Communication from the Commission on promoting the role of voluntary organisations and foundations in Europe
Date: 1997-06-06
Institutions: European Commission
Subjects: collective activities, foundation, report, social economy, voluntary organisation

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  06.06.1997 
COM(97)  241  final 

COMMUNICATION  FROM  THE  COMMISSION 

on 

PROMOTING  THE ROLE OF VOLUNTARY 
ORGANISATIONS  AND FOUNDATIONS  IN EUROPE 

TABLE OF CONTENTS 

I. Introduction 

II. Scope 

III The role and importance of Voluntary Organisations and Foundations 

IV The sector and the European  Institutions working together 

V Problems and challenges facing the sector 

VI Conclusion 

Annex I.  The survey 

1. 

1 

3 

6 

8 

11 

16 

Annex  II.  Overview  of the Legal  and  Fiscal  Framework  for  Voluntary  Organisations  and 
Foundations 

26 

Annex III 

Legal and Fiscal Framework  for  Voluntary Organisations  and Foundations 

31 

fcA 

INTRODUCTION 

PURPOSE 

in 

the  social  economy 

This  Communication  concerns  one  sector 
1 
of 
the  European 
Community  -  that  of  voluntary  organisations 
and  foundations. 
These  organisations  are 
playing an important role in almost every field  of 
social  activity.  They  contribute to  employment 
creation,  active  cîtîzerjship,  democracy,  provide 
a  wide  range  of  services,  play  a  major  role  in 
sport  activities»  represent  citizens'  interests  to 
various  public  authorities and  play  a  major  part 
in  promoting  and  safeguarding  human  rights  as 
well  as  having  a  crucial  role  in  development 
policies. 

the  years 

1.1  Over 
they  have  made  an 
increasing  contribution  to  the  development  of 
Europe  which  is  something  that  should  be 
encouraged  and  developed, 

this 

importance, 

1.2  Given 
the  European 
Commission  carried  out  an  extensive  survey  in 
order  to  gain  a  better  knowledge  of  the  sector 
and  to  identity  issues  to  be  addressed.  The 
results of the survey are given in annex 1. 

1.3  The  aim  of  the  document  is  to  illustrate 
the growing  importance  of the  sector  within  the 
European  Union,  to  show  what  problems  and 
challenges  these  organisations  are  facing  and  to 
open up a dialogue on the basis of a set of ideas, 
in  order 
their  development  at 
European  and  national  level,  to  improve  their 
capacity  to  meet  future  needs  and  maximise 
their contribution  to European  integration. 

favour 

to 

1.4  This  document  presents  a  series  of 
measures which could be taken at Member  State 
level,  but  does  not  seek  to  impose  on  Member 
States  specific  solutions  or  actions.  It  is  up  to 
individual  Member  States 
the 
different 
issues  as  they  see  fit.  However, 
conforming  to  the  principles  of  subsidiarity  and 
proportionality  there  are  some  objectives  which 
can  be  dealt  with  at  Community  level.  These 
ideas are outlined in the "Conclusion \ 

take  on 

to 

II. SCOPE 

J 

Voluntary organisations 

1 
Of  the  three  sectors  -  co-operatives, 
mutual  societies,  and  voluntary  organisations  -
which  go  to  make  up  the  social  economy,  that 
of  voluntary  organisations  is  by  far  the  most 
difficult  to delimit or  define. 

their  most 

2.1  At 
voluntary 
organisations  are  simply  groups  of  people  who 
have come together for  some purpose or other. 

basic, 

people 

2.2  At  one  end  of the  spectrum,  the  world  of 
voluntary  organisations  merges  imperceptibly 
into  the  tissue  of  everyday  social,  community, 
and  family  life;  at  the  other  end  can  be  found 
great  institutions  of enormous  national  and  even 
international  importance  such  as  universities, 
institutions, 
hospitals,  research  and  cultural 
which  many 
accustomed 
(erroneously)  to  think  of  as  straightforward 
"public"  bodies.  Others, 
in  contrast,  have 
hundreds  of  professional  staff,  thousands  of 
volunteers  and  a  turnover  of  many  millions  of 
ECU's.  Very  many  voluntary  organisations 
work 
in 
conventional  spheres  like  social  work;  others 
tradition  of  complete 
maintain  a 
independence  and  are  concerned  with  radical 
social programmes or "alternative"  lifestyles. 

closely  with  public 

authorities 

strong 

are 

2.3  There  is,  however,  some  agreement  that 
voluntary  organisations  share to varying  degrees 
the following  features: 

a) 
they are distinguished  from  informal  or ad 
hoc, purely social or familial, groupings by some 
degree,  however  vestigial,  of 
formal  or 
institutional  existence. 
they  are  non-profit-distributing^  that  is 
(b) 
to  say  they  have  purposes  other  than  to  reap 
profits  for their management  or members. 

they  are  independent,  in  particular,  of 
(c) 
government  and  other  public authorities, that 
is  to  say  free  to  govern  themselves  without 
interference  according  to  their  own  rules  and 
procedures. 

they  must  be  managed 

(d) 
is 
sometimes  called  a "disinterested"  manner.  The 

in  what 

use of this term  is meant to  indicate not just  that 
voluntary  organisations  must  not  themselves  be 
profit-seeking,  but  also  that  those  who  manage 
them ought  not  to do  so in the hope of personal 
gain. 

(e) 
they  must  be  active  to  some  degree  in 
the  public  arena  and  their  activity  must  be 
aimed,  at  least  m  part,  at  contributing  to  the 
public good; 

2.4  The  degree  to  which  particular  voluntary 
organisations  share  the  above  five  features  will 
for  example, 
vary  • considerably.  Deciding, 
is  indeed 
whether  a  voluntary  organisation 
independent  is  not  easy,  and  the  notion  of  the 
"public good"  is bound  to  be  controversial.  The 
definition  does,  nonetheless,  offer  a  degree  of 
coherence in a complex  area. 

2.5  This  paper  deals  with  all  organisations 
which  share,  to  some  degree,  the  above  five 
features.  However,  three  very  specific  kinds  of 
organisation  have  been  consciously  excluded. 
These  are  political  parties,  which  can  be 
voluntary  organisations  but  are  clearly  a  special 
case;  religious  congregations  (that  is,  in  the 
strict  sense,  and  not  excluding  organisations  of 
religious  inspiration  active  in  work  of  general 
public benefit);  and  trade  unions  and  employers' 
organisations. 

Foundations 

the 

vehicle 

pursuing 

3 
Like  voluntary  organisations,  foundations 
also  undertake  a  wide  range  of  activities.  In 
some  countries  the  foundation  is  frequently  the 
preferred 
purposes 
for 
indistinguishable from those typically  pursued  in 
other  countries  by  voluntary  organisations. 
legal  point  of  view,  however, 
From 
foundations  form  a  more  homogeneous  group 
than  do  voluntary  organisations, 
the  only 
important  distinction  being  between  those  that 
are for  essentially  private,  and  those that  are  for 
essentially  public,  benefit. 
is  foundations 
which  have  some  public  purpose  (even  while 
remaining private bodies) which  are the  focus  of 
this Communication. 

It 

3.1  For  present  purposes  foundations  are  thus 
bodies  with  their  own  source  of  funds  which 
they  spend  according  to  their  own  judgement 
on projects  or  activities  of public  benefit.  They 
are  entirely  independent  of  government  or 
other  public  authorities  and  are  run  by 
independent  management  boards or trustees. 

Types of  voluntary  organisation 

4 
Voluntary  organisations  and* foundations 
are difficult  to  categorise  and  define.  Part  of the 
difficulty  at the European  level  lies simply in the 
different  national  traditions  which  they  reflect, 
and  their  strong  tendency  to  combine  several 
different 
voluntary 
organisations  and  foundations  can,  however,  be 
considered  as  having  one  or  more  of  the 
following  functions: 

objectives. 

Most 

(a)  Service delivery or provision to provide to 
their  members  or  clients  services  such  as  social 
information, 
services,  health  care, 
advice or support. 

training, 

(b)  Advocacy:  Le.  organisations  whose 
purpose  is  to  campaign,  lobby,  and  otherwise 
argue on behalf of some cause  or group with the 
aim of changing public perception  or policy. 

(c)  Self-help  or  mutual  aid:  organisations 
typically  formed  by  groups  of  individuals  with 
some  common  interest  or  need  in  order  to 
provide  mutual  help,  information,  support  and 
cooperation. 

(d)  Resource  and  co-ordination:  so-called 
"intermediary  bodies"  which  co-ordinate  the 
activities of, or provide  information  and  support 
to,  either  individual  organisations  working  in a 
particular field or to  the  sector  in  general.  Such 
organisations  fulfil 
the  important  function  of 
providing  an  interface  between  the  sector  and 
public authorities. 

voluntary 

organisations 

4.1  Many 
and 
foundations  are,  of  course,  national  and  even 
international 
in  scope.  The  great  majority, 
however,  carry  out  their  activities  in  regions  or 
localities. 
their 
geographical  focus  the  greater  the  range  of 
functions  voluntary  organisations  tend  to  fulfil 
and  the  more  difficult  it  is  to  separate  these 

the  narrower 

In  general, 

at 

of 

the 

level 

the 
in  effect 

functions  one from  another.  Throughout  Europe 
hundreds  of  thousands  of  autonomous  local 
groups  working 
the 
neighbourhood,  city  quarter,  village,  or  small 
rural  area,  whose  aim  is  to  improve  the  quality 
community.  Such 
of 
local 
for 
life 
organisations 
fulfil, 
typically  in  an  informal  way,  all  the  functions 
described  above - providing  services and  mutual 
support,  drawing  attention  to  the  needs  of  the 
community  or of particular  groups within  it, and 
providing  a  mechanism 
the 
community  can  make  its  aspirations  known  to 
public authorities. 

through  which 

simultaneously 

The  legal  and  fiscal  framework  for 
Voluntary 
and 
Foundations 

Organisations 

fiscal 

frameworks 

Organisations 

The  importance  of  having  clear,  positive 
5 
legal  and 
for  voluntary 
organisations  and foundations  to work  in cannot 
be  underestimated. 
it 
difficult 
to  develop  their  work  when  such 
frameworks  do  not  exist,  whether  they  be  at 
national  or  European  levels.  Annex  II  gives  an 
overview  on  the  way  that 
legal  and  fiscal 
frameworks  for  the  sector  are  based  in  the 
European  Union. 

find 

m. 

THE  ROLE  AND 
VOLUNTARY 
FOUNDATIONS 

IMPORTANCE  OF 
AND 

ORGANISATIONS 

the 

that 

is  clear 

results  of 

large  human 

from 
survey 

the 
It 
6 
voluntary 
Commission's 
organisations  and  foundations, 
though  often 
very  small,  together  command  sizeable  assets 
resources,  both 
and  mobilise 
salaried  and  volunteer.  Like  other  forms  of 
enterprise,  and  particularly  small  and  medium 
sized  enterprises  many  voluntary  organisations 
and  foundations  are  also  economically  active  -
they  sell  products,  provide  services  for  which 
they  are  paid,  and  generate  surpluses  which  are 
then  reinvested. 

significant  has  recently  been  revealed  by  the 
results  of  the  first  rigorous  comparative  survey 
of the  sector  in four  Member  States  (the  United 
Kingdom,  France,  Germany  and  Italy)  directed 
by  the  John  Hopkins  University,  Baltimore1. 
These results are of conceivable  interest. 

6.2  The study found  that: 

in  Germany  the  sector  accounts  for  3.7%  of 
total  employment  and  10%  of  total  service 
employment.  That  is  no  less  than  a  million 
people.  The  non-profit  sector 
is  especially 
important in health: 40% of the hospital patient 
days are provided  by the  sector^ as are 60%  of 
the residential care facilities. 

in  France  4.2%  of  the  employed  work  in  the 
sector  or  over  10% of the total  employed  in the 
service  sector.  In  all  some  800,000  people  are 
employed.  Non-profit  organisations  look  after 
over  half  of  those  in  residential  care  and  about 
20%  of  primary  and  secondary  school  students. 
Non-profits  are  especially  prominent  in  social 
services  and  in  sport  where  80%  of  those  with 
sporting interests belong to non-profit  clubs. 

in Italy  nearly  2% of the  employed  work  in the 
sector  or  over  5%  of  those  employed  in  the 
service  sector.  In  total  the  sector,  which  is 
prominent  in  social  services,  employs  about 
run  20%  of 
400,000  people.  Non-profits 
kindergartens  and  over  40%  of  residential  care 
facilities. 

In  the  UK  4%  of  the  employed  work  in  the 
sector  or over  9% of those in the  service  sector. 
Altogether  about  900,000  people  are  employed 
the  sector,  which  plays  an  especially 
in 
important  role  in  the  provision  of  research  and 
education:  - all  colleges  are  run  by  non-profits, 
as are 22% of primary and elementary  schools. 

6.3  Finally,  the  combined  expenditures  of  the 
sector  in  these  countries  was  no  less  than  127 
million  ECU  (17  billion  in  Italy,  31.3  billion  in 
France, 36.6 billion in the UK  and 42.2 billion in 
Germany). 

6.1  The  contribution  of  the  sector  to  the 
economy  is  very  considerable  indeed.  Just  how 

Published  in  1994. 

figures 

for  non-profit 

The 
operating 
expenditures  as  a  percentage  of  gross 
national  product  are  no  less  impressive:  2% 
in  Italy;  3.3% in  France,  3.6%  in  Germany; 
and 4.8% in the UK 
6.4  Moreover  it  is  in  terms  of  employment 
growth  that  the  most  interesting  facts  of  all 
emerge. What the study found ~ in any event in 
France  and  Germany  where  figures  were 
available -  was that over the decade from 1980 
to  1990 the sector has been a powerful  creator 
of employment.  In France the sector  accounted 
for one  out  of every seven new jobs  created in 
that  decade  and  in Germany one  out  of  every 
eight  or nine! This  is  a  very  significant  finding 
indeed. 

6.5  These  figures  should  not,  perhaps,  come 
as a complete  surprise,  given  the  growth  of  the 
sector  in  the  recent  past  and  the  reasons  which 
seem  likely  to  be  behind  it  (see  paragraphs 1.4 
and 1.5 of annexe  I).  Some  of these  reasons  are 
likely  to  be,  historical,  or  to  have  been  specific 
to  particular  Member  States.  Other  factors, 
however  -  the  discovery  of  new  needs  and  the 
development  of  new  social  preoccupations,  and 
above  all  the 
to 
engage  voluntary  organisations  and  foundations 
they 
in  the  delivery  of  services  of  which 
themselves  were  formerly  both  designers  and 
providers  have  been  increasing  throughout  the 
Community. 

tendency  of  governments 

6.6  But  such  policy  developments  have  not 
developed  evenly  in  all the  Member  States.  The 
extent  to which  they  have been  accompanied  by 
clear  constitutional  or  administrative  changes 
designed  to  favour  the involvement  of voluntary 
organisations and foundations  has varied. . 

the  quality  of 

6.7  The  figures  demonstrate  clearly  that  the 
sector has shown itself capable of opening  up 
new  opportunities  contributing  not just  to 
improving 
life  but  also 
employment  and  economic  growth.  It  is  for 
this  reason 
the  sector  should  be 
encouraged to  play a bigger part in the quest 
the 
for 
"Employment  Pact'%  for  example 
in  the 
context of Local Employment  Initiatives. 

creation 

stated 

that 

job 

as 

in 

later 

sometimes 

as  providers 

training 
of  whom 

6.8  Throughout 
the  Community  many 
voluntary  organisations  and  foundations  are 
engaged  in  the  training  and  retraining  of  the 
of 
unemployed, 
government  programmes but  often  on their  own 
account,  as  well  as  providing  services  for  less 
favoured  people  -  for  people  with  disabilities, 
for  alienated  youth,  for  those  who  for  one 
reason  or  another  have  repeatedly  failed  to  gain 
a hold in the job market . 
6.9  Voluntary  organisations  and  foundations 
to  numerous 
also  give  valuable 
volunteers,  many 
find 
employment  on the  conventional jobs  market  as 
a  result  of  the  experience  and  expertise  they 
have  acquired.  Volunteering  is  also  for  many 
people  an  invaluable  means  of  preserving  the 
work  habit  at  a  time  when,  particularly  for  the 
long  term  unemployed.  The  voluntary  sector  is 
likely  to  provide  with  enriching  opportunities 
for  new  experiences  aiming  at  gaining  social 
abilities  which  will  enhance  employability  and 
moreover, 
the  feeling  of  ownership  and 
citizenship  among young  people.  The  European 
Voluntary  Service  deals  with  this  issue  and 
provides an educational  experience based  on the 
active  involvement  of  young  people  in  a  local 
project.  Volunteering  is also very  important  for 
older retired  people who are looking to  continue 
to  use  their  skills  and  maintain  a  continued 
active role in society. 

Social  importance 

7 
There  are no  accurate  figures  of knowing 
how many persons in the Union are members  of 
voluntary  organisations  but,  on  the  basis  of 
some  Member  States1  estimates  it  is  commonly 
reckoned  to  be  somewhere  between  a third and 
a  half  of  the  population,  approximately  a 
hundred million. 

influence 

7.1  Historically 
and 
the 
achievements  of voluntary  organisations, and 
their  sister  organisations  foundations,  would 
be  difficult  to  overestimate.  It  is  to  voluntary 
organisations  and  foundations  to  which  we  owe 
the  origins  of  many  of  the  services  such  as 
education,  health  and  social  services  which  we 

the 

been 

similarly 

favoured, 

take for  granted today.  Their contribution  to  the 
development  of social  and  political  ideas,  and  to 
the  intellectual  climate  in  which  we  now  live, 
immense.  Voluntary 
has 
organisations  and  foundations  have  played  a 
vital  role  in the  dissemination  of  scientific  ideas 
and  of  technological  developments  and  have 
provided  forums  for  the  exchange  of  thinking 
across  the  whole  range  of  human  concerns. 
They  have  led  the  fight  for  the  recognition  of 
human  rights  and  the  dignity  of  the  human 
person,  and  for  the  preservation  of  our  cultural 
heritage  and  of  the  natural  environment.  Many 
promote  a  spirit  of  solidarity  on  behalf  of  the 
sick  or  people  with 
less 
disabilities,  the  poor  and  the  excluded,  the  aged 
and  the  young,  and  between  those  who  have 
jobs  and  those  who  do  not,  between  men  and 
women, between  generations,  between  the  more 
prosperous  regions  and  the  poor  or  struggling 
regions.  Voluntary 
organisations  make 
important  contributions  to  the  fight  against 
social  exclusion,  sexual  exploitation  of  women 
and  children,  as well  as  racism  and  xenophobia. 
the 
They  have  played  a  major 
mobilisation  of  public  opinion  in  favour  of 
development,  promoted  democracy,  and  have 
established 
the 
representatives  of civil  society  in the  developing 
countries,  as  well  as  providing  much  needed 
emergency  help  and  food  aid  in  times  of  crisis, 
often  showing  heroism  working  in  troubled 
regions. 

links  with 

privileged 

role 

in 

voluntary 

organisations 

interest  or  endeavour  and 

7.2  Today 
and 
foundations  are active in every  conceivable field 
their 
of  human 
contribution  to  the  welfare  and  development  of 
our societies and to  our  diverse cultures  remains 
as  essential  as  it  has  ever  been,  especially  in 
view  of the process  of European  integration.  At 
the  same  time  they  continue  to  innovate,  to 
discover  new  needs  and  to  experiment  with 
ways of responding to them. 

