Private foundation
Encyclopedia
A private foundation is a legal entity set up by an individual, a family or a group of individuals, for a purpose such as philanthropy. The Bill & Melinda Gates Foundation
is the largest private foundation in the U.S. with over $38 billion in assets. However, most private foundations are much smaller and approximately two-thirds of more than 84,000 filing with the IRS in 2008 have less than $1 million in assets and 93% have less than $10 million. In aggregate, private foundations in the U.S. control over $628 billion in assets and made more than $44 billion in charitable contributions in 2007.
Unlike a charitable foundation, a private foundation does not generally solicit funds from the public.
Some of the above must be, in most jurisdictions, expressed in the document of establishment. Others may be provided by the supervising authority at each particular jurisdiction.
legal systems
:
in December 2004 following the Foundations Act. http://www.bfsb-bahamas.com/foundations/index.html
described in the Internal Revenue Code
by section 509. A private foundation is necessarily a 501(c)(3) exempt organization (or a former such entity). It is defined by a negative definition: by what it is not. A private foundation is not a public charity, as described in section 170(b)(1)(A) (i) through (vi). Neither is it a section 509(a)(2) organization, nor a supporting organization
. Private foundations are subject to 2% excise taxes found in section 4940 through 4945 of the internal revenue code. Once a charity becomes a private foundation, it retains that status unless it follows the difficult termination rules of section 507.
legal systems:
n Private Foundation (Privatstiftung) was last reformed under the Private Foundation Act in September 1993.
(Stichting) is a legal person created through a legal act. This act is usually either a notarised deed (or a will) that contains the articles of the foundation which must include the first appointed board. No government authority is involved in the creation or authorization of a foundation, it acquires full legal capacity through its sole creation. A foundation has no members and its purpose must be stated in its articles, using capital dedicated to such goal. The foundations are defined in the Dutch Civil Code (Burgerlijk Wetboek
), Boek 2 Art 285-304. It is not necessary in the Netherlands that a foundation serves a purpose of general interest, but its official goal cannot include making payments to anybody, except for charitable causes. The foundations are governed and represented by a board that is responsible for its administration, this board has not a requirement for specific number of members.
Art. 2:289 of the Civil Code establishes that all foundations must be registered in the Register of Commerce or "Handelsregister". Commercial activities are allowed if they are within the purpose of the foundation and are taxed. Board members can be held liable for the foundation, civilly as well as criminally.
The Dutch Tax Service can declare an institution to be an "institution for general benefit" (algemeen nut beogende instelling
, ANBI), with tax benefits. Often, but not necessarily, this is a foundation. Conversely, not every foundation qualifies.
Examples:
Private Foundation (Stichting Particulier Fonds).
was first introduced in 1995, modelled on the Liechtenstein Family Foundation.
Foundation was introduced following the Foundation Act of 2003.
(Stiftelse) is formed by a letter of donation from a founder donating funds or assets to be administered for a specific purpose. A private foundation may have diverse purposes, including but not limited to collective, familiar, or the purpose of passive administration of funds. Normally, the supervision of a private foundation is done by the county government where the foundation has its domicile, however, large foundations must be registered by the County Administrative Board (CAB), which must also supervise the administration of the foundation. The main legal instruments governing private foundations in Sweden are those that regulate foundations in general: the Foundation Act (1994:1220) and the Regulation for Foundations (1995:1280).
Bill & Melinda Gates Foundation
The Bill & Melinda Gates Foundation is the largest transparently operated private foundation in the world, founded by Bill and Melinda Gates. It is "driven by the interests and passions of the Gates family"...
is the largest private foundation in the U.S. with over $38 billion in assets. However, most private foundations are much smaller and approximately two-thirds of more than 84,000 filing with the IRS in 2008 have less than $1 million in assets and 93% have less than $10 million. In aggregate, private foundations in the U.S. control over $628 billion in assets and made more than $44 billion in charitable contributions in 2007.
Unlike a charitable foundation, a private foundation does not generally solicit funds from the public.
Description
One of the characteristics of the legal entities existing under the status of "Foundations", is a wide diversity of structures and purposes. Nevertheless, there are some common structural elements that are the first observed under legal scrutiny or classification.- Legal requirements followed for establishment
- Purpose of the foundation
- Economic activity
- Supervision and management provisions
- Accountability and auditing provisions
- Provisions for the amendment of the statutes or articles of incorporation
- Provisions for the dissolution of the entity
- Tax status of corporate and private donors
- Tax status of the foundation
Some of the above must be, in most jurisdictions, expressed in the document of establishment. Others may be provided by the supervising authority at each particular jurisdiction.
