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A foundation (also a charitable foundation) is a category of
nonprofit organization A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
or charitable trust that typically provides funding and support for other
charitable organizations A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious or other activities serving the public interest or common good). The legal definition of a ...
through grants, but may also engage directly in charitable activities. Foundations include public charitable foundations, such as
community foundations Community foundations (CFs) are instruments of civil society designed to pool donations into a coordinated investment and grant making facility dedicated primarily to the social improvement of a given place. Community foundations are a global pheno ...
, and
private foundations A private foundation is a tax-exempt organization not relying on broad public support and generally claiming to serve humanitarian purposes. The Bill & Melinda Gates Foundation is the largest private foundation in the U.S. with over $38 billion i ...
, which are typically endowed by an individual or family. However, the term "foundation" may also be used by such organizations that are not involved in public grantmaking.


Description

Legal entities existing under the status of "foundations" have a wide diversity of structures and purposes. Nevertheless, there are some common structural elements. * Legal requirements followed for establishment * Purpose of the foundation * Economic activity * Supervision and management provisions * Accountability and auditing provisions * Provisions for the amendment of the statutes or articles of incorporation * Provisions for the dissolution of the entity * Tax status of corporate and private donors * Tax status of the foundation Some of the above must be, in most jurisdictions, expressed in the document of establishment. Others may be provided by the supervising authority at each particular jurisdiction.


Europe

There is no commonly accepted legal definition across
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
for a foundation. There was a proposal for a European Foundation Statute, a legal form that would create a legal definition recognised across all
EU Member States The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
, however this proposal was withdrawn in 2015 following its failure to pass through COREPER 1.


Foundations in civil law

The term "foundation", in general, is used to describe a distinct legal entity. Foundations as legal structures (
legal entities In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for ...
) and/or legal persons (
legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural person ...
), may have a diversity of forms and may follow diverse regulations depending on the jurisdiction where they are created. Foundations are often set up for charitable purposes, family patrimony and collective purposes. In some jurisdictions, a foundation may acquire its legal personality when it is entered in a public registry, while in other countries a foundation may acquire legal personality by the mere action of creation through a required document. Unlike a company, foundations have no
shareholders A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal ow ...
, though they may have a board, an assembly and voting members. A foundation may hold assets in its own name for the purposes set out in its constitutive documents, and its administration and operation are carried out in accordance with its statutes or articles of association rather than
fiduciary A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for examp ...
principles. The foundation has a distinct patrimony independent of its founder.


Finland

In Finland, foundations are regulated by the Finnish Patent and Registration Office and have the four following characteristics: * They are set up to manage property donated for a particular purpose. * This purpose is determined when establishing the foundation. * Foundations have neither owners, shareholders, nor members. * A board of trustees ensures that the foundation operates appropriately, and is responsible for ensuring that the investments by the foundation are secure and profitable. Foundations are considered legal persons in Finland. The Foundations Act in 2015 dramatically updated the laws regarding foundations.


France

There are not many Foundations in comparison to the rest of Europe. In practice public administration requires at least €1 million necessary. States representatives have a mandatory seat in the Board.


Germany

German regulations allow the creation of any foundation for public or private purposes in keeping with the concept of a ''gemeinwohlkonforme Allzweckstiftung'' ("general-purpose foundation compatible with the common good"). A foundation should not have commercial activities as its main purpose, but they are permitted if they serve the main purpose of the foundation. There is no minimum starting capital, although in practice at least €50,000 is considered necessary. A German foundation can either be charitable or serve a private interest. Charitable foundations enjoy tax exemptions. If they engage in commercial activities, only the commercially active part of the entity is taxed. A family foundation serving private interests is taxed like any other legal entity. There is no central register for German foundations. Only charitable foundations are subject to supervision by state authorities. Family foundations are not supervised after establishment. All forms of foundations can be dissolved, however, if they pursue anti-constitutional aims. Foundations are supervised by local authorities within each state ( Bundesland) because each state has exclusive legislative power over the laws governing foundations. In contrast to many other countries, German law allows a tax sheltered charitable foundation to distribute up to one third of its profit to the founder and his next of kin, if they are needy, or to maintain the founder's grave. These benefits are subject to taxation. , there are about 15,000 foundations in Germany, about 85% of them charitable foundations. More than 250 charitable German foundations have existed for more than 500 years; the oldest dates back to 1509. There are also large German corporations owned by foundations, including Bertelsmann, Bosch,
Carl Zeiss AG Carl Zeiss AG (), branded as ZEISS, is a German manufacturer of optical systems and optoelectronics, founded in Jena, Germany in 1846 by optician Carl Zeiss. Together with Ernst Abbe (joined 1866) and Otto Schott (joined 1884) he laid the f ...
and
Lidl Lidl Stiftung & Co. KG (; ) is a German international discount retailer chain that operates over 11,000 stores across Europe and the United States. Headquartered in Neckarsulm, Baden-Württemberg, the company belongs to the Schwarz Group, whi ...
. Foundations are the main providers of private
scholarship A scholarship is a form of financial aid awarded to students for further education. Generally, scholarships are awarded based on a set of criteria such as academic merit, diversity and inclusion, athletic skill, and financial need. Scholars ...
s to German students.


