A foundation (also a charitable foundation) is a category of nonprofit organization or charitable trust that will typically provide funding and support for other charitable organizations through grants, but may engage directly in charitable activities. Foundations include public charitable foundations, such as community foundation s, and private foundations which are typically endowed by an individual or family. The term "foundation" though may be used by organizations not involved in public grant making.
- 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.
There is no commonly accepted legal definition in Europe for a foundation. There is a proposal for a European Foundation, a legal form that would be recognised throughout Europe, see European Foundation Project.
Foundations in civil law
The term "foundation," in general, is used to describe a distinct legal entity.
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, 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 principles. The foundation has a distinct patrimony independent of its founder.
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.
There are not many Foundations in comparison to the rest of Europe.
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 is considered necessary.
A German foundation can either be charitable or serve a private interest.
Only charitable foundations are subject to supervision by state authorities.
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.
As of 2008, there are about 15,000 foundations in Germany, about 85% of them charitable foundations.
In Italy, a foundation is a private non profit and autonomous organization, its assets must be dedicated to a purpose established by the founder.
A foundation (Fundação) in Portugal 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.
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 and the Oriente Foundation.
Foundations in Spain are organizations founded with the purpose of not seeking profit and serving the general needs of the public.
A foundation in Sweden (Stiftelse) is a legal entity without an owner.
Foundations in common law
The law does not prescribe any particular form for a foundation in Ireland.
In the UK, the word "foundation" is sometimes used in the title of a charity, as in the British Heart Foundation and the Fairtrade Foundation. 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 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 – Foundations (Jersey) Law 200-
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 funded 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.
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.
- Wikipedia articles on individual foundations
- Financial endowment
- Charitable trust
- List of wealthiest foundations
- Program evaluation
- Think tank
- List of charitable foundations
- Nongovernmental organization
- International nongovernmental organization
- Stone, Diane.
- 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, ISBN 0-7914-5642-0
- 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.
- Joan Roelofs, The Invisible Hand of Corporate Capitalism, Recorded at Hampshire College, April 18, 2007