Common law
The following foundations are set up under common lawCommon law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
legal systems
Legal systems of the world
The legal systems of the world today are generally based on one of three basic systems: civil law, common law, and religious law – or combinations of these...
:
Bahamas
Foundations were first introduced in The BahamasThe Bahamas
The Bahamas , officially the Commonwealth of the Bahamas, is a nation consisting of 29 islands, 661 cays, and 2,387 islets . It is located in the Atlantic Ocean north of Cuba and Hispaniola , northwest of the Turks and Caicos Islands, and southeast of the United States...
in December 2004 following the Foundations Act. http://www.bfsb-bahamas.com/foundations/index.html
USA
A private foundation, in the United States, is a charitable organizationCharitable organization
A charitable organization is a type of non-profit organization . It differs from other types of NPOs in that it centers on philanthropic goals A charitable organization is a type of non-profit organization (NPO). It differs from other types of NPOs in that it centers on philanthropic goals A...
described in the Internal Revenue Code
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...
by section 509. A private foundation is necessarily a 501(c)(3) exempt organization (or a former such entity). It is defined by a negative definition: by what it is not. A private foundation is not a public charity, as described in section 170(b)(1)(A) (i) through (vi). Neither is it a section 509(a)(2) organization, nor a supporting organization
Supporting organization (charity)
A supporting organization, in the United States, is a public charity created by the U.S. Internal Revenue Code in . A supporting organization either makes grants to, or performs the operations of, a public charity similar to a private foundation...
. Private foundations are subject to 2% excise taxes found in section 4940 through 4945 of the internal revenue code. Once a charity becomes a private foundation, it retains that status unless it follows the difficult termination rules of section 507.
Civil law
The following foundations are set up under civil lawCivil law (legal system)
Civil law is a legal system inspired by Roman law and whose primary feature is that laws are codified into collections, as compared to common law systems that gives great precedential weight to common law on the principle that it is unfair to treat similar facts differently on different...
legal systems:
Austria
The AustriaAustria
Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
n Private Foundation (Privatstiftung) was last reformed under the Private Foundation Act in September 1993.
Netherlands
A foundation in the NetherlandsNetherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
(Stichting) is a legal person created through a legal act. This act is usually either a notarised deed (or a will) that contains the articles of the foundation which must include the first appointed board. No government authority is involved in the creation or authorization of a foundation, it acquires full legal capacity through its sole creation. A foundation has no members and its purpose must be stated in its articles, using capital dedicated to such goal. The foundations are defined in the Dutch Civil Code (Burgerlijk Wetboek
Burgerlijk Wetboek
The Burgerlijk Wetboek is the civil code of the Netherlands. Early permutations were largely based on the Napoleonic code. The Dutch Civil Code was given substantive reform in 1992. The Code deals with the rights of individuals , legal entities , the rights of assets and succession...
), Boek 2 Art 285-304. It is not necessary in the Netherlands that a foundation serves a purpose of general interest, but its official goal cannot include making payments to anybody, except for charitable causes. The foundations are governed and represented by a board that is responsible for its administration, this board has not a requirement for specific number of members.
Art. 2:289 of the Civil Code establishes that all foundations must be registered in the Register of Commerce or "Handelsregister". Commercial activities are allowed if they are within the purpose of the foundation and are taxed. Board members can be held liable for the foundation, civilly as well as criminally.
The Dutch Tax Service can declare an institution to be an "institution for general benefit" (algemeen nut beogende instelling
Algemeen nut beogende instelling
The Dutch Tax Administration can declare an institution to be an "institution for general benefit" . Often this is a foundation, though not every foundation qualifies. It can also be a voluntary association , but not e.g. a sport club, or association of personnel...
, ANBI), with tax benefits. Often, but not necessarily, this is a foundation. Conversely, not every foundation qualifies.
Examples:
- Cornelis Kruseman StichtingCornelis Kruseman StichtingThe Cornelis Kruseman - J.M.C. Ising Stichting, called the Cornelis Kruseman Stichting in short, is a Dutch foundation that was established in 1996 and is located in The Hague, the Netherlands...
