The Dutch Foundation Michiel D’haene

Page 213 October 2015 Number of foundations ► Research 2007 Professor P.H.M. Gerver (University of Amsterdam) ► Belgium350 ► France550 ► Italy1,300 ► Germany10,000 ► The Netherlands (3 November 2008;Chamber of Commerce) 167,877

Page 313 October 2015 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 413 October 2015 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 513 October 2015 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 613 October 2015 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 713 October 2015 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 813 October 2015 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 913 October 2015 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 1013 October 2015 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 1113 October 2015 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 1213 October 2015 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 1313 October 2015 Charity in The Netherlands (source: government report “Goed bedoeld” (March 2007) ► type of organisation amount -Foundations and Associations Foundations Associations Organizations pursuing public benefits (ANBI) Fundraising organizations Private funds (= non-fundraising) Religious organizations4.000 ► Organisations focusing on charity: ► 92 %: foundations ► 600 organisations are operating nation wide.

Page 1413 October 2015 reprise ► Research 2007 Professor P.H.M. Gerver (University of Amsterdam) ► Belgium350 ► France550 ► Italy1,300 ► Germany10,000 ► The Netherlands (3 November 2008;Chamber of Commerce) 167,877

Page 1513 October 2015 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 1613 October 2015 Sources of Charity (2005) Donor/Sponsor Total amount in euros ► Households2,2 mrd ► Companies 2,2 mrd ► Government1,0 mrd ► Lotteries0,4 mrd ► Legacies 0,2 mrd ► Private funds 0,1 mrd ► Other 0,1 mrd Total 6,0 mrd

Page 1713 October 2015 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 1813 October 2015 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