Italy

In Italy, a foundation is a private non profit and autonomous organization, its assets must be dedicated to a purpose established by the founder. The founder cannot receive any benefits from the foundation or have reverted the initial assets. The private foundations or civil code foundations are under the section about non commercial entities of the first book (Libro Primo) of the Civil Code of Law ( Codice Civile) from 1942. The Art. 16 CC establishes that the statutes of the foundation must contain its name, purpose, assets, domicile, administrative organs and regulations, and how the grants will be distributed. The founder must write a declaration of intention including a purpose and endow assets for such purpose. This document can be in the form of a notarized deed or a will. To obtain legal personality, the foundation must enroll in the legal register of each
Prefettura Prefect (from the Latin ''praefectus'', substantive adjectival form of ''praeficere'': "put in front", meaning in charge) is a magisterial title of varying definition, but essentially refers to the leader of an administrative area. A prefect's ...
(local authority) or some cases the regional authority. There are several nuances in requirements according to each foundation's purpose and area of activity.


Netherlands

See private foundation in the Netherlands. The non-profit Foundations are termed as Stichtings in
the Netherlands ) , anthem = ( en, "William of Nassau") , image_map = , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of the Netherlands , established_title = Before independence , established_date = Spanish Netherl ...
which are regulated by the Dutch Laws


Norway

See
Foundations in Norway Foundations in Norway (Norwegian: Bokmål: ''stiftelse''; Nynorsk: ''stifting'') are independent i.e. self-owning juridical entities disposing assets that have been given by will, gift or other juridical dispositions for one or more purposes. Info ...
.


Portugal

A foundation (''Fundação'') in
Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...
is regulated by Law 150/2015, with the exception of religious foundations, which are regulated by the Religious Freedom Law. Foundations may be private, wholly public (created and managed exclusively by public bodies), or public but with private management (created by public entities and optionally also private entities, but whose management is dominated by private entities). Foundations may only be operational after being recognized by the Prime Minister of Portugal. Foundations must designate and pursue at least one of twenty-five public benefit goals defined by law. They must also have enough assets to pursue those goals. They may not benefit the founders or any other restricted group, but the general public. Portuguese foundations may voluntarily associate themselves via the Portuguese Foundation Centre (''CPF – Centro Português de Fundações''), that was founded in 1993 by the Eng. António de Almeida Foundation, the
Calouste Gulbenkian Foundation The Calouste Gulbenkian Foundation ( pt, Fundação Calouste Gulbenkian), commonly referred to simply as the Gulbenkian Foundation, is a Portuguese institution dedicated to the promotion of the arts, philanthropy, science, and education. One ...
and the Oriente Foundation.


Spain

Foundations in Spain are organizations founded with the purpose of not seeking profit and serving the general needs of the public. Such foundation may be founded by private individuals or by the public. These foundations have an independent legal personality separate from their founders. Foundations serve the general needs of the public with a patrimony that funds public services and which may not be distributed to the founders' benefit.


Sweden

A foundation in Sweden (Stiftelse) is a legal entity without an owner. It is formed by a letter of donation from a founder donating funds or assets to be administered for a specific purpose. When the purpose is for the public benefit, a foundation may enjoy favorable tax treatment. A foundation may have diverse purposes, including but not limited to public benefit, humanitarian or cultural purposes, religious, collective, familiar, or the simple passive administration of funds. Normally, the supervision of a foundation is done by the county government where the foundation has its domicile, however, large foundations must be registered by the County Administrative Board (CAB), which must also supervise the administration of the foundation. The main legal instruments governing foundations in Sweden are the Foundation Act (1994:1220) and the Regulation for Foundations (1995:1280).


Switzerland

A foundation needs to be registered with the company register.


