The initial objectives of the new foundation were largely directed to the creation of new educational opportunities;

to provide ample facilities for improvement and progress in education; to widen the scope for the higher education of Sabah students throughout the world; to promote the establishment of a university college in Sabah; to arrange the award of scholarships from various institutions, including the Foundation itself, to students of Sabah origin; and to make donations to schools in need of special assistance."

In recognition of the needs for a better standard of living and education for Malaysians in Sabah, and in order to create an organisation which could address those needs more effectively and expeditiously, an enactment for the establishment of Yayasan Sabah was passed by the Sabah Legislative Assembly in 1966. Within this broad perimeter, Yayasan Sabah Group has been extensively involved in the provision and improvement of the socio-economic development of Malaysians in Sabah.