In  this  way  voluntary  organisations  and 
foundations  continue,  as  they  have  always 
done,  not  just  to  provide  the  seed  bed  or 
"gene  poor  from  which  future  social  and 
other  policies  may  eventually  grow  but  also 
the political, social and  intellectual  climate in 

which  change  comes  to  be  seen  as  desirable 
on a wider scale. 

Political importance  - Citizenship 

8. 
For  many  people,  membership  of,  or 
volunteering  for,  voluntary  organisations  and 
foundations,  provides  a  vital  means  through 
which 
sense  of 
citizenship,  and  demonstrate  an  active  concern 
for their fellows and for society at large. 

they  can  express 

their 

in  Article  8  of 

8.1  The part  that  voluntary  organisations  play 
in  strengthening  a  sense  of  citizenship  and 
is  of 
its  expression 
providing  a  means  for 
growing  importance  at  the  European 
level. 
Indeed, 
they  have  an  active  part  to  play  in 
creating  a  sense  of  European  citizenship  as 
mentioned 
the  Treaty  on 
European  Union.  Voluntary  organisations  and 
foundations  have  long  fostered 
international 
contact  and  understanding  between  peoples  and 
are  now  showing  a  keen  interest  in  the  part 
citizens  have  to  play  in  the  forging  of  the 
European  Union  and  in  giving  substance  to  the 
citizen's  Europe.  Their  experience  and  basic 
philosophy, 
their  growing 
organisation  at  the-European  level, fit them well 
for this role. 

together  with 

Political  importance:  Promoting 
Democracy 

the 

organisations 

9.  Voluntary 
and 
foundations  foster a sense of solidarity and of 
essential 
citizenship,  and  provide 
underpinnings  of our democracy. In  the light 
of  the  challenges  now  facing  the  European 
Community,  and 
in  the  different 
indeed 
countries  of  East  and  Central  Europe,  these 
functions  have never been more vital. 
9.1  There 
that  voluntary 
organisations  and  foundations  make  a  profound 
and indispensable contribution  to the  democratic 
life  of  Europe.  Indeed,  the  existence  of  a well-
developed  association  and  foundation  sector  is 
an  indication  that  the  democratic  process  has 
come of age.  For many people participation  in a 
their  only 
voluntary  organisation  may  be 

is  no  doubt 

experience  of  democratic  processes  outside  of 
the normal electoral  framework. 
to  the  effectiveness 
9.2  Their  contribution 
with  which  representative  democracy  functions 
should  not,  however,  be underestimated.  Above 
all, 
they  now  play  an  essential  part  as 
intermediaries  in  the  exchange  of  information 
and  opinion  between  governments  and  citizens, 
providing  citizens  with  the  means  with  which 
they  may  critically  examine  government  actions 
or proposals,  and  public  authorities  in their  turn 
with  expert  advice,  guidance  on  popular  views, 
and  essential  feedback  on  the  effects  of  their 
policies. 

voluntary 

organisations 

9.3  That 
and 
foundations  are  important  to  the  democratic 
process  does not  mean that they could  ever  take 
on the  role  occupied  by  elected  representatives. 
There  are,  indeed,  some  dangers  in  the  sort  of 
"single  issue"  lobbying  which  some  voluntary 
organisations 
Their 
preoccupation  with  particular  causes  or  with 
particular  individuals  or  groups  can  make  them 
unjustifiably  impatient  with  the  balance  between 
competing  interests  which  all  democratically 
elected  governments  seek  to  achieve  There  is a 
need 
the 
for  greater  understanding  about 
constraints of policy decision making. 

espouse. 

tend 

to 

IV 

T HE  SECTOR  AND  THE  EUROPEAN 
INSTITUTIONS WORKING TOGETHER 

9.4  The  European  Institutions  have  a  long 
history  of  contacts  and  informal  consultation 
with  the  voluntary  sector.  This  is the  case  with 
many  of  the  European  Commission's  services, 
such  as  DGIB,  DGVIII  with  Development 
Agencies  and  ECHO  which  have  achieved  an 
experience  of  particular 
their 
cooperation  with humanitarian  aid NGOs,  DGV 
and  the  platform  of  European  Social  NGOs 
arising  out  of  the  Social  Forum,  DGXI  and 
environmental  organisations,  DGXXIII  and  the 
Consultative  Committee 
for  Cooperatives, 
Mutuals,  Associations  and  Foundations.  DGX 
in  particular  looks  to  the  voluntary  sector  to 

interest 

in 

disseminate  information  on  European  issues  to 
the citizens. 

(1994-1998). 

funded  within 

NGOs  are  involved  in  a  significant  number  of 
the  4th 
research  projects 
Framework  Programme 
The 
targeted  Socio-Economic  Research  Programme 
widely  covers  the  issue  of the  role  of the  sector 
in  the  economy  and  its  importance  for  social 
It  is  intended  to  put  even  more 
cohesion. 
the  5th 
topic  within 
this 
emphasis  on 
Framework  Programme (1999 - 2002). 

The  European  Parliament  also  relies  on  a  large 
number  of  voluntary  organisations  in  order  to 
obtain information  and  views on a wide range of 
issues.  The  heterogenity  of the  sector  is valued, 
in  particular,  for  its  knowledge  and  experience 
of 
aid  and 
development  issues and  for  providing  a vital link 
with  citizens  in  their  localities,  especially  to 
those most vulnerable in society. 

social  policy,  environmental, 

role 

increasingly  pivotal 

9.5  The 
the 
voluntary  sector  plays  in  a wide  range  of  issues 
central  to  the  construction  of  Europe,  including 
in  particular,  in  many  Member  States,  in  the 
management  and  delivery  of  key  aspects  of 
social  welfare  services,  has  been  acknowledged 
and 
the  Commission's  main 
statements  on social  and  employment  policy,  for 
instance  in  the  Green  and  White  Papers  on 
Social  Policy  and  the  White  Paper  on  Growth, 
Competitiveness  and  Employment. 

reflected 

in 

the  European 

Institutions  and 

9.6  However,  for  many  years  the  contacts 
between 
the 
voluntary  sector  took  place  on  a  completely  ad 
hoc  basis  and  it  was  not  until  the  Treaty  of  the 
European  Union,  in  1992,  that  the  importance 
of  links  with  this  sector  was  first  formally 
expressed  in  the  creation  of  Declaration  23 
which  is annexed  to the Treaty. 2 

Declaration  23  states:  "The  Conference  stresses  the 
the  objectives  of  Article 
importance,  in  pursuing 
117  of 
the  European 
Community,  of  cooperation  between  the  latter  and 
as 
charitable 

the  Treaty  establishing 

associations 

foundations 

and 

level 

to  ensuring 

9.7  A high level of political commitment  exists 
that  more 
at  European 
the  voluntary 
systematic  consultation  with 
the 
is 
sector 
development  and 
implementation  of  policy, 
commensurate  with  their  increasingly  important 
role,  especially  in  social  policy,  in  the  Member 
States3. 

instigated,  as 

regards  both 

Subsequent  to  the  creation  of Declaration  23, a 
number of developments have taken place which 
moved forward  the process of  consolidating  co 
operation  with,  and  instigating  more  systematic 
consultation  of,  NGO's  and  other  voluntary 
sector  organisations. 
these 
developments were: 

Key  amongst 

the  holding  of  the  first  European  Social 
• 
Policy  Forum  in  March  1996,  which  brought 
together  over  1000  participants  mainly  from 
NGOs,  on  the  eve  of  the  beginning  of  the 
Intergovernmental  Conference.  This  saw  the 
launch  of  a  new  policy  objective:  the  building 
over time of a  strong civil dialogue at European 
the  policy 
level  to  take  its  place  alongside 
dialogue  with  the  national  authorities  and  the 
social  dialogue  with  the  social  partners. 
It  is 
intended  that  the  Forum  be  held  every  two 
years. 

This  emerging  civil  dialogue  has  two  main 

aims: 

-to  ensure  that  the  views  and  grassroots 
the  voluntary  sector  can  be 
experience  of 
taken  into  account  by  policy 
systematically 
makers at European  level  so that  policies  can be 
tailored  more to real needs, and; 

from 

information 

-to  disseminate 

the 
European  level  down  to  the  local  level  so  that 
citizens are aware of developments, can feel  part 
of  the  construction  of  Europe  and  can  see  the 
relevance  of  it  to  their  own  situation,  thus 
increasing 
promoting 
citizenship. 

transparency 

and 

• 
the  creation  in  1995  of  a  Platform  of 
European  social  NGO's,  representing  a  large 
to  assist  in 
number  of  organisations,  in  order 
the  preparation  of  the  European  Social  Policy 
Forum  and  to  facilitate  the  development  of civil 
dialogue. 

• 
the  setting  up  of  a  "Comité  des  Sages"  in 
1995 to prepare a report  on  fundamental  rights 
to  be  discussed  at the  Social  Policy Forum  with 
a  view  to  it  providing  an  input  to  the  IGC 
discussions on the revision of the EU Treaty. 

This  report  which  advocated  a  Europe  of  civic 
and  social  rights  has  also  sparked  off  a 
Europe-wide  debate through  a series of national 
seminars  involving,  in  particular,  the  voluntary 
sector and the Social Partners. 

• 

the  creation,  in  1997,  of  a  new  budget  line, 
to  promote  co-operation  with 
B3-4101, 
NGO's 
sector 
and 
organisations  and  to  strengthen  the  capacity 
of  these  organisations  to  engage  in  civil 
dialogue at European level; 

voluntary 

other 

9.8 
In  the  context  of the  preparations  for  the 
IGC  an  ongoing  dialogue  was  developed 
between  the  sector,  the  Commission  and  the 
European Parliament, 

Important  issues relating to the sector have been 
discussed  in  the  framework  of  the  IGC.  These 
include: 

institutions  responsible  for  welfare  establishments 
and services ". 

a  legal  base  for  regulations  concerning 

associations at European  level 

It should  also be noted  that  the Commission  has had 
a  long  standing  dialogue  with  the  sector  in  other 
areas  such  as  with  Development  NGOs  through  the 
EC-NGO Liaison  Committee which  receives  90% of 
its funding  from  the  Commission. 

a legal base for  incentive measures both in 

employment  and the social field 

and 

specific 

the  integration  of  Declaration  23  into  the 
Treaty 
the 
consultation  of,  and  dialogue  with  charitable 
associations  and  foundations  on  all  policy 
matters which concern them 

provision 

for 

a modification  of article 8a to take (by co-
decision)  measures  to  facilitate  freedom  of 
circulation. 

The  European  Commission 
is  also  working 
closely  with  NGOs  in  the  fight  against  sexual 
exploitation  of children  and  women. 

like 

its 
The  Commission  would 
sector  developed 
cooperation  with 
in  view  of  deepening  European 
further 
integration.  Proposals  to  this  end  are  made 
in the "Conclusion". 

to  see 

the 

to  make  relevant 
intends 
The  Commission 
proposals according to the outcome of the IGC. 

PROBLEMS  AND  CHALLENGES 

V 
FACING THE  SECTOR 

With  regard  to  future  progress,  in  order  to 
retain  the  maximum  amount  of  creativity  and 
free  expression,  it  is  important  not  to  over-
bureaucratise  or  institutionalise  consultation  of 
the  voluntary  sector  and  to  strive  instead  for  a 
flexible  but  systematic  approach  in  developing 
the  civil  dialogue  and  relations  between  the 
voluntary  sector  and  the  European  Institutions 
which  takes  full  account  of  the  principle  of 
subsidiarity  and  of  the  specificities  of  each 
Member  State. 

9.9  The  Commission  has  also  attempted  to 
open up a wide range of funding  programmes  to 
the  sector.  This  includes  the  Structural  Funds, 
the  PHARE  and  TACIS  programmes  for  East 
and  Central  Europe,  the  Leonardo  da  Vinci 
Programme,  the  Declaration  23  and  the  new 
Third  Sector  and  Employment  budget  lines,  the 
SME  and  Social  Economy  budget  lines,  as well 
as the  European  Voluntary  Service  Programme 
which  encourages  transnational  volunteering, 
the EDF  for  cooperation  and  development  with 
the  LOME  countries,  and  specific  budget  lines 
for  external  actions,  in  particular  cooperation 
with  the  ALAMED  countries,  to  name  but  a 
few. 

It  is  estimated  that  overall  some  800  million 
ECU  (of which  196MECU  is in the  form  of co-
financing)  annually 
development 
assistance  is  channelled  through  NGOs  and  the 
Commission  looks  to  the  sector  in  many  policy 
issues towards developing countries. 

of  EU 

it  can  respond 

in  the  way  that 

10.  Voluntary  organisations  and  Foundations 
are  working  under  enormous  pressure  and 
within  a  constantly  changing  environment. 
In 
some  cases  organisations  are  taking  on  the 
running  of  services  that  were  hitherto  provided 
by  the  public  authorities.  However,  there  are 
very  real  problems  and  challenges  facing  the 
sector 
to 
providing  these  new  services.  Organisations 
which  have  traditionally  played  the  role  of 
providing  a  back  up  for  state  run  services, 
suddenly  find  themselves  having  to  run  those 
services themselves.  This  may mean  completely 
new  staffing  arrangements,  new  management 
structures  and  needs,  a  complete  change  in  the 
financing  of  the  organisation,  a  change  in  the 
way  that  it  works  with  the  public  authorities, 
and  indeed  with  other  voluntary  organisations 
and  foundations.  How  will  the  organisation  be 
resourced?  Will  funding  come  from  public 
authorities  in  the  form  of  long  term  grants  or 
short  term  contracts: 
indeed,  will  there  be 
enough  funding?  Will  an organisation  be able to 
increasingly  draw  on  support  from  the  public 
(individuals)  or  the  corporate  sector?  This 
change  may  also  mean  a  major  rethink  in  the 
raison  d'être  of  an  organisation.  Should  an 
organisation  which  was  set  up  to  promote  the 
needs of specific  parts  of the  population  (people 
socially  excluded,  ethnic 
with  disabilities, 
minorities,  etc.,)  and  to  provide  some  back  up 
services,  be  asked  to  suddenly  take  on  the 
running of the mainstream  service  itself? 

10.1  These  are  all  areas 
that  have  major 
implications  for  organisations  in  the  way  that 

they  are  resourced  and  trained,  and  public 
authorities should  be aware of the importance  of 
giving  voluntary  organisations  and  foundations 
the  resources  and  time  to  be  able  to  adapt  to 
new needs. 

on 

have  not 

10.2  Despite  their  increasing  reliance  on 
foundations  and  voluntary  organisations  to 
carry  out  a  wide  range  of  functions,  public 
authorities 
the  whole 
acknowledged  their  responsibility  to  ensure 
that the sector is as well placed  as possible to 
make  its  distinctive  contribution  to  the 
public  good,  The  result  is  that  in  many 
Member  States  the  sector»  as  a  sector, 
in 
in  what  amounts,  at 
operates 
strategic terms, to a policy vacuum. This lack 
of a coherent framework  of public  policy  has 
the 
inhibited 
optimum  extent  possible,  to  the  solution  of 
the problems  which  we  face. It is  time  it was 
remedied. 

from  contributing, 

least 

to 

it 

have 

social 

relating 

supplying 

departments 

10.3  One of the greatest  problems facing  policy 
makers is the present  serious lack of  information 
about  the  sector.  In an important  sense,  policy 
making  has  also  been  inhibited  by  the  structure 
of  government  itself,  and  in  particular  by  the 
to 
habit  of  public  authorities  of 
associations  and  foundations  as  suppliers  of 
services 
to  particular  client  groups  or  as 
interlocutors  in  particular  subject  areas.  Social 
contact  with 
service 
organisations 
services, 
environment  departments  with  those  active  in 
the  environmental  field,  and  so  on.  Over  a 
period  of  time,  such  departments  and  their 
officials  can  acquire  a  close  and  detailed 
knowledge  of  the  particular  organisations  with 
which they  deal. Within  government  as a whole, 
however,  such  knowledge  as  departments  may 
acquire remains fragmented.  For the most  part it 
is rare for  public authorities to have an  overview 
of  the  sector  as  a  whole  or  of  its  needs,  or  of 
significant  developments  within  it.  The  same 
phenomenon  has  no  doubt  also  been  one  of  the 
factors  which  in a number  of Member  States has 
the  growth  of  a  "broad  sectoral" 
inhibited 

consciousness  amongst  voluntary  organisations 
and foundations  themselves. 
10.4  The  urgent  need  now  is  for  public 
authorities  to  complement  their  "vertical" 
approach  and  to  begin  to  look  seriously  at 
"horizontal"  issues  affecting  the  sector  as  a 
whole  with  a view  to  developing  appropriate 
policies.  At  the  same  time,  the  public  role  of 
foundations 
voluntary  organisations  and 
needs 
the 
acceptance  of  the  sector  as  a  full  partner  in 
the  debate  on  all  policy  and  implementation 
matters  which  concern  them,  needs  to  be 
actively encouraged  at all levels. 

acknowledged 

to  be 

and 

by 

done 

10.5  Over  the  past  ten  years  the  amount  of 
transnational  work 
voluntary 
organisations  and  foundations  has  increased 
dramatically.  This  is  due  to  a growing  number 
of European  funding  programmes being opened 
up  to  the  sector  which  encourage  transnational 
collaboration,  and  an  expanding  number  of 
organisations  who  are  interested  in  developing 
their services in other countries* 

for 

individual 

10.6 .There  is  also  a  large  and  continuously 
growing  number  of  European  wide  federations 
or  networks  of  voluntary  organisations  and 
foundations. 
Some,  such  as  the  Red  Cross 
Liaison  Committee  act  as  a  co-ordinating 
organisation 
national 
organisations  which  share  the  same  aims  and 
objectives,  as  well  as  the  same  name.  Others 
such  as  the  European  Foundation  Centre  or 
CEDAG  (the  European  Council  for  Voluntary 
Organisations)  act  as a focus  point  for  lobbying 
the  public  authorities  on  behalf  of  the  sector, 
and  providing  and  developing  examples  of good 
-  diverse 
practice  within 
membership. 

-  often 

their 

10.7  There  are  also  many  development  and 
emergency  aid  agencies  which  have  a  long 
tradition  working  overseas,  but  which  are 
working  more  and  more together  at  a European 
the  European  Commission. 
level  and  with 
Indeed,  the  EC-NGO  Liaison  Committee  of 
closely  with 
Development  NGOs,  works 

DGVIII (Development), with ECHO, DGIB and 
with other Dgs of the European  Commission. 

limited  by 

10.8  The  ability  of  voluntary  organisations  to 
make  their  full  contribution 
in  transnational 
activities  in the  social  and  employment  field  has 
been 
the  suspension  of  some 
European  programmes  since  1995  pending  a 
European  Court  of  Justice  ruling  on  the  legal 
basis  of  such  measures.  In  its  proposals  to  the 
to 
the  Commission  has  endeavoured 
IGC, 
remedy  this  by  proposing  a  legal  base  for  the 
transfer  of  best  practice,  networking  and 
exchange  of  experience  on  a transnational  basis 
the  fight  against  social 
in  such  fields  as 
equal 
exclusion 
opportunities 
of 
the  grounds  of  gender, 
discrimination  on 
disability,  race  or  age.  This  would  enable  the 
Community to adopt  such  incentive  measures  as 
have  already  been  established  for  education, 
training and public health. 

the  promotion 
the 

combating 

and 

and 

of 

other 
10.9  There  are  however,  many 
problems 
to 
facing  organisations 
develop  their  transnational  European  work: 
They  include: 

trying 

difficulties 

minded 
finding 
* 
organisations  in  other  countries  in  order  to 
develop joint  projects. 

like 

Although  on  paper  an  organisation  may seem  to 
have  the  same  aims  and  objectives,  in  reality  it 
may  not.  The  role  of  an  organisation  working 
with  a  specific  client  group  in  one  country  may 
differ  a great  deal from  one  working  in  another. 
in  organisations 
There  are  also  difficulties 
working 
to 
differences  in culture and  language 

together  which 

is  often  due 

inability  of  organisations 

* 
European funding* 

to  access 

Decision  making  for  many  European 
funding 
programmes  is  frequently  made  at  national  rather 
than at European level. 

