The Dutch Foundation

Michiel D’haene

Page 2April 19, 2023

Number of foundations

► Research 2007 Professor P.H.M. Gerver (University of Amsterdam)► Belgium 350► France 550 ► Italy 1,300 ► Germany 10,000

► The Netherlands

(3 November 2008;Chamber of Commerce) 167,877

Page 3April 19, 2023

Legal framework

► Legal persons with corporate capacity in the Netherlands► Private company limited by shares (“BV”)► Company limited by shares (“NV”)► Associations (“Vereniging”)► Cooperatives (“Coöperaties”) ► The mutual insurance society (“Onderlinge

waarborgmaatschappij”)

Page 4April 19, 2023

Establishment of a foundation

► Notarial deed (including a public will)► The name of the foundation► The object► Appointment and dismissal of the directors► The statutory seat► The application of the surplus after liquidation

► Registration Chamber of Commerce

Page 5April 19, 2023

Statutes

► Lot of freedom (anything goes)► Common subjects

► duration of the foundation► the manner in which the foundation will obtain its assets► the authorities of specific committees in the foundation► a timeschedule that indicates the appointment and dismissal of

Directors

► the statutes regulate possible amendments ► Statutes can exclude possible amendments► District Court can intervene upon request DA or person concerned

Page 6April 19, 2023

Object

► Anything goes ! (part 2)► One restriction:

► Object may not include distributions to any founder or those participating in the constituent bodies

► No restraints to exploit a commercial business;► Profits should be distributed according to the objects of the

foundation

Page 7April 19, 2023

Board of Directors

► Can be one or more directors► Only two specific restrictions; not authorized (unless

statutes grant this authority);► to enter into agreements to purchase etc. real estate property► to enter into agreements to provide security rights, act as a guarantee

► Approval and dismissal is described in the statutes; Directors can be appointed by third parties

Page 8April 19, 2023

Other bodies

► Anything goes ! (part 3)► For example

► Council of advisors► Supervisory board► Council of sponsors► Possible authorities

► Approval of annual accounts► Prior approval for certain board decisions► Appointment/dismissal directors of the board

etc.

► One restriction► No members;► “Other bodies” may not be similar to the Meeting of Members in an

Association.

Page 9April 19, 2023

Supervision

► no internal checks and balances ► unless the statutes provide for “other bodies

► Overall supervision: District Court► Can intervene upon request of:

► District Attorney (DA)► Persons concerned

► Apart from the DA, no government control

Page 10April 19, 2023

Financial records

► Most foundations do not publish any financial records

► Exception 1: “Small”commercial foundations ► commercial foundations with a nett turnover of more than EUR

3,500,000 two years on a row; obligatory publication of summarizes annual accounts.

► Exception 2: “Large”commercial foundations ► 2 out of 3:

► the value of assets exceeds 4,400,000 million Euros► the yearly turnover is more than 8,800,000 million Euros► the average number of employees is more than 50

Page 11April 19, 2023

Liquidation (1)

Dissolution based on:► a resolution of the Board of directors of the Foundation (if provided for in the

statutes) ► the occurrence of an event as described in the statutes ► after an involuntary liquidation order by the District Court► by a court decision upon request of a party concerned or the District Attorney

if:► there are formal irregularities with regard to the establishment of the foundation; ► the statutes are not in compliance with the law;► the actual design of the organisation does not match the legal definition of a

foundation;► the assets of a foundation are not sufficient to achieve the object of the foundation

and it is expected that the foundation will not be able to acquire those assets in the future;

► the object of a foundation has been achieved or the object of a foundation can not be achieved and it is not appropriate to change the object of the foundation.

Page 12April 19, 2023

Liquidation (2)

► by a court decision (without any request of a party concerned or the District Attorney) in case that:

► the unaltered statutes could lead to situations that are reasonably not expected and wanted at the time of establishing the foundation;

► the statutes do not provide for an alteration of the statutes► a person concerned applied for an alteration of the statutes (which is under

these circumstances a possibility that is created in paragraph 2: 294 BW) but the court turned that request down; In that situation there is no other way than to dissolve the foundation.

► Administrative dissolution order by the Chamber of Commerce for inactive legal entities

Page 13April 19, 2023

Charity in The Netherlands(source: government report “Goed bedoeld” (March 2007)

► type of organisation amount

- Foundations and Associations 268.500

- Foundations 157.500

- Associations 111.000

- Organizations pursuing public benefits (ANBI) 17.500

- Fundraising organizations 13.500 - 15.500

- Private funds (= non-fundraising) 2.000 - 4.000

- Religious organizations 4.000

► Organisations focusing on charity: 17.500 - 19.500.► 92 %: foundations ► 600 organisations are operating nation wide.

Page 14April 19, 2023

reprise

► Research 2007 Professor P.H.M. Gerver (University of Amsterdam)► Belgium 350► France 550 ► Italy 1,300 ► Germany 10,000

► The Netherlands

(3 November 2008;Chamber of Commerce) 167,877

Page 15April 19, 2023

Average size

2004: ► Biggest: turnover 150 million – 200 million Euros► 41 fundraisers: turnover > 5 million Euros► 7 fundraiser: turnover > 25 million Euros► Most organizations: turnover < 25,000 Euros

Employees:► Biggest: around 400 employees► Most organizations: no employees

Page 16April 19, 2023

Sources of Charity (2005)

Donor/Sponsor Total amount in euros► Households 2,2 mrd► Companies 2,2 mrd► Government 1,0 mrd► Lotteries 0,4 mrd► Legacies 0,2 mrd► Private funds 0,1 mrd► Other 0,1 mrd

Total 6,0 mrd

Page 17April 19, 2023

Legal framework on charity

► No specific legislation► Dutch government reluctant for further regulations► Desired standards:

► a balance between operational costs and the distribution of funds;► criteria regarding the yields of private funds► organizational transparency with a clear structure of the board of

directors; ► records about the conduct of persons and entities

► Self regulation is promoted

Page 18April 19, 2023

Recent developments

► ANBI Tax facility► Facility to donate tax-deductable gifts► Around 16,000 organizations (500 churches)► Dutch (tax) authorities demand more transparency

► Anti terrorism legislation► More permanent screening of legal entities based on risk factors► Foundations will be included also► Foundations get obligation to publish financial records

► General feeling; risk of criminal activities through charity is small

Thanks for your attention

Michiel D’haene