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The Dutch Foundation

The Dutch Foundation. Michiel D’haene. 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. Legal framework.

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The Dutch Foundation

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  1. The Dutch Foundation Michiel D’haene

  2. 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

  3. 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”)

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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.

  9. 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

  10. 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

  11. 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.

  12. 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

  13. 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.

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. Thanks for your attention Michiel D’haene

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