10 

Many  organisations  have 

trouble 
information  on 
obtaining  good  up  to  date 
European 
They  also  may  have 
funding. 
difficulties  with  Member  States  which  are 
reluctant  to  allow  voluntary  organisations  and 
foundations  access to  specific  European  funding 
programmes  in which  the  Member  States  have 
a decision making role. 

difficulties  finding  matching funding 

* 
projects  which  are 
European funding  programmes 

co-financed 

for 
through 

Matching funding  for  projects  often  comes 
from  public  authorities  who  may  be  putting 
forward  their own rival bids, or not be interested 
in supporting the  project. 

on 

over 

dependence 

European 
* 
Community  Funds  leading  to  difficulties  m 
forward  planning and  continuity  of  management 
owing  to  the  incompatability  of  the  short  term 
nature  of  this  funding  and  the  long  term  core 
funding  needs of voluntary organisations. 

Difficulties  in  obtaining  funds  at  national 
level  has  led  some  organisations  to  look  for 
European  funding  which  can be inappropriate  to 
Failure  to 
their  main  aims  and  objectives. 
continue  receiving  these  funds  can  undermine 
their existence. 

difficulties faced  by organisations due lo 

* 
late payments  of European  funding. 

Payments  held  up  for  various  reasons  at 
European  or  national  levels  can  often  cause 
problems 
out 
organisations 
transnational  projects. 

carrying 

for 

lack 

of 
* 
organisations in other countries. 

legal 

recognition 

for 

for 
This  can  cause  serious  problems 
organisations  wishing  to  open  offices  in  other 
Member  States,  or  provide  services  that  are 
financed  by  public  authorities  from  another 
Member  State.  The  Commission  has  already 
proposed  certain  measures  (notably  the  Statute 
for  a  European  Association)  aimed  at  giving 

legal  personality 
organisations  a 
countries within the European Union. 

in  other 

weak  representativeness  of  organisations 

* 
taking part in consultation 

In some cases European  networks  lack the 
structure  and  adequate  membership  to  ensure 
that  views  of  a  wide  spectrum  of  operating 
organisations  at  local,  regional  and  national 
levels are taken into account. 

* 
tack  of  understanding  by  some  public 
authorities  on  what  European  work  voluntary 
organisations and foundations  wish to  do. 

Many  organisations  complain  that 
public  authorities  are  not  aware  or  being 
supportive  of  the  transnational  work  that  they 
are 
in 
transnational  projects being hindered. 

This  often 

to  do. 

results 

trying 

* 

lack of  adequate  training. 

Inadequate  training  can  lead  to  poorly  run 
organisations  and  the  inability  to  respond  to 
challenges and new needs. 

* 

lack of access to networking  techniques 

Subsequent 

some 
to  poor 
organisations  are  not  able to  develop  links  with 
other like minded  organisations. 

training 

all 

problems 

10.10 Not 
are 
these 
insurmountable,  and  indeed  some  of  them  are 
already  being  dealt  with  by  the  European 
Commission  and  by  some  Member  States. 
However,  it  should  be  stated  that  they  are  often 
dealt with on an ad hoc basis, and not  as part  of 
a  coherent  strategy  and  policy  towards  the 
sector.  The following  section  presents  a  number 
of  ideas  which  can  be  addressed  by  the  sector 
itself,  as well  as at Member  State  and  European 
levels. 

VI  CONCLUSION 

MEMBER  STATE  LEVEL 

11 

The  Commission  believes that  for  the  most  part 
action  will  need  to  proceed,  in  line  with  the 
principle  of  subsidiarity,  at  the  level  of  the 
Member  State  or,  where  appropriate,  at  the 
level of the region or the locality. 

The  Commission  proposes  that  the  Member 
States  examine attentively the following  areas: 

acquiring  a  much  deeper  knowledge  and 

the  relationship  ("partnership**}  between 

• 
understanding of the sector at aD levels 
There  is  no  doubt  that  policy  making  is  at 
present  severely  hampered  by  the 
lack  of 
systematic  and  reliable  data  about  the  sector. 
Indeed  there  are  parts  of the  Community  where 
the  sector  has  had  so  little  public  profile  that 
policy  makers  appear  to  have  been  scarcely 
aware  of  its  existence.  All  concerned  actors, 
local  authorities 
European,national,  regional, 
and the voluntary  sector itself,  need  therefore  to 
address the question  of what practical  steps they 
could  each  undertake  to  map  the  extent  and 
contribution the voluntary  sector makes. 
* 
public authorities and the sector 
Voluntary  organisations  are being  asked  to  take 
on  an  increasingly  important  role,  by  public 
authorities  across  the  Community  and  by  the 
European  Commission  itself.  It  is 
therefore 
important  that  voluntary  organisations  are given 
the  opportunity  to  be  involved 
in  planning 
services  and  policy  making  with  public 
authorities  at  all  levels.  Relationships  between 
voluntary  organisations  and  public  authorities 
should  be  clearer 
and  new  partnerships 
Partnership  between  voluntary 
developed. 
involve 
organisations  and  governments  will 
contractual  arrangements  between 
individual 
voluntary  organisations  and  public  authorities 
their  own 
which  will  properly 
constraints.  But  whatever  relationship  they  may 
voluntary 
have 
with 
organisations 
are 
independent  of government  and  must  remain 
so.  Public  authorities  should  review  public 
policy  and  make  proposals  about  what  would 
the 
to  be  done  for  policy  to  help 
need 
voluntary  sector  to  increase  its  capacity  and 
where  relevant  to  improve  its  skills  in  order 

governments, 
and 

foundations 

involve 

the law governing voluntary  organisations 

that it can  best fulfill  the new  roles it is being 
called on to address. 
• 
and  foundations 
The  competent  authorities  should  examine  what 
scope  exists  for  clarifying  and  adjusting  legal 
frameworks  so  that  they  are  conducive  to  the 
voluntary  sector  fulfilling  its  full  potential  at 
national, regional and local levels. 

the fiscal  basis  and  competition  rules  on 

• 
which the sector operates 
The taxation  rules  applicable  to  the  sector  have 
to be clear and  simple,  and  incentives  as well  as 
exemptions  have  to  be  studied  attentively.  Any 
individual  tax  treatment  has  to  be  justified  in 
relation  to  the  constraints  specific  to  this  sector 
and to  its method  of internal  organisation  which 
differentiates 
traditional  economic 
actors. 

from 

it 

how  the  continued  financial  health  of  the 

• 
sector is to be secured 
Positive  legal  and  fiscal  regimes  are  important 
for  the growth  of the  sector  in  each  country,  as 
accountability. 
ensure  public 
well  as 
However,  public  authorities  should  also  ensure 
that  the  sector  is  seen  positively  by  society  and 
that  funding  by public  authorities,  the  corporate 
sector and private donations are all encouraged. 

to 

training 

• 
The growth  of the  sector  has  not  been  matched 
by  an  increase  in  training  to  help  voluntary 
organisations  develop  their  skills  and  expertise 
in  order  to  meet  new  needs.  All  too  often, 
training  budgets  are  the  first  to  be  hit  when 
funding  becomes  difficult 
to  obtain  and 
voluntary  organisations  are  asked  to  cut  costs. 
Public  authorities  should  ensure  that  voluntary 
organisations  are  given  adequate  training  in 
order  to  provide  the  services  and  do  the  work 
that is being increasingly asked  of them. 

information  society  developments 

• 
Voluntary  organisations  and  foundations  have a 
clear  interest  in  being  associated  closely  with 
The 
information 
participation  of  voluntary  organisations  and 
foundations  in  pilot  projects,  particularly  in  the 
applications field, should be encouraged. 

developments. 

society 

Support 

Insofar  as 

better  access  to  programs  co-financed  by 

• 
the Structural  Funds 
Many  voluntary  organisations  are  concerned 
about  access  to  finance  from  the  Structural 
implementation  of 
Funds. 
the 
Community 
and 
Frameworks 
operational  Programmes  is  the  responsibility  of 
Member  States,  the  latter  are  encouraged  to 
examine  and 
review  current  administrative 
practise  so  as to  facilitate  access  to  information 
and  broader  participation  by  the  voluntary 
sector. 
the 
designation  of  beneficiaries  for  global  grants  is 
concerned. 

The  same  applies 

insofar  as 

VOLUNTARY 
FOUNDATIONS LEVEL 

SECTOR 

AND 

It  is  important  that  voluntary  organisations  and 
to  promote 
foundations  make  every  effort 
themselves,  through  use  of  the  media  and  new 
information  technology.  They  should  try  to  be 
open  and  accessible  in order  that  the  public and 
public  authorities  understand  their  aims  and 
objectives  and  how  they  work.  Organisations 
should  encourage  relevant  training for  their  staff 
and  volunteers,  and  when  appropriate,  should 
try to  develop  good  links with  public  authorities 
and the corporate  sector. 

The  sector  should  look  to  diversify  its  funding 
base  in  order  not  to  become  too  dependant  on 
any  one  source  of  funding.  Networks  of 
organisations  should  also try to  ensure that  their 
is  as  comprehensive  as 
membership  base 
possible 
truly 
in  order 
representative. 

to  be 

them 

for 

EUROPEAN  COMMUNITY  LEVEL 

In  addition,  the  Commission  proposes  the 
following  at European  Community  level: 
Voluntary  organisations  play  an  extremely 
• 
important  role as interfaces  between  citizens and 
government  authorities,  although  in  many  cases 
this 
receive  proper 
recognition.  Voluntary  organisations  are  asking 
for  their  work  in  this  sphere  to  be  recognised; 
they  are  no  longer  satisfied  with  a  single 

still  does  not 

role 

12 

lobbying  role,  but  are  asking  to  be  consulted 
systematically  and  regularly  by  Community 
bodies  on  all matters»and  on  all decisions which 
might  affect  the  work  they  do,  how  they  do  it 
and their efforts  to achieve their objectives. 

their  work.  For  these  reasons,  and  in  order  to 
support  the effort  to  improve  knowledge  of this 
sector,  the  Commission  will  consider  proposing 
a  year  of  voluntary  organisations  and 
European  citizenship. 

by 

the 

establishment 

The Commission  will  maintain  and  further 
develop  a  continuous  exchange  of  information 
and  points  of  view  by  establishing  systematic 
and  regular  dialogue  and  consultation  with  the 
sector5.  In  this  connection  the  Commission 
the 
welcomes 
aforementioned  movements  of  the  Consultative 
Committee  for  Cooperatives,  Mutual  Societies, 
Associations  and  Foundations,  which  aims  to 
ensure  the  consultation  and  the  horizontal  co 
ordination  of  the  sector.  The  Commission  will 
also look to  develop its dialogue with the  sector 
through  the  European  Social  Policy  Forum  and 
the new budget  line promoting  cooperation  with 
charitable  associations,  and  will  examine  how 
the representation  of voluntary  organisations  on 
other  existing  advisory  committees  can,  where 
appropriate,  be  organised.  The  development  of 
this  dialogue  and  partnership  will  contribute 
to  a  better  understanding  and  building  of 
European  integration  at  all  levels.  As  well  as 
this,  the  revised  treaty  should  include  such 
measures  as  the  fight  against  exclusion,  the 
promotion  of  employment,  and  measures  in 
areas 
and 
immigration,  which  call for  this strengthening  of 
dialogue. 

discrimination 

such 

non 

as 

of 

and 

• 
The  role  of  voluntary  organisations  in 
present-day  society  will  not  be  recognised 
without  more  knowledge  of  how  this  sector 
operates, 
and 
its 
expectations.  As people  are very  far  from  being 
fully  aware  of  all  this,  particularly  in  all  the 
Member  States  and  at  European  level,  an  effort 
must  be made in this direction.  One  of the  ways 
of  making  progress  in  this  matter  is  to  give  a 
higher  profile  to  voluntary  organisations  and 

requirements 

In  this  context  it  should  be  recalled  that  the 
European  Commission  has published  a directory on 
European  Non  Profit  organisations  in  order  to 
enable  officials  to  consult  more  systematically  and 
as widely as possible. 

13 

in 

that 

role 

recognises 

Commission 
the 
of 

the 
• 
The 
voluntary 
importance 
organisations  can  play  as  disseminators  of 
information,  and  as  bodies  close  to  ordinary 
citizens,  and  proposes  to  involve  them  more 
its  activities  of  disseminating 
closely 
information.  Voluntary  organisations  have 
played  an  important  role  in  the  development  of 
past  "European  years". This role has not  always 
been  acknowledged.  The  Commission  therefore 
intends  to  ensure  that  the  role  of  voluntary 
organisations  is  recognised  and  publicised  in 
all "European  Years" relevant to the sector. 

• 
The  European  Parliament  has  proposed 
that  studies  be  made  on  the  expansion  of  the 
social  economy  in the  European  Community,  in 
particular  the  establishment  of  an  observatory 
to  follow  developments  in  this  sector  in  the 
single  market.  The  Commission  considers  that 
for voluntary  organisations and foundations,  this 
task  could  be  undertaken  within  the  European 
observatory  for  SMEs,  and  proposes  that  the 
collection  and  analysis  of  information,  in  the 
framework  of  the  existing  structures,  should  be 
based  on  what  voluntary  organisations  do  and 
want 
level,  and 
they 
particularly  on 
encounter in doing so, i.e. problems arising  from 
differences  in  their  legal  forms  in  the  various 
States,  money  transfers,  leasing  or  purchasing 
premises in other  states,  obtaining  subsidies,  the 
recognition  of 
effectiveness  of 
the  mutual 
vocational 
to 
obstacles 
sponsoring  in  the Member  States,  etc.  It  would 
also  look  to  identify  areas  of  good  practice 
which could be promoted  and  disseminated. 

the  problems  which 

qualifications, 

transnational 

to  do  at 

undertake 

transnational 

activities, 
•  To 
voluntary  organisations  need  instruments  which 
are not yet widespread, but which  are a sine qua 
this  kind.  These 
non  for  any  activity  of 
instruments 
a  knowledge  of 
from 
languages  to  familiarity  with  current  differences 
the  various  Member  States  concerning 
in 

range 

to 

access 

European 

the  part  of 

taxation,  working  methods, 
administrative 
procedures  etc.  There  is  great  demand  for 
those  voluntary 
training  on 
organisations  which  are  interested  in  expanding 
their  transnational  activities.  The  Commission 
will  therefore  give  an  impetus  to  promoting 
training 
better 
programmes  which  officials  of  voluntary 
organisations  wishing 
to  expand  into  Europe 
could use. 
On  the  other  hand  the  involvement  of  the 
voluntary  sector  during  the  European  year  of 
life  long  learning  gives  evidence  of  the  actual 
and  potential  contribution  of  this  sector  to  life 
long learning, including adult  education which is 
largely managed  by the voluntary  sector.  In  the 
years  to  come,  this  contribution  is  likely  to 
become crucial  to build  a knowledge  society  for 
all. 
• 
have 
difficulty  in finding partners  or  people  to  work 
with  outside  their  own  Member  States  who 
could  help them  in  their  transnational  activities, 
and  facilitate  access  for  them  to  a  number  of 
Community  funds  for  which  this  is  a  condition 
of eligibility. All the more because the  numerous 
Community instruments and policies available to 
enterprises  for  finding  partners  at  European 
level  (BC-Net,  Europartenariat,  BCC  etc..)  are 
not  always  suited  to  the  needs  of  voluntary 
organisations.6  Accordingly, 
the  Commission 
will  see  that  they  are  made  easily  accessible  to 
voluntary  organisations,  and that they meet their 
specific  requirements. 

organisations 

Voluntary 

often 

• 
Voluntary  organisations  and  foundations 
have  a  clear  interest  in  being  associated  closely 
with  information  society  developments.  An 
effort  should be made to raise their awareness of 
the  opportunities 
the 
information  and  communication  technologies, 
services  and  applications  can  offer  them.  The 
Commission  has  already  set  up  the  Information 

and  benefits 

that 

in 

this  area.  The 

Society  Project  Office  as  a  "one  stop  shop" 
within  the  Commission  to  facilitate  access  to 
Information 
information 
Society  Forum  will  seek  to  involve  all  parties 
including  voluntary  organisations 
concerned, 
and  foundations, 
in  the  policy  debate.  The 
participation  of  voluntary  organisations  and 
foundations  in  pilot  projects,  particularly  in  the 
applications field, should be encouraged. 

they  have 

•  Many  voluntary  organisations  are  calling 
for  easier  access  to  sources  of  finances, 
including  to  the  Structural  Funds  as  well  as 
other  sources.  The  complexity  of  application 
systems  and  administrative  procedures,  which 
often  lead  to  delays  in  payments  can  prevent 
small, lean voluntary  organisations from making 
the 
the  valuable  contributions 
potential  to  make  in  the  implementation  of  the 
various EU funding  programmes. 
Insofar  as  the  Structural  Funds  are  concerned, 
the  Commission  will,  in  conjunction  with  the 
Member  States,  continue  to  actively  explore 
ways  of  facilitating  access 
to  Community 
finance, including the possibility  of  pre-financing 
by the  Member  States  and  the  increased  use  of 
global grant  finance.  In general  terms, it will be 
proposing  ways  of  streamlining  and  simplifying 
procedures  in  the  context  of  the  reform  of  the 
Structural  Funds  which  is  due  to  take  effect 
from  the  year  2000.  Likewise,  it  will  continue 
interpretation  of  the 
to  encourage  a  broad 
concept  of  partnership  extended  to  economic 
and  social  partners7,  compatible  with  the  need 
for  proper  and  effective  systems  for  monitoring 
the management  of public  funds. 

