Legal and Governance Issues

Basic Training on Conservation Trust FundsCape Town, South Africa March 31 – April 2, 2009

Legal Establishment

• Legal registration depends on the legal framework in the country where the fund is created

Registration of fund• Legal statutes, articles of incorporation or deed • Creation of board of directors or trustees• Deposit of initial capital of fund• Recognition of “public benefit” and/or tax exempt status of

fundAll of this depends on active government support for the creation of an independent fund

Legal Framework

• Common Law vs. Civil Law

• CTFs can be established through:Foundation or Trust LawSpecial LawOffshore Bilateral or International Agreement

Definition of Trust Fund

A trust (fund) is an entity managed by one person or group (trustee) for the identified goals or benefit of a sector person or group (beneficiary).

Legal Instruments

• Trust Deed or Articles of Incorporation

• By-laws

• Grant Agreements – based on donor requirements (e.g., dissolution, no changes to statutes without approval, reporting)

Tax Exemption

• Based on national laws for not-for-profit organizations or funds

• May require special exemption prior to establishment of fund, if not provided by law

• Exemptions include: donations, investment income, procurement

Offshore “Twinning”

• “Friends of”

• U.S. 501(c) 3

Governance

• By-laws Build on legal statutes– Set Board rules for selection

and rotation of members, meetings, committees, voting, conflict of interest

– Duties of Board– Define relationship with

Secretariat– Requirements for operational

manuals and reporting Mexican Nature Conservation Fundwww.fmcn.org

Successful Boards

• Independent with majority non-governmental• Balance of stakeholder interests represented• Board members serve in individual capacity• Board member commitment to mission• Leadership in strategic planning and

fundraising• Measures to strengthen Board capacity

Criteria for Selection of Board Members

• Expertise (conservation, legal, finance, other)

• Regional representation

• Gender• Stakeholders Madagascar Biodiversity

Fund Board, 2006

Board Committees

• Boards function more effectively when they delegate certain topics to expert committees that make recommendations to the full board

• Finance/Investment• Technical• Local or regional

advisory