- Stichting MuseumjaarkaartMuseumkaartThe Museum card is a card that allows free entrance to a number of museums around the Netherlands. The card itself costs €44.90 , and is valid for one year. A discounted card is available for under 19s, and costs €19.95 .The Museumkaart is available to buy at any of the participating museums below...
- purpose: promote visiting Dutch museums - Nederlandse Omroep StichtingNederlandse Omroep StichtingThe Nederlandse Omroep Stichting , English: Netherlands Broadcasting Foundation, is one of the broadcasters in the Netherlands Public Broadcasting system...
- purpose: make news and sports programmes for the three Dutch public television channels and the Dutch public radio services - Stichting FERNFERNFERN is a Dutch foundation created in 1995. It is an international non-governmental organization to keep track of the EU’s involvement in forests and to co-ordinate NGO activities at the European level...
- purpose: promote greater environmental and social justice, focusing on forests and forest peoples’ rights - Stichting isfth - purpose: supporting individual artists and stimulating artistic audio visual developments.
- Stichting Talent-aid International - purpose: promote and support artists, composers and performers mainly via the internet.
- Stichting INGKA FoundationStichting INGKA FoundationThe Stichting INGKA Foundation is a Dutch foundation founded in 1982 by Ingvar Kamprad, the Swedish billionaire, who is founder and chairman of IKEA. INGKA is one of the largest charitable foundations in the world. The name "INGKA" comes from a contraction of his name; "Stichting" is the Dutch...
- purpose: promote and support innovation in the field of architectural and interior design - Stichting Max HavelaarStichting Max HavelaarStichting Max Havelaar is the Dutch member of FLO International, which unites 23 Fairtrade producer and labelling initiatives across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand. Several of these corresponding organizations in other European countries also use the...
- Stichting Pensioenfonds ABPStichting Pensioenfonds ABPStichting Pensioenfonds ABP , frequently referred to as ABP, is the pension fund for government and education employees in the Netherlands...
- pension fundPension fundA pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
for the government and educational sectors - Stichting Pensioenfonds Zorg en WelzijnStichting Pensioenfonds Zorg en WelzijnStichting Pensioenfonds Zorg en Welzijn is the second largest pension fund in the Netherlands...
- pension fund for the healthcare and social workSocial workSocial Work is a professional and academic discipline that seeks to improve the quality of life and wellbeing of an individual, group, or community by intervening through research, policy, community organizing, direct practice, and teaching on behalf of those afflicted with poverty or any real or...
sectors - Wiardi Beckman StichtingWiardi Beckman StichtingThe Wiardi Beckman Stichting is a Dutch think tank linked to the left-of-center Labour Party .The foundation is named after Herman Bernard Wiardi Beckman, a member of the Dutch Senate, who during the Second World War was summoned by Queen Wilhelmina to become a member of the war cabinet, but who...
Netherlands Antilles
Foundation legislation was last reformed in 1998, giving rise to the Netherlands AntillesNetherlands Antilles
The Netherlands Antilles , also referred to informally as the Dutch Antilles, was an autonomous Caribbean country within the Kingdom of the Netherlands, consisting of two groups of islands in the Lesser Antilles: Aruba, Bonaire and Curaçao , in Leeward Antilles just off the Venezuelan coast; and Sint...
Private Foundation (Stichting Particulier Fonds).
Panama
The Panama Private Interest FoundationPanama Private Interest Foundation
The Panama Private Interest Foundation is a type of private foundation formed under the laws of Panama. It is based upon the Liechtenstein "Stiftung" .-Features:...
was first introduced in 1995, modelled on the Liechtenstein Family Foundation.
Saint Kitts
The Saint KittsSaint Kitts
Saint Kitts Saint Kitts Saint Kitts (also known more formally as Saint Christopher Island (Saint-Christophe in French) is an island in the West Indies. The west side of the island borders the Caribbean Sea, and the eastern coast faces the Atlantic Ocean...
Foundation was introduced following the Foundation Act of 2003.
Sweden
A private foundation in SwedenSweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
(Stiftelse) is formed by a letter of donation from a founder donating funds or assets to be administered for a specific purpose. A private foundation may have diverse purposes, including but not limited to collective, familiar, or the purpose of passive administration of funds. Normally, the supervision of a private foundation is done by the county government where the foundation has its domicile, however, large foundations must be registered by the County Administrative Board (CAB), which must also supervise the administration of the foundation. The main legal instruments governing private foundations in Sweden are those that regulate foundations in general: the Foundation Act (1994:1220) and the Regulation for Foundations (1995:1280).