The  Commission  will  also  explore  ways  of 
publicising  more  widely  information  on  existing 
to 
Community  Finance  which 
voluntary  organisations and  foundations.8 

is  available 

Article  4 of the  Framework  Regulation  No.  2081/93 
on the Structural  Funds. 

and 

RECITE 

ECOS/OUVERTURE 
The 
programmes,  and  also  the  PACTE  programme  can 
facilitate 
internationalisation  of  voluntary 
organisations and  foundations. 

the 

14 

DGVIII  (Development)  already  has  a  document 
"Digest  of  Community  Resources  available  for 
the  activities  of  NGOs  and  other 
financing 
Governmental 
Bodies 
representing  Civil  Society 
fields  of 
Development  CO-operation and Humanitarian  Aid". 

and/or  Decentralised 

the 

in 

The  results  of  activities  financed  under  the  new 
budget  line  B3-4013  will  help  shed  some  light 
on  the  employment  dimension  of  the  third 
In  particular  the  actual  and  potential 
sector. 
role  of  the  voluntary  sector  and  foundations  in 
the  employment  development  process  and  their 
job  creation  capacity  will  be  examined  and 
examples  of  best  practice 
The 
identified. 
the 
Commission  will  ensure 
resulting 
analysis 
are  widely 
and 
disseminated. 

conclusions 

that 

The  European  Commission's  support  through 
training  and  the use  of information  technologies 
will  improve their  capacity  to  network  in  order 
for 
in  European 
Community Programmes. 

to  fully  participate 

them 

The  survey  has  shown  that  there  is  a 
• 
growing  interest  by  voluntary  organisations  in 
developing  their  transnational  work.  Voluntary 
organisations  are  keen  to  learn  different  models 
and  ways  of  working  from  organisations  in 
other  countries.  Many  organisations  find  this 
difficult  to  do, due to the lack  of resources.  The 
Commission  could  help  organisations  such  as 
foundations  to  explore  the  possibility  of  them 
setting  up  a  special  fund  in  order  to  facilitate 
the 
voluntary 
organisations.  In  particular,  the  fund  would 
enable  voluntary  organisations  to  pre-finance 
certain  projects  for  which  grants  have  been 
asked  from  public  authorities,  and  also  enable 
study  visits,  and  the  attendance  of  conferences, 
seminars  and  training  events  for  organisations 
which normally lack the means to do so. 

transnational 

work 

of 

they 

when 

The  numerous  difficulties  facing  voluntary 
• 
organisations 
contemplate 
transnational  projects  are  often  the  result  of 
national  legislations  which  are  ill-suited  to  the 
new  needs,  but  they  can  also  arise  from  the 
effect  of  measures  taken  at  Community  level, 
which,  since  they  were  drafted  with  other 
objectives  in view,  may turn  out  to  be  obstacles 
for voluntary  organisations  and  foundations.  For 
this  reason  the  Commission  proposes  to  study 
and  monitor  closely  the  effects  of  Community 
policies,  actions  and  legislation  on  this  sector. 
This  follow-up  and  analysis  should  be  carried 
better 
out 

systematically 

through 

also 

inter-departmental  co-ordination,  with  the  aim 
both  of  monitoring 
implementation  of 
the 
Community  rules in the sector  and  of promoting 
the  structures  of  voluntary  organisations  and 
their access to the Single Market. 

The  Commission  intends  to  conduct  a  broad 
dialogue  involving  the  sector,  the  European 
Parliament,  the  Committee  of  the  Regions, 
the  Economic  and  Social  Committee, 
Member  States  and  other  interested  parties 
in  order  to  fully  discuss  the  issues  contained 
in  this  document.  The  Commission  intends 
to  hold  a  series  of  conferences  and  seminars 
to  discuss  the  Communication  and  issues 
arising out of it. 

15 

ANNEX!  THE SURVEY 

I 
How  many  voluntary  organisations  and 
foundations  are  there?  How  are  they  financed? 
to  voluntary 
How  many  people  belong 
organisations?  How  many  people  do 
they 
employ?  How  many  people  work  for  voluntary 
organisations  or  foundations  as  volunteers? 
How big is the sector,  and  is it growing? How is 
it developing at the European  level? What are its 
needs and aspirations for the  future? 
1.1  Unfortunately,  as  has  already  been  made 
clear,  there  is  a  serious  lack  of  information 
about  the  voluntary  sector  in  Member  States, 
and still more at the European  level. This lack  of 
essential  facts  reflects  not  simply what  has, until 
fairly  recently,  been  a  lack  of  interest  amongst 
scholars and policy makers, but  also the  absence 
of any sort  of convenient  sampling  frame. 

1.2 
In  an  attempt  to  throw  some  light  on  the 
scene,  the  Commission  therefore  decided  to 
carry  out  a  questionnaire  study  of  voluntary 
organisations  in  all  the  Member  States.  The 
method  used  was to  distribute  questionnaires  to 
voluntary  organisations  throughout  Europe  via 
their  representative  organisations  in  Brussels 
and at national  level. The survey was carried  out 
between  June  and  October  1993  and  altogether 
some  2300  replies  were  received.  This  is  a 
surprisingly  good  response  and  the  Commission 
is grateful  to  everyone  involved.  The  response 
may  itself  be  taken  as  an  indication  of  the 
lively  interest  that voluntary  organisations  in 
the  different  Member  States  have 
in 
developments  at a European  level. 

1.3  Given  the  method  used,  which  was  the 
only  one  open  to  the  Commission,  the  study 
must be regarded  as strictly  exploratory  and its 
results,  which  are  not  in  any  sense  scientific, 
should be treated  with  caution.  The findings  are, 
however,  of interest  and  are discussed  below. 

Growth of the sector 

that 

increase 

suggests 

the  evidence 

the  very  marked 

this  phenomenon,  highlighting 

1.4  All 
the 
associative  sector  has  grown  enormously  since 
the  end  of  the  last  war  and  the  survey  clearly 
in 
reflects 
particular 
in  the 
number  of  voluntary  organisations  in  the  last 
twenty  or  so years.  The growth  of the  sector  in 
the  last  decade  might justly  be  called  explosive. 
Of the  voluntary  organisations  which  responded 
to  the  questionnaire,  some  75%  were  founded 
after  1961,  about  65%  after  1971  and  about 
45%  after  1981.  There  is  no  reason  to  believe 
that  the  sample  was  abnormally  "young"  nor 
does  growth  appear  to  be  slackening.  There  are 
minor differences  between  the  sector  in  different 
Member  States - for  example,  for  reasons which 
will  be  obvious,  the  sector  appears  to  be  on 
average  younger  in  Spain  and  Portugal  than 
elsewhere  in  Europe  (84%  of  the  Spanish  and 
85%  of  the  Portuguese  sample  were  founded 
after  1971  and  63% and  62%  respectively  after 
1981)  - but  the  same  basic  phenomenon  can  be 
observed  everywhere in Europe. 

1.5  There  are  no  doubt  many  reasons  for  this 
very  marked  growth  but  the  following  factors 
have almost certainly been  influential; 

increases  in  prosperity 

the 
• 
second  world  war  and  latterly  increased  leisure 
time  (shorter  working  week,  longer  holidays 
and two-day weekends) 

following 

the  shift  evident 

• 
economies  during 
provision  of services 

in  most  European 
the 
towards 

the  80's 

• 
the  increasing  delegation  to  voluntary 
organisations  of  services  (particularly  social 
services)  previously 
delivered  by  public 
authorities ("social privatisation") 

• 
changes  in public  preferences  away from 
uniform  and relatively impersonal  services of the 
kind  typically  provided  by  public  authorities 
towards  the  more  individual  client-oriented 
approach  favoured  by voluntary  organisations 

16 

the identification of a whole range  of new 
• 
social 
needs  and  the  growth  of  new 
preoccupations 
sexual  equality,  the 
(e.g. 
environment and preservation of the biosphere, 
foreign  aid  to  developing  countries  following 
the granting of independence to former colonies 
in the 60% peace etc.) 

leading 

the employment crisis in the late 70'$  and 
• 
early  30's 
the  creation  of 
to 
employment  schemes  involving  voluntary 
organisations 
• 
historical reasons  peculiar to particular 
Member  States  such as the release of pent-up 
associative  demand  following  political  changes 
in Spain and Portugal or the movement to create 
structures  outside  the  purview  of  the  state 
following  the  social  and political  upheavals  of 
196S 

• 
demographic  changes  taking  place  in 
Europe  such  as  the  increasing  number  of 
leading.  Member 
retired/unemployed  people 
States  to  offload  services from the  State to the 
private  and  associative  sectors  as  a  way  of 
cutting public expenditure 

Numbers  of members 

in 

the  sense  explained 

1.6  One well-known  voluntary  organisation in 
the  Community  has  over  13  million  members. 
Most  voluntary  organisations,  however,  are 
small,  often  having  no  more  than  a  handful  of 
active  adherents.  Because  of the  methods  used 
by  the  Commission,  the  sample  contains  a 
disproportionate  number (30%) of "intermediary 
in 
organisations" 
paragraph  4  and  of  national  organisations.  The 
results  will 
considerably 
overestimated  the  average  size  of  voluntary 
(Most 
organisations 
intermediary  organisations  responding  to  the 
survey  were  federations  -  that  is,  umbrella 
bodies providing some centralised  services (such 
as  information  and  combined  lobbying)  for  a 
number  of  separate  voluntary  organisations  or 
branches  (usually  with  their  own  legal  identity) 
working  in  the  same  field.  Nonetheless  the 
figures  are of interest. 

the  Community. 

therefore 

have 

in 

1.7 
In  the  sample,  about  40%  of  voluntary 
organisations  had fewer  than  100 members and 
more  than  half  had  fewer  than  200. The  range 
was,  however,  very  wide.  Thus  13%  of  the 
sample  had between  1 000 and  5 000 members, 
and  15%  had  over  5 000.  As  would  be 
expected,  national  organisations  tended  to  have 
more members  than  those  with  a regional  focus 
-  they  appear,  roughly  speaking,  to  have  twice 
as many members as regional  organisations. 

1.8  Of  the  federations  responding  to  the 
survey  very  nearly  half  represented  more  than 
fifty  organisations,  with  9%  representing  over 
indirectly 
500.  Such  bodies  do,  of  course 
represent 
large  numbers  of  members  of 
individual voluntary organisations: in our sample 
over  half  (55%)  of  federations 
indirectly 
represented  more  than  10 000  members  with 
32%  representing  over  100 000.  The  average 
number  of  members  indirectly  represented  was 
over  1  300 000. 

1.9  The  size  of  voluntary  organisations  and 
federations  appears  to  vary  according  to  a 
number  of  factors.  Larger  bodies  tend  to  be 
older,  as  do  organisations  working  in  fields  of 
obvious  and  enduring  interest,  such  as  social 
services  and  education.  As  has  already  been 
remarked,  voluntary  organisations  with  wide 
geographical  scope  tend  to be larger  than  those 
with a relatively  parochial  focus.  The size of the 
membership  also  reflected  to  some  degree  the 
size  and  relative  wealth  of  the  Member  State 
and the relative maturity of the  sector. 

Employment 

1.10  The  numbers  of  staff  employed  by 
voluntary  organisations  varies  very  widely  -
from  none  at  all to  many  thousands.  The great 
majority  of  voluntary  organisations  are,  in 
effect, 
their 
counterparts  in the conventional  economy,  most 
employ  no more  than  a handful  of staff.  A few, 
however,  are 
large  organisations  by  any 
standards,  employing  large  numbers  of  full  and 
part-time salaried  staff. 

enterprises 

small 

and, 

like 

1.11  The average  voluntary  organisation  in our 
sample  employed  40 full  and  10 part-time  staff. 
The  equivalent  average  figure  for  intermediary 

17 

organisations was a little higher.  These  averages 
do,  however,  conceal  wide  variations.  Thus 
some  14% of our sample employed  no paid  staff 
at  all,  17%  employed  over  50  people  (full  and 
part-time),  6%  between  101  and  500,  and  4% 
over  501. The commonest  number  of  employees 
was  between  1 and  5.  Full-time  staff  appear  to 
work  on  average for  36  hours  a week  and  part-
timers  for  20  hours.  These  figures  varied  less 
from  country to  country than they did  according 
to  the  area  in  which  the  voluntary  organisation 
was  active:  for  example,  as  might  be  expected, 
voluntary  organisations  active  in  the  health  or 
social  services  field  tended  to  employ  many 
more salaried  staff than  those active in,  say, civil 
rights. 

Volunteers 

1.12  Another  very  important  source  of  support 
for  voluntary  organisations 
is,  of  course, 
volunteers.  81% of  our  sample  said  that  they 
employed volunteers.  Voluntary  organisations in 
some countries  appeared  to  make  rather  greater 
use  of volunteers  than  others,  but  in no  country 
did  the  proportion  of  voluntary  organisations 
which  have  volunteers  working  for  them  fall 
below  60%.  Again,  the  numbers  of  volunteers 
employed  varied  widely:  30%  of  voluntary 
organisations  (including  federations  and  other 
intermediary  organisations)  told  us that  between 
1  and  5  volunteers  were  active 
their 
organisation; about  18% reported  that they were 
supported  by between  6 and  10 volunteers; 60% 
had  over  51  volunteers,  10%  had  between  101 
and  500, and  7% had  over  500. A few  voluntary 
organisations  (3%)  were  supported  by  over 
2 000  volunteers.  On  average  each  volunteer 
spent  about  nine  hours  a week  working  for  the 
organisation they  supported. 

in 

1.13  Although  there did  not  appear to  be  major 
differences  between  the number  of  organisations 
in different  Member  States using volunteers,  the 
ratios  of  salaried  staff  to  volunteers  varied 
widely from  country to country - from  about 1:1 
to  about  1:8.  Such  differences  did  not  appear  to 
be  related  to  the  size  or  wealth  of  Member 
States  or  any  other  particular  factor.  It  may  be 
that  they  simply reflect  varying  traditions,  or the 

extent  to  which  volunteering  is,  or  is  not, 
organised. 
1.14  The  numbers  of  volunteers  employed  also 
varied  markedly  according  to  the  voluntary 
organisation's  main 
field  of  activity.  For 
example,  voluntary  organisations  working 
mainly  in  the  field  of  culture  and  recreation,  or 
in  human  rights,  clearly  depended  to  a  much 
greater  extent  on  volunteer  workers  than  did 
voluntary  organisations  working 
in  health, 
education,  or  social  services.  However,  while 
there  was 
for  voluntary 
organisations  to  rely  on  either  salaried  staff  or 
volunteers,  it  was  not  necessarily  the  case  that 
voluntary  organisations  with  few  salaried  staff 
had  few  volunteers,  or  vice  versa  -  the  mix 
varied  a great deal. 

tendency 

some 

Assets 

1.15  The 
federations  in our sample had: 

voluntary 

organisations 

and 

financial  assets  amounting  to  2,208 

• 
thousand ECU, 
• 
ECU;' 
• 
equipment 
thousand  ECU; 
• 
thousand  ECU; 

property  amounting to 702 thousand 

amounting 

to  1,102 

other  assets  amounting 

to  835 

total  assets  of  10,068  thousand 

• 
ECU. 

though 

These averages  conceal  wide variations between 
voluntary  organisations  themselves  and  between 
countries.  By  and  large  it  is,  as  would  be 
expected,  voluntary  organisations  in  the  richer 
Member  States  which  have  on  average  bigger 
these 
the  variation 
assets, 
countries  is  as  wide  as  anywhere.  Voluntary 
organisations  in Member  States  where there  are 
still  remnants  of  the  old  mortmain  laws,  or 
where  the  laws  governing  inheritance  are  still 
relatively  rigid,  have  discernibly  fewer  assets  in 
the form  of property. 

in  even 

Expenses 

1.16  Data  on  organisations'  annual  expenditure 
was  broken  down  into  salaries  and  wages, 
administrative  costs,  and  other  costs.  On 
average  the  costs 
incurred  by  our  sample 
organisations amounted  to the  following: 

salaries and wages: 
thousand ECU 
administrative costs: 
thousand ECU 
other costs: 
thousand  ECU 

total costs 
thousand ECU 

27,743 

465 

1,044 

31,149 

differences 

between 
There  were  minor 
countries:  broadly  voluntary  organisations  from 
better  off  Member  States  spent  more  than 
average  on wages  and  salaries. Not  surprisingly 
rather  more  on 
larger  organisations  spent 
administration  than  did  federations,  which  were 
generally  more  expensive  to  run  than  simple 
voluntary  organisations. 

Sources of Income 

their 

voluntary 

1.17  Very  many 
organisations 
depend  to  some  degree  on  external  subsidies  of 
one  kind  or  another, 
typically  from  public 
authorities,  but  often  from  individuals  or  other 
private  donors.  Many  others  are  virtually  self-
supporting,  obtaining 
from 
membership  fees  or  by  the  sale  of  services  or 
other  products.  To  get  an  idea  of  how  they 
financed  their  expenditures,  we  asked  voluntary 
organisations 
in  our  sample  to  state  what 
proportion  of  their  income  was  from  their  own 
resources  and  what  proportion  came  from  so-
called  external  sources,  such  as  gifts  and 
subsidies. 

income 

1.18  For  the  purposes  of  the  study,  income 
from  the  sale  of  services  (whether  to  members 
or 
(e.g. 
or 
non-members) 
publications),  membership 
investment 
income  and  income  from  contracts,  were  all 
counted  as  "own  resources".  Under  "External 
resources"  were 
from 
included 
government  bodies  and  other  public  authorities, 

products 
fees, 

subsidies 

a 

typical 

European 

individuals, 

international 

and  support 
from 
bodies, foundations  and companies. 
1.19  On  average  membership  fees  (30%)  and 
the sale of services  (30% of which  20% were to 
members  and  10%  to  non-members)  made  the 
largest  contribution  to  voluntary  organisations' 
"own  resources",  followed  by  contracts  (17%), 
sales of products  (15%),  and  investment  income 
(8%).  To  put  the  matter  in  another  way,  on 
average 
voluntary 
organisations  derives  some  62%  of  its  "own 
resources"  from  economic  activity  of  one  form 
or another  - i.e.  from  selling  services  directly  or 
under  contract,  or from  selling products  such  as 
publications.  Again 
did, 
however,  conceal wide variations in the amounts 
that voluntary organisations gained  from  various 
sources  and  in  their  relative  importance.  For 
in  two  Member  States 
example, 
the  most 
important  source  of 
the  "own 
in 
resources"  category  was  sales  to  non-members; 
and  in  another  membership  fees  apparently 
contributed  little  in  comparison  with  contracts 
with public authorities. 

averages 

income 

these 

individuals 

1.20  There  was  less  variation  apparent  when 
we  looked  at  "external  resources".  By  far  the 
most  important  source  of  external  income  for 
voluntary  organisations  in  all  but  one  Member 
State  was  reported  to  be  subsidies  from  public 
authorities (52%). This was followed  by  support 
from 
from 
from 
international 
foundations 
lastly  support  from 
companies  (7%).  Again  to  put  these  averages 
into  perspective,  grants  from  foundations  were 
generally  not  an  important  source  of  income 
(between  3%  and  6%)  in  all  but  two  Member 
States, as were supports from  business. 

support 
(10%),  grants 

bodies 
(9%),  and 

(22%), 

subsidies  were  clearly 

1.21  Of all  the  sources  of  internal  and  external 
income, 
the  most 
important,  followed  by  membership  fees.  The 
following  diagram  compares  all  the  sources  of 
internal  and  external  income  and  gives  their 
mean percentages of the total. 

