Philanthropy & Charity Foundations

When one chooses to start a charity, one of the first essential steps is to choose an appropriate legal form. Dutch law knows various entities which can serve as a legal form for a charity: the Dutch foundation and the Dutch association.

The Dutch foundation is most often chosen for founding a charity. A characteristic of the Dutch foundation is that it has no members. Basically, the Dutch foundation only has to have one organ: the board of directors. The Dutch foundation aims to achieve a specific goal as mentioned in the articles of incorporation. This goal can be reached by obtaining donations, conducting a business or applying for grants. In addition, it is prohibited for the foundation to distribute profits to founders, the persons that form part of its organs and other persons. The latter group (‘other person’), however, may receive payments as long as these payments are made for an altruistic or social purpose, meaning that a foundation is a legal form that is well fit to shape a charity. A foundation has donators or volunteers. In principle, these persons do not have any voting rights. Furthermore, a foundation may own immovable property, make debts, enter into commitments and open bank accounts. A foundation may also conduct commercial activities.

Unlike a foundation, an association has members, who are united in the General Meeting. This General Meeting has a considerable amount of power, as it is amongst others responsible for the appointment and removal of directors. Additionally, the articles of incorporation can only be amended by the General Meeting. The association may not distribute profits among its members. Just like the foundation, an association may perform legal acts such as buying property. The latter is, however, prohibited in case the association can be seen as an informal association.

Between the foundation and the association there can exist differences in potential directors’ liability.