Foundations in common law


Canada

Under
Canadian law The legal system of Canada is pluralist: its foundations lie in the English common law system (inherited from its period as a colony of the British Empire), the French civil law system (inherited from its French Empire past), and Indigenous ...
, foundations may be
public In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of such groupings. This is a different concept to the sociological concept of the ''Öffentlichk ...
or private, but both are charities. They collectively comprise a large asset base for philanthropy.


Ireland

The law does not prescribe any particular form for a foundation in Ireland. Most commonly, foundations are companies limited by guarantee or trusts. A foundation can obtain a charity registration number from the Revenue Commissioners for obtaining tax relief as far as they can be considered under the law on charity, however, charitable status does not exist in Ireland. The definition usually applied is that from the Pemsel Case of English jurisprudence (1891) and the Irish Income Tax Act 1967. Trusts have no legal personality and companies acquire their legal status through the Company law and the required documents of incorporation. Foundations are not required to register with any public authority.


United Kingdom

In the UK, the word "foundation" is sometimes used in the title of a charity, as in the
British Heart Foundation The British Heart Foundation (BHF) is a cardiovascular research charity in the United Kingdom. It funds medical research related to heart and circulatory diseases and their risk factors, and runs influencing work aimed at shaping public policy ...
and the
Fairtrade Foundation A fair trade certification is a product certification within the market-based movement fair trade. The most widely used fair trade certification is FLO International's, the International Fairtrade Certification Mark, used in Europe, Africa, Asi ...
. Despite this, the term is not generally used in English law, and (unlike in civil law systems) the term has no precise meaning. Instead, the concept of Charitable Trust is in use (for example, the
Wellcome Trust The Wellcome Trust is a charitable foundation focused on health research based in London, in the United Kingdom. It was established in 1936 with legacies from the pharmaceutical magnate Henry Wellcome (founder of one of the predecessors of Glaxo ...
). The States of Jersey are considering introducing civil law type foundations into its law. A consultation paper presenting a general discussion on foundations was brought forth to the Jersey government concerning this possibility. It was adopted by the states of Jersey on 22 October 2008 through the Foundations (Jersey) Law 200.


United States

In the United States, many philanthropic and charitable organizations (such as the Bill & Melinda Gates Foundation) are considered to be foundations. However, the Internal Revenue Code distinguishes between private foundations (usually endowed by an individual, family, or corporation) and public charities ( community foundations or other nonprofit groups that raise money from the general public). While they offer donors more control over their charitable giving, private foundations have more restrictions and fewer tax benefits than public charities.


International networks

At an international level there are a series of networks and associations of foundations, among them Council on Foundations, EFC ( European Foundation Centre), WINGS (Worldwide Initiatives for Grantmaker Support). Those organization also have a role in supporting research on foundations.


See also

* Wikipedia articles on individual foundations * Financial endowment * Charitable trust *
List of wealthiest foundations This is a list of wealthiest charitable foundations worldwide. It consists of the 45 largest charitable foundations, private foundations engaged in philanthropy, and other charitable organizations such as charitable trusts that have disclosed the ...
*
Program evaluation Program evaluation is a systematic method for collecting, analyzing, and using information to answer questions about projects, policies and programs, particularly about their effectiveness and efficiency. In both the public and private sectors, s ...
*
Think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmenta ...
* List of charitable foundations * Nongovernmental organization *
International nongovernmental organization An international non-governmental organization (INGO) is an organization which is independent of government involvement and extends the concept of a non-governmental organization (NGO) to an international scope. NGOs are independent of government ...


Further reading

* Stone, Diane. Knowledge actors and transnational governance: The private-public policy nexus in the global agora. Palgrave Macmillan, 2013. * Lester Salamon et al., "Global Civil Society: Dimensions of the Nonprofit Sector", 1999, Johns Hopkins Center for Civil Society Studies. * Joan Roelofs, ''Foundations and Public Policy: The Mask of Pluralism'', State University of New York Press, 2003, * Helmut Anheier, Siobhan Daly, ''The Politics of Foundations: A Comparative Analysis'', Routledge, 2006. * ''Legitimacy of Philanthropic Foundations: United States and European Perspectives'', ed. Kenneth Prewitt, Russell Sage Foundation, 2006.


Further listening

* Joan Roelofs, '' The Invisible Hand of Corporate Capitalism'', Recorded at Hampshire College, April 18, 2007.


References


External links


Comparative Highlights of Foundation Laws: The operating environment for foundations in EuropeFoundations in EuropeEuropean Foundation StatuteIt's time for a European Foundation Statute (2011)
{{DEFAULTSORT:Foundation (Nonprofit) Charity law