19 

Own  and  External  Resources 

0,15 

0.20 

avaraga  part  in % 

there  were 

1.22  Additional  information  was  also  sought 
from  voluntary  organisations  and  federations 
about the balance of "own" to  "external" income 
over  the  last  three  financial  years.  The  ratio  of 
own  resources  to  external  resources  was  on 
significant 
average  about  45:55,  with  no 
fluctuations  over  the  three  years.  In  each  year, 
however, 
voluntary 
organisations/federations  claiming  that  100%  of 
their income was derived  exclusively  either  from 
their  own  or  from  external  resources.  In  other 
words  most  voluntary  organisations  appear  to 
income 
little  under  half 
generate  a 
themselves,  relying  for  the  remainder  mainly  on 
subsidies  of  one  kind  or  another;  but  there  are 
numbers  of  voluntary  organisations  which  are 
either  wholly  self-sufficient  or  alternatively, 
wholly dependent  on external aid. 

some 

their 

Sphere  of  Activity 

1.23  The  questionnaire  used  the  following  ten 
main  spheres  of  activity  with  which  to  classify 
voluntary  organisations/federations: 

indicate 

in  brackets 

1.24  The  figures 
the 
proportion  of  respondents  naming  each  of these 
areas  as  one  in  which  they  were  active.  These 
figures  take  account  of  the  fact  that,  as  has 
already  been  made  clear,  many  voluntary 
organisations  are  active  in  a number  of fields at 
once.  This  is  clearly  revealed  by  the  following 
diagram  showing  the  proportions  of  voluntary 
organisations  whose  main activity  may lie in one 
field but  which  are  also  active  in  others.  There 
were,  as  would  be  expected,  differences 
between  countries,  though  it  is  noteworthy  that 
social  services was named  most  frequently  in all 

Social Services 
Education  and  Research 
Development and Housing 
Culture and Recreation 
International  Activities 
Civil Rights and  Advocacy 

Health 
Philanthropy  and  Voluntarism 
Environment 
Business  and Professional  Voluntary  organisations 

20 

(57%) 
(46%) 
(40%) 
(36%) 
(35%) 
(35%) 
(26%) 
(23%) 
(18%) 

(  8%) 

Areas  of Activity  and Main Areas  of Activity  - frequencies  in % 

£ 

Social  Services 

Culture  and  Recreation 

Development/Housing 

Education  and  Research 

International  activities 

Health 

Civil  Rights 

Environment 

Philanthropy 

Business 

30 

frequencies  in  % 

60 

but  two  countries  (it  is unlikely that  this finding 
simply  reflects  our  particular  sample).  Greater 
differences  appeared,  however,  when  we  looked 
in  more  detail  at  the  type  of  social  services 
in 
provided  where  voluntary  organisations 
different  countries  appear 
in 
to  specialise 
different  sub-areas  such  as  family  care,  youth 
work  or  services  to  elderly  people  or  people 
with disabilities. The latter three groups were, in 
fact,  most  often  mentioned.  This may reflect  the 
fact 
to 
voluntary  organisations  to  provide  services  for 
these particular groups. 

that  governments  most  often 

turn 

for 

"culture 

1.25  Looking  in  a  little  more  detail  at  the 
example, 
figures  on, 
and 
recreation",  reveals 
that  41%  of  voluntary 
organisations  whose  main  activity  lies  in  this 
field  are  also  involved  with  other  cultural  and 
artistic  activities  -  37%  with  sport,  29%  with 
recreational  and  entertainment  clubs  and  27% 
with  the  media  and  communication.  Voluntary 
organisations  which  gave  another  area  as  their 
main field of activity were also  active in  "culture 
and  recreation". 

1.26  A further  example is provided  by  "health": 
36%  of  voluntary  organisations  which  claimed 
that  health  was  their  main  area  of  activity  were 
involved  in  rehabilitation,  35%  were  involved 
with public health services, and 26% were  active 
in  nursing  homes.  Nursing  homes  were  also 
mentioned  by,  for  example,  29%  of  voluntary 
organisations  which  gave  "Philanthropy  and 

Voluntarism"  as their  main  area  of  activity;  and 
17%  of  voluntary  organisations  who  were 
mostly  involved  in  "social  services"  were  also 
involved  in  "rehabilitation". 

a 

for 

either 

reflects 

1.27  This  "multi-functionality"  is  typical  of  the 
philosophical  approach  adopted  by  voluntary 
organisations  and  often  also 
their 
circumstances  as  key  sources  of  aid  or 
information  in  a  particular  locality.  Voluntary 
organisations  in  .this  sense  are  rarely  entirely 
"subject-oriented":  their  focus  is  above  all  on 
people  and  their  problems.  In  this  spirit,  many 
is,  in 
voluntary  organisations  provide  what 
effect 
the 
"one-stop-shop" 
inhabitants  of a particular  area,  or  for  the  group 
which  is their  special  concern.  Thus  a  voluntary 
organisation  dealing  with,  for  example,  people 
with  disabilities,  will  deal  not  simply  with  the 
immediate  results  of  a  particular  disability,  but 
will 
the 
information  and  advice  needs  of  its  clients  and 
with  the  whole  range  of  concerns  affecting 
them,  including, most importantly, their rights as 
citizens.  This  latter  is  a  particularly  important 
point:  as  a  glance  at  the  diagram  will  show: 
regarded 
while  only  6%  of  our 
themselves  as  primarily  concerned  with  human 
rights,  35% gave it as a field in which  they were 
active.  The  same  multi-functionality  is  evident 
throughout  the diagram. 

itself  also  with 

to  occupy 

sample 

tend 

1.28  When  we  looked  at  the  expenditure  and 
assets  of  voluntary  organisations  working  in 
different  fields  we  found  that  bodies  concerned 

with  social  services  and  health  had  the  highest 
expenditure.  The  voluntary  organisations  and 
federations  whose  main  concern  was  with  civil 
rights  and  advocacy  had  the  lowest  costs  and 
the  smallest  assets.  Environmental  voluntary 
organisations/federations  and  those  whose  main 
objective  was  education  and  research  were  best 
off from the point of view of assets. 

regards 

the  most 

the  "own 

resources"  of 
1.29  As 
important 
voluntary  organisations, 
source  of  income  for  bodies  in  the  field  of 
culture and recreation was the sale of services to 
members  and  membership  fees,  both  providing 
29%o. In the fields of education  and research  and 
international  activities,  contracts,  (25%  and 
27%  respectively)  were  the  most 
important 
source  of  self-generated  income,  while  in  the 
area  of  health  it  was  membership  fees  (36%). 
social 
Voluntary 
services  also 
fees 
constituted  a  significant  part  of  their  "own 
resources" (33%), as did those dealing with civil 
rights  (38%),  development  and  housing  (31%) 
and  the  environment  (35%).  In  contrast,  charity 
organisations  obtain  the  bulk  of  their  own 
resources by  selling  services  to  members  (28%) 
and  non-members  (26%).  For  business  and 
professional  organisations,  membership  fees  are 
by far the largest element in the "own resources" 
category. 

organisations 
said 

that  membership 

providing 

of 

charitable 

to  73%  of 

Ï.30  As  regards  external  sources  of  income, 
organisations  working  in  all  fields  are  largely 
supported  by subsidies  of  one  kind  or  another. 
Subsidies  provide  from  31%  of  total  external 
voluntary 
income 
organisations/federations 
such 
income for  business and  professional  bodies.  As 
has already been noted, support from  individuals 
income. 
is  also  an 
Charitable 
and 
federations,  for  example, said that  support  from 
individuals  represented  37%  of  their  external 
income.  Environmental  voluntary  organisations 
claimed  the  proportion  to  be  29%,  and  in  the 
fields of  social  services,  education  and  research 
and  international  activities^  it  represented  a fifth 
of  external  resources.  The  major  exception  to 
this  picture  was  provided  by  business  and 

source  of 
organisations 

important 
voluntary 

professional  voluntary  organisations,  which 
derived  only  2%  of their  external  income  from 
individuals. 

Geographical  scope 

1.31  In  asking  about  the  geographical  area 
covered  by  voluntary  organisations,  we  were 
chiefly  interested  in  gaining  an  impression  of 
what 
sample 
sort  of  proportion  of  our 
considered  Europe  as  a  significant,  if  not  the 
only,  focus  of  their  organisation.  The  results 
varied  surprisingly  widely:  in  one  country  only 
4%  of  respondents  regarded  their  scope  as 
to  35%  in 
extending  to  Europe,  compared 
another  country.  They  should,  however,  be 
considered  together  with  our  findings  (reported 
below)  on  the  number  of  actual  or  intended 
partnerships  or  other  activities  undertaken  by 
voluntary  organisations  at  the  European  level. 
Interestingly, 
little 
correlation  between  how  important  a  focus 
organisations  consider  Europe  to  be  and  their 
propensity to form  European  partnerships. 

appears 

to  be 

there 

to 

1.32  The  scope  of  a.  voluntary  organisation's 
interest  is  not,  of  course,  necessarily  closely 
its  organisational  structure.  For 
related 
example,  an 
internationally  active  voluntary 
organisation  may  well be  locally  based,  whereas 
one  which  may  be  active  at  a  national  level 
within  a  particular  Member  State  may  lack  any 
interest  in  Europe.  As  a  broad  rule,  however, 
the greater  an  organisation's  geographical  scope 
the  more  it  appears  to  play  an  active  role  at  all 
levels.  Thus  most  national 
organisations 
considered  that  they  were  also  active  at  local 
and  regional  level,  but  few  local  organisations 
considered  that  their  scope  extended  to  national 
level.  In  line  with  this,  most  of  the  voluntary 
organisations  that  are  active  at  the  European 
level are, in fact,  nationally  organised. 

Target groups  and  beneficiaries 

.  1.33  We  asked  voluntary  organisations  which 
particular  groups  of  people  their  organisation 
worked  with  or  was  concerned  with  and  to 
indicate  to  whom,  or  to  which  bodies  they 
offered  services  and  on  what  basis.  The  great 
and 
majority 

of  voluntary 

organisations 

22 

significance 

federations  defined  their  target  public  widely  -
46%>  of  respondents  said  that  they  served  the 
"general  public"  or  alternatively  "young  people" 
(37%>) or  "adults"  (35%).  In  contrast,  very  few 
organisations  mentioned  more 
voluntary 
narrowly-defined  groups  as 
their  particular 
concern.  It  may  be  doubted  whether  there  is 
much 
finding.  Since 
in 
voluntary  organisations  were  not,  in  practice, 
confined  to  one  choice from  the list  provided  in 
the  questionnaire,  the  likelihood  is  that  most 
respondents  whose  activity  was  directed  on  the 
one  hand  at  a  specific  group  of  people  e.g. 
"drug  addicts"  or  "veterans"  and,  on  the  other 
hand  at  the  population  as  a  whole  (whether  to 
draw  attention  to  their  work  or  to  canvass  for 
support)  indicated  both  the  specific  group  and 
"general public". 

this 

1.34  When we asked voluntary  organisations  to 
whom  they  provided  services  the  answer  was, 
again,  most  often  the  "general  public"  (39%), 
followed  as the next most frequent  categories by 
the  "target  group"  (38%)  and  members.  (36%), 
governments  or  other  public  bodies  (22%).  The 
extent  to  which  these  services  were  provided 
free or in return for  payment varied  according  to 
the  country  concerned  and  to  whom  the  service 
was  provided.  Free  services  were  most  often 
provided  to  the  general  public  and  to  members, 
and 
voluntary 
organisation's  particular  target  group  or  clients 
or to public authorities. 

services 

paying 

the 

to 

voluntary 

organisations 

1.35  Overall,  more free  goods  or  services  were 
provided  by  voluntary  organisations/federations 
than  goods  and  services  against  payment.  Not 
surprisingly, 
and 
federations  that  mainly  offer  their  services  free 
rely  more  heavily  on  support  from  outside  than 
do  bodies  which  charge.  To  what  extent 
services  are provided  free  or,  alternatively,  have 
to be paid for depended  heavily on the voluntary 
organisation's  field  of  action.  For  example,  the 
support  of  the  homeless  is  likely  to  involve  the 
provision  of  free (or  at  least  very  cheap)  goods 
or  services  whereas  it  may  be  reasonable  to 
charge  for,  say,  adult  education.  Similarly, 
sports  clubs,  where  perhaps  relatively  costly 
equipment  is  needed,  or  which  are  prestigious, 

will  provide  fewer  free  benefits  than  those 
voluntary  organisations 
in  social 
services, especially of a relatively informal  kind. 

involved 

together  with 

These  findings, 
those  on 
voluntary  organisations*  sources  of  income 
are  a  clear 
important 
redistributive effect  which these bodies have. 

indication  of  the 

European Community-wide  partnerships 

between voluntary  organisations 
and  foundations 

contained 

1.36  Because  of  the  method  we  used,  our 
a  greater 
sample  undoubtedly 
proportion  of voluntary  organisations  which  are 
active  at  the  European  level  than  would  be 
expected  in a more scientific  sample. The figures 
impressive  evidence  of  the 
are  nonetheless 
extent  to  which  the  sector  is  already  beginning 
to  come  together  throughout  the  Community: 
50% of those voluntary  organisations  answering 
the  relevant  question,  or  nearly  a  quarter  of the 
total  sample,  said 
they  were  already 
that 
involved  in cross-border  activities  in  some  form 
of  partnership  with  nationals  or  organisations 
from  other Community  countries. 
1.37  Given  that  the  inspiration  for  the  majority 
of the  well-known  networks  already  working  at 
European  level  came from  countries in the north 
of the  Community,  it  might  have  been  expected 
that  the tendency  to  form  partnerships  might  be 
less marked  in the south than  in the north.  In the 
findings  did  not 
event, 
this 
the 
hypothesis: 
there  were  differences  between 
countries,  which  are  not  altogether  easy  to 
explain,  but  no  clear  division  was  discernible 
between the overall picture north  and  south. 

support 

1.38  Looking  ahead,  46%  of  our  respondents 
said  that  they  envisaged  entering  into  cross-
border  partnerships  at  some  time  in  the  future. 
Interestingly,  an  analysis  by  country  showed,  in 
effect,  that  it  is voluntary  organisations  in  those 
countries  that  have  hitherto  formed  a  below-
average  number  of  partnerships  which  have  the 
strongest  future 
intentions.  In  other  words, 
when  it  comes  to  operating  on  the  European 
stage,  voluntary  organisations  in  countries  now 
lagging behind  appear to have every  intention  of 
catching up. 

23 

in 
L39  Of  voluntary  organisations  already 
partnerships,  27%  were  active 
in  "social 
services",  14%  in  the  field  of  "culture  and 
recreation",  13%  in  "international  activities". 
11%»  in  "education  and  research"  and  10%  in 
"development  and  housing".  Again,  there  was 
evidence  that  voluntary  organisations  working 
in  some  fields  where  few  partnerships  have  yet 
been  formed  have  stronger  future  intentions  as 
regards  cross-border  work:  for  example,  no 
than  75%  of  our  sample  voluntary 
fewer 
organisations  which  are  active  in  the  field  of 
"development  and  housing"  said  that  they  were 
planning  partnerships  for  the  future.  On  the 
other hand, only 22% of voluntary  organisations 
active  in  the  health  field  said  that  they  were 
planning  to  enter  into  partnerships.  This  may 
that  many  voluntary 
well  reflect 
organisations  supply  what  are,  in  effect,  public 
services  - and  furthermore  in  a  highly  regulated 
circumstance, 
sorts 
these 
In 
field. 
partnerships  may 
voluntary 
simply  offer 
organisations less and thus be less attractive. 

the  fact 

of 

Problems  in forming  partnerships 

in 

1.40  Just  over  half  the  voluntary  organisations 
they  had  met 
involved 
that 
their 
running 
in 
problems 
or 
partnerships.  The  broad 
findings  were  as 
follows: 

them  said 
forming 

M.lt*j~t* 

' 

Vrt 

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•<*<•  Mr C »/ 

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'+ 

trtt'ttt 

'tt 

or 

regional 

national, 

The  figures  in  brackets  indicate  the  proportion 
of  respondents  encountering  each  kind  of 
apparent 
problem.  Few  differences  were 
local 
between 
organisations,  though  there  was  a  tendency  for 
smaller  organisations  to  be  less  preoccupied 
with  difficulties.  The  outstanding  finding  is,  of 
course,  the  extent  to  which  "communication" 
has  caused  difficulties,  though  the  extent  of 
legal  and  fiscal  problems  is  also  noteworthy.  It 
seems  likely  that  the  legal  difficulties,  at  least, 
will be largely  removed  by the proposed  Statute 
for  a  European  Association.  Language 
is 
probably  the  most  important  impediment  to 
"communication"  but  it  is  likely  that  there  are 
other  complicating  cultural  factors  at  work  as 
well,  such  as  misunderstanding  of  role  and 
importance  of  the  sector  in  different  countries, 
misunderstanding  of  how  organisations  work, 
the  lack  of  understanding  of  cultural,  legal  and 
fiscal  backgrounds,  the  existence  of  different 
ways of working etc.. 

Main  future  needs  of  voluntary 
organisations 

1.41  We asked  respondents to tell us what  they 
felt  were  their  voluntary  organisation's  main 
needs  for  the  future.  The  results  are  given 
below. 

24 

Main  needs  of  European  associations/foundations 

30 

40 

50 

frequencies  in  % 

Points 

for 

the  Commission: 
the 
- development 
sector  at  the  European 
level 

of 

1.43  Finally,  we  invited  respondents  to  let  us 
know  of  any  points  which  they  would  like  to 
bring to  the  attention  of the  Commission  and  to 
put  forward  any  suggestions  they  might  have 
about  how  the  Commission  might  help  the 
development  of the sector at the European  level. 
The  answers  we  received  ranged  widely  from 
simple  demands  for  "recognition"  in  a  quite 
general  sense  (either  of the  non-profit  sector  or 
of  some  particular  organisation)  to  relatively 
complex 
in,  or 
extensions to, European  Community policies. 

suggestions 

changes 

for 

the  sector 

It  is  clear  from  the  results  that  the  perceived 
need  for  more  funds  and  more  staff,  and  above 
all  the  former,  is  more  or  less  universal.  The 
same  demand  exists  in  the  sector  in  all  the 
Member  States,  though  there  is  a  tendency  for 
in  poorer  countries, 
voluntary  organisations 
where 
less  well 
tends 
developed,  to  feel  their  comparative  lack  of 
funds  more  keenly.  Voluntary  organisations  are 
not,  on the whole, capital-intensive,  and  it is not 
surprising,  therefore,  that  there  should  not  be 
the  same  desire  for  more  capital.  Nonetheless 
almost  a  quarter  of  our  respondents  mentioned 
capital  as a need. 

to  be 

1.42  The  desire  for  more  paid  staff  appears  to 
be  felt  most  by  older  voluntary  organisations 
(those  founded  between  1945  and  1950): 
younger  voluntary  organisations,  in  contrast, 
appear  in  relatively  greater  need  of  information 
and  management  advice.  The  desire  for  more 
volunteers  was very  widespread  but  particularly 
organisations 
evident 
working  in  the  fields  of  "health"  and,  for 
and 
in 
obvious 
voluntarism".  The  need  for  more  training  was 
mentioned  by  almost  a  quarter  of  respondents 
and appears to be felt  by voluntary  organisations 
working in all fields regardless of their age. 

"philanthropy 

voluntary 

amongst 

reasons, 

25 

ANNEX  H  OVERVIEW  OF  THE  LEGAL 
AND 
FOR 
VOLUNTARY  ORGANISATIONS  AND 
FOUNDATIONS 

FRAMEWORK 

FISCAL 

II. 1  The  following  is  an  overview  of  the  legal 
and  fiscal  basis  on  which  foundations  and 
voluntary  organisations  operate  in  each  of  the 
Member  States.  Following  the  definition  given 
is  taken  of 
in  paragraph  2.3  no  account 
"economic"  associations  which  exist  in  some 
Member  States  and  which  can  engage 
in 
commercial  or other profit  making activities, nor 
of the several varieties of private  foundation. 

Legal  basis 

to 

under 

establish 

(normally 

guaranteed 

in  all  Member  States  of 

n.2  The freedom  to establish  or join,  or indeed 
to leave,  a voluntary  organisation  is nowadays a 
the 
right 
constitution) 
the 
Community.  The  right  of  association  is,  of 
course,  also  guaranteed  under  the  European 
Convention  on  Human  Rights.  Generally 
speaking  it  is  possible  for  nationals  of  any 
Member  State 
a  voluntary 
organisation  or  foundation  anywhere  in  the 
Community,  although  some  Member  States 
there  should  be  a  minimum 
stipulate 
number  of  their  own  citizens  or  residents 
involved10.  Some Member  States have  however, 
foreign 
special  statutes  precisely 
nationals  to  establish  voluntary  organisations 
which,  though  subject  to  the  same  national 
registration  or  publication  requirements  as  any 
then  run 
other  voluntary  organisation,  are 
according to  such  internal  regulations  as may be 
laid  down 
the 
founders  originate. 

in  the  country  from  which 

to  enable 

that 

II.3  Generally  speaking,  where  jurisdictions 
make the  distinction  between  private  and  public 

Article  16  of  the  ECHR  permits  derogations  to  the 
right  of  association  in  the  context  of  a  political 
activity of non-national  citizens. 

This  is  in  fact  in  contravention  of  Articles  6  and  52 
of the Treaty on European  Union. 

26 

both 

either 

States 

voluntary 

organisations 

law 
and 
foundations  are  entities  of  private  law.  Not  all 
Member 
voluntary 
define 
organisations  or  foundations  explicitly,  and  not 
all make a fundamental  legal  distinction  between 
voluntary  organisations  on  the  one  hand  and 
foundations  on the  other.  For  present  purposes, 
however,  voluntary  organisations  can  be  taken 
as groups  of private  individuals  who  have  come 
together  for  some  non-profit  end  in  the  public 
interest.  In  contrast,  foundations  are  entities 
which  have  charge  of  assets  set  aside  for 
purposes  in the public  interest  in the  form  of an 
endowment  or  of  a  regular  dedicated  source  of 
income. 

IL 4  That  part  of the  sector  of  interest here is, 
therefore,  neither  wholly  private  nor  wholly 
public  in nature.  It  follows  that  fundamental  to 
the law must  be  some  means of  demarcating  its 
proper  sphere  of  operation  from  the  territory 
occupied  by  purely  private 
activity,  by 
government,  or  by  commercial  companies  and 
other forms  of profit  making  enterprise.  Within 
the  Community  this  has  been  achieved  either 
formally  -  by  setting  but  the  basic  features  of 
internal  organisation  and  governance  to  which 
non-profit  organisations  must  conform,  or  by 
objects  -  by  laying  down  what  spheres  of 
activity  count  as  in  the  public  interest  and  by 
establishing  other  rules  defining  how  the  non 
profit  status of the organisation  is to be secured. 

the 

first  of 

these 
11.5  Broadly  speaking 
approaches - that of defining  non-profits  by their 
formal  features  is characteristic  of the  civil  code 
tradition,  and the second  - that of delineating the 
sphere  of  non-profit  activity 
in  the  public 
interest  ("charity")  by the purpose  of the activity 
itself-  is the fundamental  feature  of the common 
law tradition. 

a 

commentators  draw 

11.6  Many 
sharp 
distinction between  these two  approaches,  and it 
is  certainly  true  that  the  legal  traditions  from 
which 
they  derive  are  very  different.  The 
practical  effect  of  the  difference  in  approach 
can, 
exaggerated.  Many 
jurisdictions  contain  special  legal  provisions  for 
voluntary  organisations  with  certain  aims 
regarded  as  of  public  interest  which,  combined 

however, 

be 

(and 

in  particular 

with  different  levels  of  tax  relief,  means  that  in 
practical  effect  organisations  in  many  Member 
States  are  defined  in  terms  of  both  their  formal 
structure  and  their  objects.  It  is  also  true  to  say 
that in practical terms the basic provisions  of the 
law  on  foundations 
the 
emphasis  given  to  the  preservation  of  assets, 
with  all  that  that  implies)  in  code  countries  are 
also  very  similar to  those  found  in common  law 
jurisdictions.  The  clear  link  here  is  probably 
historical.  The  common  law  on  charity  has 
enjoyed  an  unbroken  tradition  and  has  never 
drawn  a 
fundamental  distinction  between 
foundations  and  voluntary  organisations  -  both 
are  charitable  trusts.  Since  foundations  are  the 
older  form,  it  appears  that  the  law  was  simply 
applied  later  to  voluntary  organisations  without 
any  major  adaptations.  In  contrast  many  code 
countries  have  not  enjoyed  the  same  continuity, 
the result being that the law has diverged. 

organisations  may 

be 
11.7  Voluntary 
incorporated  or  unincorporated  and  both  forms 
are found  in all jurisdictions. It  seems likely that 
the  majority  of  voluntary  organisations  in  the 
Community  are in  fact  unincorporated  and  thus 
without 
legal  personality.  There  are  some 
disadvantages  to  being  unincorporated:  it  is not 
always  easy  for  the  voluntary  organisations  to 
acquire any assets it may need, and its individual 
board  members or trustees,  in whose  names the 
business of the  voluntary  organisation  is carried 
on,  may be uncomfortably  exposed to  liabilities. 
In most places the law has, however,  developed 
ways of mitigating the difficulties  - by the use of 
the law of agency, for  example, or by a common 
fund  to which members contribute and  to  which 
in  most 
creditors  have  first  recourse,  and 
jurisdictions 
voluntary 
the  unincorporated 
organisation  does  not  appear  to  be  prevented 
from  taking part  in  legal  process  as  a voluntary 
organisation  (that  is to  say under  its  own  name 
rather than that of a responsible board member), 

11.8  In  code  countries  the  incorporation  of 
voluntary  organisations  is generally  achieved  by 
the publication  of statutes conforming  to the law 
in  the  relevant  official  journal,  together  with  a 
list of (board) members. Incorporation  (or,  more 
its 
accurately, 

registration  which 

the 

is 

from 

carefully 

distinguished 

condition)  may  be  refused  on  the  grounds  that 
the  statutes  of  the  body  are  non-conforming.  A 
refusal  to  register  a  voluntary  organisation  in 
these  circumstances  is an  entirely  administrative 
matter  and  implies no political judgement  on the 
status of the organisation.  It needs,  therefore,  to 
the 
be 
circumstances  in  which  organisations  may  be 
refused  special  status  for  tax  purposes  (see 
below,  paragraph  5.14  and  5.15).  The  statutes 
(and  often  a  full  or  partial  list  of  members)  are 
typically required  to be registered  with either the 
local  court  or  with  the  responsible  ministry, 
regional  or local  authority.  All foundations  have 
legal  personality,  which  again 
is  normally 
achieved  by  the  publication  of  statutes  etc.. 
Unlike 
however, 
organisations, 
to  some 
foundations  are  generally  subject 
degree  of  a  priori  control  to  ensure  that  the 
statutes  are  in  strict  conformity  to  the  law,  that 
intended  to  exist  "in 
(since  they  are  often 
perpetuity")  management  succession  has  been 
properly  allowed  for,  and  that  their  intended 
assets are adequate to achieve their ends. 

voluntary 

11.9  In  common  law  jurisdictions  no  special 
form'  of  incorporation  is  available  for.  either 
voluntary  organisations  or  foundations.  Instead 
bodies  seeking  the  convenience  or  protection  of 
incorporation  have  a  number  of  different  forms 
to choose from  depending on the area of activity 
in  which  they  are  engaged.  By  far  the  most 
common  is  the  so-called  "company  limited  by 
guarantee'"  -  in  effect  a  non-profit-distributing 
company  -  but  there  are  other  forms  available 
such  as  the  "housing  association"  or  the  so-
called 
society".  There  are  also 
(comparatively 
rare)  examples  of  charitable 
voluntary  organisations  and  foundations  which 
have  been  incorporated  by  Royal  Charter  or  by 
special  Act of Parliament. 

"friendly 

11.10 Incorporation  is  available  everywhere  by 
one  means  or  another,  but  the  resulting  degree 
of  legal  capacity  is  not  always  as  great.  In  a 
number  of  Member  States  legal  capacity  is 
effectively  unlimited  (in  any  event  as long  as the 
body  concerned  acts  in  accordance  with  its 
statutes).  In  others,  however,  neither  voluntary 
organisations  nor  foundations  can  receive  gifts 

27 

and  legacies  or  own  real  property  without  the 
express  permission  of 
relevant  public 
authority. 

the 

H.11 There  are  differences  too  when  it  comes 
to  the  difficult  question  of  the  degree  to  which 
voluntary  organisations and  foundations  (but  in 
particular  voluntary  organisations)  are  allowed 
to  engage in economic activity  without  the  loss 
of  tax  privileges.  Some  degree  of  economic 
activity is allowed in all Member States, the rule 
generally  applied  being  that  such  activity  must 
not be voluntary organisations1 principal  activity 
in the sense that it must be carried out not for its 
own sake kit  for acme non-profit ain\ and must 
ke  ancillary  to  the  objects  of  the  voluntary 
organisations in the sense that it must be directly 
tied  to  the  voluntary  organisation's  objects  and 
the 
not 
organisation's general  financial  position.  In  line 
with the non-distribution constraint  under which 
all  voluntary  organisations  operate,  any  surplus 
from economic activity has, of course» to be put 
towards 
the  voluntary 
organisation's  aims.  In  some  jurisdictions,  it  is 
for  a  voluntary  organisation  or 
possible 
foundation to  supplement its income by  creating 
or  acquiring  an  entirely  separate  commercial 
company  which  then  remits  its  income  to  the 
parent body. 

the  achievement  of 

designed 

improve 

simply 

to 

from  property taxes  on  real  property  owned  or 
occupied  by  the  voluntary  organisation  or 
foundation,  In  addition  there  may,  rarely,  be 
partial relief from  employment taxes. 

in  different 
voluntary 

spheres. 
In 
organisations 

11.13 If  the  principle  of  a  degree  of 
tax 
exemption  for  some voluntary  organisations  and 
foundations  is  universal,  the  approach  adopted 
by  Member  States  differs  significantly,  as  does 
the  extent  to  which  relief  is  given  to  bodies 
working 
some 
and 
jurisdictions, 
foundations  are  in  principle  subject  to  the  same 
tax  regime  as  companies  and  receive  no  relief 
from  direct  taxation  unless  they  are  recognised 
(either,  as  having  certain  objects,  by  law,  or 
individually  by  the  relevant  authorities)  for  tax 
purposes.  In  others  (and  in  particular  those 
where  voluntary  organisations  and  foundations 
are  defined  as  being  in  the  public  interest)  tax 
relief  is  accorded  as  of  right  but  may  be  lost  if 
is  regarded  as 
the  voluntary  organisations 
carrying  on  commercial  or  lucrative  activity 
law  or 
recognised  by 
outside 
jurisprudence. 
the 
such 
privileged  tax  status  of the  organisation  may be 
removed  altogether.  Alternatively  relief  may  be 
withdrawn  only  in  respect  of  those  activities 
which  are  regarded  as  profit  making  in  the 
relevant sense. 

circumstances 

limits 
In 

the 

As  far  as  competition  rules  are  concerned,  all 
competition  rules will be adhered  to, taking  into 
account the specificities  of the  sector. 

Taxation 

n. 12 All Member  States  allow  some  voluntary 
organisations  -  broadly  speaking,  those  which 
are  regarded  as  having  purposes  in  the  public 
interest  -  some  degree  of  relief  from  direct 
taxation  either  by  exempting  them  from  taxes 
imposed on companies and other  forms  of  profit 
making  enterprise,  or  by imposing  a  lower  rate 
than that paid by companies, or by establishing a 
minimum  income  threshold  below  which  tax  is 
not  incurred.  These  forms  of  relief  are  not 
necessarily mutually  exclusive. Where  voluntary 
organisations  are  exempt  from  company  tax 
they may have to  pay income tax  instead.  Some 
Member  States  allow  partial  or  full  exemption 

28 

the  area  of  public 

foundations  working 

11.14 Besides 
in  approach 
these  differences 
there  are  significant  variations  in  the  way  in 
which  Member  States  delineate  the  sphere  of 
activity  that  they  regard  as  being  in  the  public 
interest.  There  are thus  considerable  differences 
in  the  extent  of  tax  relief  for  which  voluntary 
organisations  and 
in 
different  fields  are  eligible.  Some  jurisdictions 
define 
the 
tax  relief  very  generally  and 
purposes  of 
broadly,  including,  for  example,  any  activity  of 
public  utility  or  benefit.  Such 
jurisdictions 
typically give full  relief to all bodies meeting this 
broad  criterion.  Other  Member  States  take  a 
much  more  restrictive  approach.  In  one,  for 
example, reliefs are presently available only for a 
small  number  of  individual  organisations  named 
by the  law.  Yet  other  Member  States  take  both 
a  restrictive  approach  and  one  which  also 

interest  for 

discriminates  between  different  sorts  of  bodies. 
Thus  only very  limited  relief  may  be  granted  to 
all  non-profit  bodies,  fuller  exemption  being 
confined  to  bodies  operating  in  a  restricted 
number  of  fields  -  such,  typically,  as  health, 
culture  or  social  services  -  and  subject 
to 
accountability 
stringent  management 
requirements.  Such  special  tax  status  is  subject 
to  administrative  and  political  discretion  and  in 
some Member  States  appears  to  be  increasingly 
rarely  accorded. 

and 

Tax relief for  donors 

11.15 All Member  States  grant  a measure  of tax 
relief  to  donors  to  voluntary  organisations  or 
foundations,  whether  they  be  individuals  or 
companies  or  other  forms  of  organisation. 
Reliefs  may  be  granted  up  to  a  maximum 
amount  in any  one  tax  year  or,  alternatively,  up 
to  a  maximum  proportion  (expressed  as  a 
percentage)  of  an  individual's  gross  or  after-tax 
income.  The  arrangements  for  companies  are 
usually  similar,  relief  generally  being  granted 
either  up  to  a  maximum  amount  or  up  to  a 
tax. 
proportion  of  profits  before  or  after 
Minimum  amounts  or  proportions  may  be 
imposed  and,  in  the  case  of  companies,  the 
permitted  base  for  calculating  the  maximum  gift 
may be turnover  rather than  profits. 

to 

to  gifts 

tax  relief 

to  donors 

11.16  Some  Member  States  grant  some  degree 
to  any  voluntary 
of 
organisation  or  foundation  active  in  the  public 
interest  as  broadly  defined.  In  others,  more 
restrictive  criteria  are  applied,  relief  to  donors 
those 
typically  being  restricted 
voluntary  organisations  which  are  themselves 
granted  special  status  for  tax  purposes.  Indeed, 
unless 
status, 
voluntary  organisations  in  these  Member  States 
do  not  normally  have  the  capacity  to  receive 
gifts  at  all  (see  paragraph  5.10  above).  In 
jurisdictions  where  voluntary  organisations  or 
foundations 
legal 
capacity, voluntary  organisations given  a general 
dispensation to receive gifts  may nevertheless be 
required  to  dispose  of  any  gift  of  real  property 
within  a  specified  period.  In  some  Member 

they  possess 

normally 

required 

limited 

have 

the 

their  estate 

States  the  voluntary  organisation  or  foundation 
may be charged  tax on the gift  received. 
take  a  different 
11.17 Member  States  also 
attitude  when  it  comes  to  legacies.  In  some 
Member  States  individuals  are  free  to  leave  all 
or  part  of 
to  a  voluntary 
organisation  or  foundation  of  their  choice  and, 
while this  appears  to  be  a less  common  practice 
than  in  the  past,  many  still  do  so.  Alternatively 
they  may  create  a  new  body  -  usually  a 
foundation  -  with  some  cherished  aim.  Such 
testamentary  gifts  are  generally  tax  free  both  to 
the  donor's  estate  and  to  the  recipient  body.  In 
those  countries  where  voluntary  organisations 
and  foundations  have  limited  legal  capacity, 
however,  it may be impossible to  leave  anything 
but  a  notional  part  of  an  estate  to  a  voluntary 
organisation  or  foundation  unless  the  recipient 
body  has  received  the  required  dispensation 
from  the  authorities.  Willing  an  estate  may  be 
further  complicated  by  strict  laws  governing 
inheritance  or  by  requiring  that  considerable 
assets  be  set  aside  before  a  foundation  can  be 
created. 

Indirect tax 

11.18  Article  13(A)(1)  of  the  Sixth  Directive 
77/388/EEC of  17 May  197711 requires Member 
States to exempt  from  VAT  "certain  activities in 
the  public  interest".  These  include  hospital  and 
medical  care,  goods  and  services  closely  linked 
to  welfare  and  social  security  work  or  the 
protection  of  children  and  young  persons, 
education  and  training for  young  persons  and  so 
and 
on.  Many  voluntary 
in  the 
foundations  are,  of  course 
provision  of  just  such  services  and 
their 
transactions  are  exempt  from  VAT,  provided 

organisations 
involved 

Known  as  the  "Sixth  Directive",  it  governs  the 
harmonisation  of  the  laws  of  the  Member  States 
relating  to  turnover  taxes  and  introduces  a  common 
system  of  VAT  and  a  uniform  basis  for 
its 
assessment. 

These  exemptions  are  subject  to  certain  conditions 
(see  Anicle  13.A.lb),g).h),i))  and  are  not  given 
automatically 

29 

that  they  obtain  prior  authorization  from  the 
Member  State  in which  they  are  established,  i.e. 
they  are  exempt  from  the  need  to  file  VAT 
returns, to charge VAT to their clients or to  pay 
output  tax.  In  addition,  under  Article  13(A)(2) 
Member  States  can make the granting  of  any of 
the  listed  exemptions  to  any  body  (other  than 
those  governed  by  public  law)  subject  to  a 
number  of  conditions  designed  in  effect 
to 
ensure  that  exempt  bodies  are  bona  fide  non 
profit  organisations  whose  activities  will  not 
affect 
taxed 
the  competitive  position  of 
commercial  enterprises.  On  the  face  of  it  the 
ability  to  impose  conditions  on  the  granting  of 
exemptions would  seem to  leave  a good  deal  of 
scope 
treatment  of 
voluntary  organisations  but  in  practice,  with  a 
few  minor  exceptions  all Member  States  appear 
to  have  implemented  the  exemptions  outlined  in 
Article 13. 
11.19 In  addition  to  the  exemptions  mentioned 
above,  a  number  of  Member  States  "zero  rate" 
certain  supplies.  This  can  benefit  non-profits  by 
allowing them to reclaim input tax. 

for  variations 

the 

in 

30 

ANNEXE m 

THE LEGAL AND  FISCAL 
FRAMEWORK  FOR  VOLUNTARY 
ORGANISATIONS 
(ASSOCIATIONS) 
FOUNDATIONS 

AND 

BELGIUM 

ASSOCIATIONS 

LEGAL POSITION 

Right of association guaranteed by law? 

Yes  -  Article  27  of  the  Constitution  as 
revised in 1994. 

Basic  definition 

An  association,  in the  strict  sense  of the 
term,  is  a  contract  via  which  several 
people  agree  to  pool  certain  material 
resources  with  an  aim  other  than  the 
profits, 
production 
(associations 
a  degree  of 
involve 
permanence in the shared  existence). 

sharing  of 

or 

Minimum number of founders 

Three (for ASBLs). 
Two  for  AIs  formed  under  Belgian  or 
foreign  law. 

Main types of association 

De facto  associations  (not  incorporated 
in  one  of  the  forms  laid  down  by  law, 
and not having a legal personality). 

ASBL  (Associations  Sans  But  Lucratif) 
defined  by  the  Law  of  27  June  1921  as 
organizations  which  do  not  engage  in 
industrial  or  commercial  operations,  and 
which  do  not  seek  to  procure  material 
gain for their members. 

International  Associations  under  Belgian 
law  (IA)  (Associations  Internationale  de 
droit  beige)  limited  to  associations  with 
philanthropic, 
scientific, 
artistic,  or  educational  objectives  (Law 
of 25 October  1919). 

religious, 

31 

International  Associations  under  foreign 
law (Associations  Internationale  de droit 
same  aims  as 
the 
étranger)  with 
associations  under  the  IA  Belgian  law 
(cf.  Article 8  of  the  Law  of  25 October 
1919,  which  entitles  an  association  with 
its  head  office  abroad  to  open  an  office 
in Belgium). 

Membership nationality  requirements 

ASBL:  Three-fifths  must  be  of  Belgian 
nationality  or  resident  (established  and 
registered)  in  Belgium;  otherwise  the 
association  will not be able to claim legal 
status  vis-à-vis  third  parties,  who  will 
themselves,  however,  be  entitled  to  hold 
this against them; 

at 

law): 

one 
IA(Belgian 
administrator  of  Belgian  nationality,  no 
requirements for  ordinary members. 
IA(foreign  law): none 

least 

Legal personality,  and how acquired. 

of 

the 

ASBL  -  by  publication  of  statutes,  plus 
the  full  names,  trades/professions  and 
addresses 
association's 
administrators  in  the  annexes  to  the 
"Moniteur". 
IA  (Belgian  law)  -  by  Royal  Decree 
(published  by extract  in the "Moniteur"); 
legal  personality  effective  vis-à-vis  third 
parties  ten  days  after  publication  of  the 
statutes 
names, 
the 
trades/professions  and  addresses  of  the 
association's 
the 
annexes to the "Moniteur". 

administrators 

plus 

full 

in 

information  as  for 

IA  (foreign 
law)  -  legal  personality 
effective  vis-à-vis  third  parties  ten  days 
after  publication  of the  statutes,  plus the 
same 
IAs  under 
Belgian  law (including the address of the 
in  Belgium).  Such  publication 
office 
requires  prior  "recognition"  by 
the 
Government.. 

Legal capacity 

Immovable  property 

All types  of  association  are  restricted  to 
the  permanent  ownership  of  only  such 

is 

university 

as 
the  fulfilment  of 

strictly 
immovable  property 
required 
their 
for 
purposes  (extension  of legal  capacity  for 
the  "Notre-Dame  de  la  Paix"  university 
departments  at  Namur  and  the  "Saint 
Louis" 
at 
Brussels). 
Donations 
ASBL:  acceptance  of  donations  of 
movable property  (including  cash)  above 
FBR400  000 
immovable 
property  must  be  authorized  by  Royal 
Decree. 

department 

and 

of 

IA: 
acceptance 
(irrespective  of 
authorized by Royal Decree. 

donation 
its  value)  must  be 

any 

of 

No  authorization  required  for:  goods 
transferred 
to  one  ASBL  by  another 
ASBL  to  promote  activities  similar  to 
those of the donor,  donations granted  by 
public  bodies  to  an  ASBL,  proceeds  of 
collections, etc. 

Statutes 

ASBL:  There  must  be  a  written 
document 
under 
(authenticated 
private  seal)  which  must  contain  certain 
the 
items  of 
objective  for  which  the  association  was 
formed  (Article 2 of the law of  1919). 

information, 

including 

or 

IA  (Belgian  law):  idem  (the  statutes 
listed  in  Article 2  of  the  law  of  1919 
must be mentioned). 

IA  (foreign  law)  -  As  for  IA  (Belgian 
law),  plus  the  address  of  the  office  in 
Belgium;  otherwise  can  exercise 
in 
Belgium  all  the  rights  accorded  by  its 
national  statute. 

9. 

Registration  requirements 

None  as  such,  but  see  publication 
requirements  above  (para  6).  A  list  of 
international  associations  is  kept  by  the 
Ministry of Justice. 
Commercial  activity 

Unclear.  In  theory  not  allowed,  but  in 
practice  acceptable  so  long  as  not  the 
association's  principal  activity  (i.e.  not 

10. 

32 

carried  out  for  its  own  sake  but  for  a 
non-profit  end)  and  ancillary  to  its  main 
object.  (Ancillary  means  directly  tied  to 
the  association's  objects  and  not  simply 
designed  to  improve  the  association's 
financial  position,  and  any profits  are put 
towards the association's aims.) 

11.  Disposal  of assets on liquidation 

To  ends  of  no  benefit  to  the  individuals 
involved,  in  general  as  laid  down  in  the 
statutes. 

TAX POSITION 

INDIRECT  TAX 

12.  Article  13 of 6th VAT Directive 
exemptions 

of 

relevance 

All 
to 
Associations  coming  under  Article  13 
have  been  implemented.  Organisations 
must  meet  the  criteria  set  out  in  Article 
13(A)(2)(a). 

13.  Other specific  exemptions 

No.  There  is  a  lower  rate  (6%)  for 
vehicles  for  the  transport  of  disabled, 
sick,  injured  or  blind  persons,  daily  or 
general 
weekly 
de 
information 
récupération". 

publications 
and 

of 
"produits 

14.  Zero Rates 

DIRECT TAX 

15.  General  position 
A. Income tax 

Not  generally  subject  to  company  tax 
unless  considered 
to  be  carrying  on 
commercial/gainful  activity  outside  the 
limits  recognised  by  law  (Article  182  of 
the  Code  des  impôts  sur  les  revenus: 
CIR) or case  law.  Associations  are liable 
for  the  more  favourable  taxes  on  legal 
persons 
220-226), 
(CIR  Articles 
including in particular: 

income  tax  and  capital  gains  tax,  and  to 
property  tax  unless  the  building  is  used 
for  religious, educational,  medical, social 
work or charitable purposes. 

16. 

B. other taxes 
A  "compensatory 
inheritance  tax"  of 
0.17%  is  payable  on  the  association's 
total assets held  in Belgium.  Tax on  gifts 
to Belgian  associations  is reduced  to  8% 
(1.1%  if the  donor  is  another  ASBL  or 
IA  ,  a  recognised  mutual  society,  an 
establishment  of  public  utility  or  a 
professional  union).  Inheritance  tax  on 
legacies  made  in their  favour  is  reduced 
to  8.8%. 

for 

tax 

particular 

impôts  sur 

the  "Code  des 

Recognition  of  associations 
purposes 
Under  Article  104, paragraphs  1 and  3-5 
of 
les 
revenus", gifts  to  certain  institutions  and 
those 
organizations - in 
established  in the form  of associations  or 
foundations  to  which  approval  has  been 
granted  by  law  or  by  Ministerial  or 
Royal  Decree 
tax-deductible. 
-  are 
Approval  by Royal Decree is granted  for 
three  years 
a  maximum  period  of 
approved 
Officially 
(renewable). 
institutions  are  generally  exempt  from 
capital  gains  and  property  taxes.  In 
certain  cases,  express  authorization  is 
of 
the 
required 
tax-deductible  donations  by  approved 
institutions  established  in  the  form  of 
(cf. 7 
associations 
above). 

foundations 

acceptance 

for 

or 

17.  Criteria for  recognition 

To  qualify  for  recognition,  an  institution 
must  have  legal  personality,  be  of  a 
non-profit-making  nature,  both  in  itself 
and  as  regards  its  members,  be  able  to 
provide  documentary  evidence  of  its 
accounts, be active in the country  or  one 
of the  cultural  communities,  keep  its list 
of  donors  open  to  inspection  by  the  tax 
authorities  and  not  spend  more  than 
20% of its budget  on  administration. 

(libraries, 
fields:  cultural  promotion 
private  radio  and 
television  stations, 
museums,  sports  groups,  tourism  and 
leisure  associations),  scientific  research, 
development  aid, or social work. 

19.  Gifts  by individuals 

Tax-deductibility  provisions  apply  solely 
to  gifts  to  recognized  bodies  (including 
associations  and  foundations).  Up  to 
10%  of  total  taxable  revenue  up  to  a 
limit  of  Bfr  10  million  (index-linked)  is 
deductible.  Gifts  of  major  works  of  art 
to  museums 
at 
are 
government  valuation. 

deductible 

20.  Gifts by companies 

Tax-deductibility  provisions  apply  solely 
to  gifts  to  recognized  bodies  (including 
associations  and  foundations).  Up to  5% 
of  net  operating  profit  up  to  a  limit  of 
index-linked)  is 
Bfr  20  million  (non 
deductible. 

ACCOUNTS  AND  AUDITING 

See  paragraph  17  above  for  recognised 
associations. 
Other  forms  of  associations  do  not  have 
to  publish  accounts.  In  general,  internal 
supervision 
external 
by  members, 
verification  by tax authorities. 

21. 

accept 

To obtain  authorization  by Royal  Decree 
a  gift,  ASBLs  must 
to 
nevertheless  have  been 
their 
annual  accounts  with  the  civil  court, 
public 
are  open 
where 
inspection,  since their establishment  or at 
least for the past ten years 

lodging 

they 

to 

FOUNDATIONS 

LEGAL  POSITION 

22.  Constitution 

18.  Qualifying  purposes for  recognition 

Apart  from  institutions  recognised  by 
law,  the  activities  of  approved  bodies 
must  fall  within  one  of  the  following 

Requires  agreement  of public  authorities 
to  establishment  and  to  statutes  and 
Royal  Decree.  The  statutes 
together 
the  names  and  addresses  of 
with 

33 

27.  Disposal of assets on liquidation 

By  court-appointed  receivers  for 
the 
purpose  laid  down  in  the  statutes  of  the 
foundation  or,  failing  that,  to  ends  as 
close  as  possible  to  those  for  which  the 
body was  founded. 

TAX POSITION 

28.  As for recognised  associations. 

ACCOUNTS  AND AUDITING 

29. 

The  Government  has  a  duty  to  ensure  that  the 
foundation's  funds  go  towards  the  purposes  for 
which  it  was  created.  All  foundations  must 
produce  annual  accounts  and  budgets  and 
present  them  to  the  Government  within  two 
months  of  producing  them.  Both  are  published 
in the annexes to the  "Moniteur".  At the request 
of 
the  government  ministry,  administrators 
found  guilty  of  fraud  or  mismanagement  can  be 
removed  by  the  court.  In  such  cases,  new 
administrators  are  appointed  according  to  the 
statutes  or,  at  the  request  of  the  court,  by  the 
Government. 

administrators  must  be  published  in  the 
annexes  to  the  "Moniteur",  and  any 
changes  in  the  statute  must  also  be 
approved  and published. 

23. 

Basic  definition 

following 

non-profit 

Assets  irrevocably  given  over  to  one  of 
ends: 
the 
philanthropic, 
scientific, 
artistic  or  educational.  No  members 
(Articles 27 etseq.of  the Law of 27 June 
1921). 

religious, 

24.  Nationality  requirements? 

Not  for  administrators,  but  siège  must  be 

in Belgium. 

25.  Legal personality and how acquired 

Yes,  by  Royal  Decree  approving  the 
in  the 
statutes  (published  by  extract 
"Moniteur")  and  publication  of 
the 
statutes in the annexes to the  "Moniteur" 
(may be  done  retroactively  to  the  act  of 
constitution. 

26.  Legal capacity 

Cf.  ASBL (7 above) 

34 

DENMARK 

ASSOCIATIONS 

LEGAL  POSITION 

1.  Right to association guaranteed by law? 

Yes - under  constitution 

2. 

Basic  definition 

None:  NB  Associations 
necessarily  "non-profit"  organisations. 

are 

not 

3.  Minimum number of founders 

Not  stipulated 

4. 

Types of associations 

Single 

5.  Membership nationality  requirements 
-  anybody 

None 
individual) 
Denmark  can form  an association. 
Legal personality and how acquired 

residing  permanently 

(legal  person  or 
in 

6. 

Yes  -  by  will  of  the  members.  Legal 
personality 
is  acquired  as  soon  as 
members  have  signed  adequate  statutes 
management 
and 
committee. 
see 
below.) 

a 
requirements 

nominated 
(For 

7. 

Legal  capacity 
Unlimited 

8. 

Statutes in prescribed  form? 

No.  But 
statutes  of  unregistered 
associations  must  at  least  contain  rules 
governing  relations  between  members 
and  the  methods  for  nominating  their 
management  bodies.  The  statutes  of 
registered 
contain 
bodies  must 
provisions  required  by  law  -  e.g.  the 
name,  head  office, 
the  number  of 
members  charged  with  managing  the 
association  and  how they  are  nominated, 
membership  conditions  and 
relations 
between members, the accounting  period 
and  method  of  presentation  of  accounts 
etc.  Changes  have  to  be  notified  to  the 
register. 

9. 

Registration  requirements 

and 

unions 

The  following  categories  of  association 
must  be  declared  in  the  "Register  of 
Foundations"  within  three  months  of 
their  creation:  employers  associations; 
trade 
professional 
associations which have as their principal 
aim  the  protection  of  the  economic 
interests  of  the  professional  group  to 
which  their  members  belong;  all  private 
law  associations  with  assets  of  more 
than  250 000  Kroner  (approx  31000 
ECUs)  except 
to 
carry  out  legal  social  aid  obligations  on 
behalf  of  communes  or  departments; 
bodies  holding  property  connected  with 
the  national  church;  legally  recognised 
religious  congregations;  or  educational 
establishments  authorised  by  the  state, 
provided  such  bodies  have  no  other 
powers or  objectives. 

those:-  contracted 

10.  Commercial  activity 

like 

foundations 

Associations, 
(see 
below)  can  engage  in  economic  activity, 
but  receipts  from  such  activity  are 
the  same  taxes  as  those 
subject 
imposed  on commercial  companies. 

to 

11.  Disposal  of assets on liquidation 

Freely  determined  by  the  association's 
statutes (but  see paragraph  17 below). 

TAX  POSITION 

INDIRECT  TAX 

12.  Article  13 of 6th VAT Directive 
exemptions 

All 
to 
associations  coming  under  Article  13 
have been  implemented. 
13.  Other specific  exemptions 

relevance 

of 

Sales  of  second-hand  goods  in  shops 
owned  by  recognised  associations  and 
special  events organised  by them. 

14.  Zero  rates 

Newspapers. 

DIRECT  TAX 

15.  General  position 

35 

look  after 

Employers'  associations, 
trade  unions 
and  other  professional  groupings  whose 
main  purpose 
the 
is  to 
economic  interests  of  the  occupational 
group  to  which  its  members  belong 
(labour  market  groupings)  are  taxable 
the  Funds  Tax  Act.  Other 
under 
associations  which  simply  look  after 
their  members' 
and 
professional 
interests  of  a  market-and 
economic 
(trade 
nature 
service-oriented 
associations)  are  similarly  liable  to  tax 
under  the Funds  Tax  Act.  The  principle 
behind  this  Act  is  that  foundations  and 
associations  must  basically  be  subject  to 
the 
limited 
companies. The rate of tax is the same as 
for  corporation tax, i.e. 34%. 

rules  as  public 

same 

When  reporting  their  taxable  income, 
labour  market  groupings  need  to  include 
only  earned  income,  unearned  income 
and  profits.  Membership  subscriptions 
are  thus  not  to  be  counted  as  taxable 
income.  These  groupings  are  entitled  to 
deduct  for  tax  assessment  only  that 
expenditure  which  relates  to 
taxable 
income. 

Trade  associations  are  taxed  in  full  on 
earned 
income  is 
income,  but  other 
taxed  only if it exceeds DKr 200 000. 

Trade  associations  and  labour  market 
groupings are entitled to deduct  amounts 
distributed  for  charitable  or  non-profit 
to 
purposes.  They  are  also  entitled 
for 
deduct 
non-profit  or charitable purposes. 

provisions 

aside 

set 

Trade  associations  are  also  entitled  to 
deduct  amounts  distributed  for  purposes 
which accord with their Memorandum  of 
Association,  provided  that  the  recipient 
of  any  given  distribution  is  liable  to  pay 
tax on the relevant  amount  in Denmark. 
Other  associations,  corporations  and 
foundations  (stifelser)  not  covered  by 
the  Funds  Tax  Act,  are  covered  by  the 
Corporation 
§ 1.  1  (6). 
Tax  Act, 
Associations are liable to pay tax only on 
Similarly, 
their 

income. 

earned 

16. 

associations  are  entitled 
to  deduct 
operating expenditure only if it relates to 
earned taxable income. 
Trade  associations  are  also  entitled  to 
to  meet 
deduct  allocations 
purposes  which  accord  with 
their 
Memorandum  of  Association,  insofar  as 
those  purposes  may  be  considered  to  be 
charitable or  non-profit. 

intended 

of 

for 

tax 

tax 

the 

lists  of  bodies  eligible 

Associations  may  set  aside provisions  to 
fulfil  charitable or  non-profit  purposes at 
a later date. 
Recognition  of  associations 
purposes 
By  law  or,  for  the  purpose  of  receiving 
tax-deductible  gifts  or  annuities,  at  the 
authorities. 
discretion 
Separate 
to 
receive  gifts  or  annuities  are  published 
tax  authorities. 
the 
each  year  by 
Application may be made for  inclusion in 
either  or  both  of  these  lists.  Exemption 
from  tax  on  legacies  may  be  granted  at 
the  discretion * of  the  tax  authorities. 
Recognition  for  these  latter  purposes  is, 
in  practice,  generally  given  to  bodies 
listed  as eligible to  receive tax  deductible 
gifts. 

17.  Qualifying  criteria for  recognition 

Bodies  qualified  to  receive  tax  benefits 
are  structured  as  non-profit  associations 
or foundations.  Precluded  bodies  include 
those performing  solely political  tasks. It 
is a condition  that  gifts  (and  legacies)  be 
used  solely  for  charitable  or  non-profit 
purposes  to  the  benefit  of  a  fairly  large 
group  of people,  and  that  any  surplus  at 
liquidation  be  distributed  in  accordance 
with  those  same  principles.  In  addition, 
the  body  must  be  resident  in  Denmark 
(i.e.  the  head  office  must  be  located  in 
Denmark  and  most  of  the  management 
functions  must  be  carried  out  there).  It 
appears  that  the  rules  qualifying 
the 
receipt  of  tax  deductible  annuities  are 
stricter. 

19.  Gifts by individuals 

36 

Single  tax  deductible  gifts  can  only  be 
made  to  bodies  on  the  list  published  by 
the tax  authorities  (see above,  paragraph 
16). Each  gift  must  be  at  least  500  Dkr. 
up  to  a  maximum  of  5 000  Dkr.  a  year. 
The first 500 Dkr.  are not  deductible.  In 
addition,  deductible  gifts  can  be  made 
through 
(contractual 
annuities) up to  a limit  of  15% of earned 
income  plus  capital  gains  before  tax,  or 
up  to  a  maximum  of  15 000  Dkr., 
whichever 
is  the  greater.  Covenants 
must  normally  be  for  a  minimum  of  ten 
years. 

covenants 

20.  Gifts by companies 

As  for  individuals,  except  that  single 
gifts  are deductible from  taxable  revenue 
and  covenants  are  allowed  up  to  a 
maximum  of  15%  of  taxable  profit  (or 
15,000 Dkr.). 

ACCOUNTABILITY 

AND 

SUPERVISION 

21. 

than 

for  unregistered 
None 
laid  down 
associations.  Registered 
associations 
must  produce  accounts  conforming  to 
good  practice  and  have  them  examined 
and  signed  by  one  or  more  auditors. 
These  accounts  must  be  sent  to  the 
Registrar  of  Foundations  within  six 
months  of  the  end  of  the  accounting 
period. If,  at the time it is drawing  up its 
accounts,  the  association  has  assets  of 
more 
(approximately) 
ECU 380,000,  then  at  least  one  of  the 
auditors must be professionally  qualified. 
In  this  latter  case,  the  audit  must  be  a 
full  one  and  the  auditor  must  be  given 
every facility  by the  association.  Failure 
or 
to 
management,  accounting  requirements  is 
punishable  by  a  fine.  The  Minister  of 
Justice  (who 
the 
Register)  can  require  an  association  to 
include  in  its  statutes  any  provision 
deemed  necessary,  and  can  ask  for  any 

is  responsible  for 

registration 

conform 

to 

information  thought  necessary  to  verify 
that the law has been complied  with. 

FOUNDATIONS 

LEGAL POSITION 

22.  Freedom to  establish? 

Yes,  but  the  amount  of  capital  given 
over should  normally be at least  200 000 
Dkr. (approx ECU 25,000). Foundations 
with  a  smaller  amount  of  initial  capital 
can be created  with the agreement  of the 
long  as  the 
Ministry  of  Justice,  so 
the  ends 
amount 
foreseen. 
23.  Basic  definition 

is  adequate 

for 

None  in  statute.  Essentially,  goods  or 
capital  given  over  to  some  purpose 
forming  an  entity  with  its  own  legal 
personality  managed  according  to  its 
own  statutes  by  an  independent  board. 
No members. 
A  Fund  is  a  corporate  fund  if  it  passes 
rights, 
over  goods  or 
disburses  services  and  similar  things  for 
which it normally receives payment,  or if 
it  exercises  a profession  with  real  estate 
selling  or  real  estate  demise,  or  if  it  can 
qualify  as a holding  fund. 

incorporeal 

24.  Nationality  requirements? 

established 

they  must  be 

Foundations can be created by  foreigners 
but 
in 
Denmark.  In addition,  at least  half of the 
members  of  the  managing  board  and  all 
the  foundation's  administrators  must  be 
in  Denmark.  The  authority 
resident 
foundations  may, 
responsible 
however,  grant  an  exemption  from  the 
residence  requirement.  In  any  event,  the 
requirement  is  waived  if  this  provision 
conflicts  with international  obligations. 

for 

25.  Legal personality and how acquired 

Newly-established 
foundations  must 
report  to  the  Ministry  of  Justice  (Civil 
Law Directorate)  and  the tax  authorities 
(Inland  Revenue) 
in  the  foundation's 
home  district  within  three  months  of 

37 

acquire 

being  set  up.  This  is  simply  a  formal 
requirement  and  has  no  legal  effect  on 
the  foundation's  legal  status.  Corporate 
legal  personality  by 
funds 
registration  in  the  register  of  Corporate 
Funds  at  the  Danish  Commerce  and 
the 
Companies  Agency, 
Minister of Industry,  Trade and  Shipping 
is responsible. 

for  which 

26.  Legal capacity 

Unlimited 

27.  Disposal of assets on liquidation 

no 

are 

their 

their 

assets 

-  can 
by 

Foundations can be merged  or liquidated 
longer 
if 
commensurate  with 
objects. 
Merger  or liquidation  - by distribution  of 
take  place  after 
the  capital 
application 
foundation's 
the 
administrators and with the agreement  of 
the  Ministry  of  Justice,  or  can  be 
the  Minister.  Bodies 
imposed  by 
authorised  to  receive gifts  must  agree  to 
distribute any  surplus  on  liquidation  to  a 
similar institution. 

Corporate  funds  can  be  merged  or 
liquidated  if  their  assets  are  no 
longer 
commensurate  with  their  objects  or  if 
longer  being 
their  purposes  are  no 
served.  Merger 
liquidation - by 
or 
distribution  of the capital - can  only  take 
place  after  application  by  the  board  of 
the  corporate 
the 
fund 
agreement  of  the  Administration  of  the 
Corporate  Funds,  which  normally  is  the 
Danish  Commerce 
and  Companies 
Agency,  with  consent  from  the  Ministry 
of Justice. 

and  with 

TAX POSITION 

Foundations  covered  by  the  Funds  Act 
or 
the  Commercial  Funds  Act  are 
taxable  in  accordance  with  the  Funds 
Taxation  Act.  The  principle  behind  this 
latter  Act  is  that  funds  and  associations 
must  basically  be  subject  to  the  same 
rule  as  public  limited  companies.  The 

28. 

38 

rate of tax is the same as for  corporation 
tax, i.e. 34%. 
Earned  income  must  be  included  in  full 
when  taxable  income  is  reported.  The 
first  Dkr  25 000  of  other  income  is 
tax-free. 

to  deduct 
Foundations  are  entitled 
amounts  distributed  for  charitable  or 
non-profit  purposes.  They  are  also 
entitled  to  deduct  amounts  distributed 
for  purposes  which  accord  with  their 
Memorandum  of  Association,  provided 
that 
any  given 
distribution  is  liable  to  pay  tax  on  the 
relevant  amount  in  Denmark.  They  are 
further  entitled  to  deduct  provisions  set 
charitable 
aside 
purposes. 

for  non-profit 

recipient 

the 

of 

or 

ACCOUNTABILITY 

AND 

SUPERVISION 

can 

responsible 

in  addition: 

For  the  most  part  as  for  registered 
associations  (see  paragraph  21  above). 
the  administrative 
But 
authority 
remove 
members  of the  board  who  commit  acts 
which  render  them  unworthy  of  their 
position, who do not  fulfil  the nationality 
or  residence  requirements,  who  fail  to 
act  in  conformity  with  the  statutes,  or 
who  are  demonstrably 
incapable  of 
their  role;  the  administrative 
fulfilling 
authority  can  also  appoint  members  of 
the  board  (even  in  non-conformity  with 
the statutes); 

bankrupt  members  of  the  board  must 
resign; 
founders  and  their  relatives  cannot  form 
the  majority  on  the  board  without  the 
administrative 
the 
permission 
of 
authority.  Nor, 
the  case  of  a 
in 
foundation  created  by  a  company,  can 
anybody  who  owns  more  than  half  the 
voting  capital  form,  conjointly  with  the 
founder  and  his  or  her  relatives,  the 
majority  on 
the 
permission 
administrative 
authority; 

the  board  without 
of 

the 

for 

their 

services 

board  members  cannot  receive  larger 
fees 
than  are 
considered  normal  for  the type  of  work 
involved. 
board  members  cannot  take  part  in 
debates in which they have an interest; 
all foundations  must basically  have their 
annual accounts audited, and if their own 
capital  in the preceding year was  over 3 
million  Dkr,  the  auditor  must  be  a 
chartered  accountant.  The  auditor  must 
normally  be  resident  in  Denmark  and 
must  be  absolutely  independent  of  the 
foundation,  its  board  members  and  of 
any  of  its  employees  concerned  with 
accounting  or  the  administration  of  its 

assets.  The  audit  must  be  detailed  and 
critical,  and  the  auditor  must  abide  by 
any  requirements 
the 
relevant  authority.  He  or  she  must  be 
given every facility by the foundation; 

imposed  by 

members of the board are responsible for 
any  damage  to  the  foundation  due  to 
their  management,  as  if  relevant  are the 
foundation's auditors and the companies, 
if any, to which they belong; 

foundations  can  set  aside  reasonable  sums  to 
their  reserves,  but  aside  from  this  their  funds 
must  be  spent  on  their  objects.  The  amounts 
allocated  for reserves or spending can be varied 
responsible. 
authority 
by 

the 

39 

GERMANY 

ASSOCIA TIONS (VEREINE) 

LEGAL FRAMEWORK 

By entry in the register  of associations in 
the court  local to  the head  office  (Article 
21 BGB). 
Legal capacity. 
Unlimited 

7. 

Right of association guaranteed  by law? 

8. 

Statutes 

Yes:  Constitution,  Article  9,  paragraph 
1:  German  nationals  have  the  general 
right of association.  The legal position  of 
the association  is governed  by Article 21 
et  seq.  of  the  Civil  Code  (BGB)  and  by 
the  relevant  provisions  of  the  Law  on 
Association  (VereinsG). 

Basic  definition 

No  legal  definition.  In legal  practice  and 
theory  an  association  is  defined  as  a 
permanent  and  structured  group  of 
persons  (natural  or  legal)  who  form  an 
entity on a voluntary basis with a view to 
attaining  a common  object.  The  concept 
of the communality  of the members must 
be  expressed  at  least  by  a  common 
denomination  and 
in  a  body  which 
represents them. 

Minimum number of founders. 

Two  founder-members.  However,  there 
must  be  at  least  seven  when  the  statutes 
are  registered  with  a  view  to  obtaining 
legal personality. 

Types of associations. 

aim 

make 

The  Civil  Code  governs  non-profit 
associations  (Idealvereine,  Article  21 
associations 
commercial 
BGB)  and 
which 
profits 
to 
(wirtschaftliche  Vereine,  Article  22 
BGB).  However,  the  latter  are  of  only 
require 
marginal 
authorization  by  the  public  authority 
concerned.  The  result,  de facto,  is  that 
the  concept  of an  association  is more  or 
less  restricted  in  Germany  to  non-profit 
organizations,  irrespective  of  whether 
they have legal status. 

importance, 

and 

Membership nationality  requirements 

No restrictions. 

Legal personality  and how  acquired. 

40 

For registered  associations  (BGB  57 and 
58). 

9. 

Registration  requirements. 

For  associations  wishing  to  acquire  full 
legal personality. 

10.  Commercial  activities. 

A  non-profit  association  may  engage  in 
commercial  activities  if  they  are  purely 
ancillary,  do  not  constitute  the  main 
object  of the  association  and  play  a very 
secondary  role  in  relation  to  its  main 
non-profit  activity.  If  these  commercial 
activities  are  not  completely  ancillary, 
they  cannot  constitute  the  association's 
main  or  statutory  activity.  In  principle, 
ancillary  activities  are  allowed  only  if 
the 
their  purpose 
performance  of  activities  to  which  tax 
concessions  are  attached  (not  only  fund 
raising)  and 
if  this  purpose  can  be 
this  activity 
through 
attained  only 
(Articles  65  to  68  of the  tax  code).  The 
income,  profits  and  assets  arising  from 
activities  of  an 
other 
association  which  is  recognized  as  a 
public utility are liable to ordinary tax. 

commercial 

to  help 

in 

is 

11. 

Disposal of assets on liquidation 

that 

Assets pass  to  the  non-profit  association 
named  in  the  statutes.  The  statutes  may 
the  Annual  General 
lay  down 
Meeting  should  nominate  the  non-profit 
association  authorized 
to  receive  the 
assets,  but  in  this  case  the  authorization 
of the tax authorities  is required. 

TAX POSITION 

INDIRECT  TAX 

12.  Article  13 of the Sixth VAT Directive 

the 

All 
applicable 
exemptions 
associations under Article  13 apply. 

to 

13.  Other specific  exemptions 

None 

14.  Zero rates 
No 

DIRECT TAX 

15.  General  position 

16. 

are 

are 

exempt 

granted 

concessions 

associations  are  liable  for  corporation 
tax.  If  their  income  does  not  exceed 
DM 7 500 
from 
they 
corporation  tax (concession). 
Associations  which  are  recognized  or 
which enjoy tax concessions. 
to 
Tax 
associations whose  statutes  and  effective 
management  are  inspired  exclusively  by 
altruism  and the general  good  and  which 
are directly engaged  in a philanthropic  or 
religious  activity  (Articles  51  to  68  of 
the  tax  code).  Tax  concessions  are  not 
^confined  to  associations,  but  are  granted 
on  the  same  conditions  to  any  legal 
persons  within  the  meaning  of  Article  1 
of the law on corporation  tax. 

17.  Criteria for  recognition 

the 

and 

It  must  be  clearly  apparent  from  the 
statutes 
association's 
administration  that  in  its  actions  it  is 
pursuing  an  objective  for 
the  public 
good.  The  statutes  must  state  very 
precisely: 

the  object; 
the  way  in  which  the  object 

is 

attained; 

the  non-profit  activity  aimed  solely 

and directly at this  object; 

that  if  the  association  were  to  be 
wound  up  or  deprived  of  its  status  as  a 
public  utility,  its  assets  would  remain  in 
the public utility field; 

that  the  effective  management  must 

be in accordance with the statutes. 

18.  Recognized  bodies 

41 

are 

Under  Articles  52-54  of  the  Tax  Code, 
any  association  whose  statutes  and 
actual  management 
exclusively 
inspired  by  altruism  and  the  general 
good  and  which  is directly  engaged  in a 
philanthropic  or  religious  activity 
is 
recognized  as  being  of  public  utility  for 
tax purposes. 

and 

financial 

this  object 

In  tax  law,  a  distinction  is  made,  with 
regard  to  the  financial  activities  of  an 
association  of  public  utility,  between 
activities  strictly  connected  with 
the 
declared  object  in  order  to  enjoy  tax 
activities 
concessions 
unconnected  with 
and 
therefore taxable. 
Activities  strictly  connected  with  the 
declared  object  are  those  for  which  the 
the 
receipts  are  wholly  allocated 
has 
object  which 
tax 
declared 
concessions. There are no limits on these 
activities,  which  are  deemed 
to  be 
without  profit  aim,  and  which  enjoy  tax 
concessions. 

to 
association 
enjoy 
to 

the 
in  order 

to 

On the  other  hand,  activities  not  directly 
related 
the  declared  object  are 
taxable.  These  are  mainly  commercial 
activities  engaged  in  by  the  association 
through  enterprises  engaged 
to  raise 
funds  to  be  used  to  attain  the  object  for 
which  the association  has applied  for  tax 
concessions. These activities are taxed in 
the  same  way  as  any  other  commercial 
activity,  but  do  not  entail  the  loss  of 
non-profit  status  provided  that  they  do 
not  take  over  from  the  main  activity  of 
the association  (first  paragraph  of Article 
55 of the Tax Code). 

19. 

Gifts by individuals 

Gifts  made  by  a  natural  or  legal  person 
liable to  tax  in Germany  with  the  aim  of 
promoting  charitable,  ecclesiastical  or 
religious  activities  for  activities  which 
are  recognized  as  being  for  the  general 
good to an association  recognized  by the 
tax  authorities  as  being  of  public  utility 
can be deducted  from  the donor's taxable 

to  certain  ceilings; 

income  up 
the 
ceilings  vary,  depending  on  the  purpose 
of the  gift,  by  between  5%  and  10%  of 
the donor's total taxable income. 

20.  Gifts by companies 

Companies  may  deduct  gifts  up to  0.2% 
of the  sum  of total  turnover  and  salaries 
and wages paid. 

forwarded  either 
the  Ministry  of 
to 
Internal  Affairs,  which  is  empowered  to 
dissolve  an  association  covering  more 
than  one  "Land\  or  -  if  the  association 
does not  cover  more than  one Land  - to 
the  senior  government  authority  in  the 
Land  concerned . 

FOUNDA TIONS (STIFTUNGEN) 

20(a). 

Gifts to non-resident  associations 

22.  Constitution 

Such gifts  are not deductible. 

ACCOUNTS AND  AUDITING 

21. 

Accounts 

account. 

loss 
obligation 

The  association  must  produce  an  annual 
profit 
This 
and 
vis-à-vis 
accountancy 
members  is laid  down  in  Articles  27  (3) 
and  Article  666  of  the  Civil  Code,  and 
the 
vis-à-vis  the  tax  authorities  (for 
purposes  of  establishing  the  non-profit 
nature of the social  object),  in Article 63 
(3) of the Tax Code. 

law 

is  engaged 

If  the  association 
in  a 
commercial  activity,  it  is  required  by 
commercial 
to  keep  accounting 
records  in  the  same  way  as  businesses. 
In  all  cases,  two  sets  of  accounts  must 
be  presented,  one  for  taxable  activities 
and the other for  non-taxable activities. 

Auditing 
The administrators  are responsible to  the 
Annual  General  Mmeeting  for  keeping 
proper  accounts.  The  statutes  may 
provide  for  a  supervisory  body  and  also 
for  its  powers.  If  a  supervisory  body 
(Aufsichtsrat)  is  set  up,  the  provisions 
applicable  to  GmbH  and  AG  forms  of 
companies  are  not  applicable.  The 
responsibilities  of  such  a  body  are 
determined  by the statutes. 

inspectorate. 

The  task  of  auditing  associations  has 
the 
passed 
It 
tax 
to 
regularly 
the  process  of 
comprises 
recognizing 
their 
non-profit  status.  As soon  as a  non-fiscal 
the  file  is 
is  detected, 
infringement 

checking 

and 

By  a  Memorandum  of  Association 
subscribed  to  by  any  person,  physical  or 
legal, inter vivos (in which  case it  can be 
revoked  up  to  the  date  of  approval),  or 
through  a  will.  The  memorandum  must 
state  the  object  of  the  foundation,  the 
this 
resources  available  for  pursuing 
object  and the governing body or bodies. 
The 
resources  provided  must  be 
adequate  for  pursuing  the  object  which 
itself.  An 
the 
application  for  authorization  must  be 
made 
the 
foundation  has its  head  office  (under  the 
law  of  the  Lander).  An  appeal  against 
refusal  of  authorization  may  be  made 
only  on  the  basis  that  the  administration 
had not applied  its own criteria. 

foundation  has 

the  Land 

in  which 

set 

to 

23. 

Definition 

to  which  a 

Assets 
attaches. 

legal  personality 

24. 

Nationality  requirements 

Any person may be a founder. 
Acquisition  of legal  personality 

25. 

Through  approval  by  the  competent 
authority. 
Legal  capacity 

26. 

The maximum capacity  required  to attain 
the  object  of  the  foundation.  It  may  do 
all  that  is  necessary,  or  even  simpiy 
useful,  in pursuing its objective. 

27. 

Disposal  of assets on  liquidation 

the 
If  it  has  become  impossible  for 
foundation  to  accomplish  its object,  or if 
the  foundation  is jeopardizing  the  public 
good,  the  administrative  authority  may 

42 

amend  its  object  while  complying  with 
the  intentions  of  the  founder  as  far  as 
possible.  The executive  committee  must 
be heard. The authority may also abolish 
and  dissolve  the  foundation  (Article  87 
BGB).  In this event, the assets go  to the 
in  the  statutes. 
persons  designated 
Otherwise,  they  go  to  the  state.  The 
liquidation 
for 
associations. 

procedure 

as 

is 

TAX POSITION 

28.  See associations 

ACCOUNTS AND AUDITING 

29.  Accounts 

See associations 

30.  Auditing 

The managing body for the foundation is 
subject  to  the  competent  administrative 
authority,  which  is  concerned  only  with 
conformity  with  the  rules  of  public 
order.  It  operates 
in  the  exclusive 
interest  of  the  foundation.  Auditing  of 
the accounts is governed by the statutes. 

43 

GREECE 

ASSOCIATIONS 

LEGAL FRAMEWORK 

final and the association  is entered  in the 
register of that  court.. 

7. 

Legal capacity 

legal  capacity  except 

Full 
inherent to physical persons. 

for  acts 

1.  Right of association guaranteed by law? 

8. 

Statutes 

Yes. Article  12 of the  1975  Constitution 
protects  non-profit  associations  and 
unions provided that they conform  to the 
laws of the State, which cannot make the 
exercising  of  this  right  subject  to  prior 
authorization. 
Basic  definition 

Article  61  of the  Civil  Code.  A union  of 
persons  with  legal  personality,  formed 
with  a  view  to  pursuing  a  given  object, 
as well as a collection  of goods  assigned 
to serving a given  object. 

2. 

3.  Minimum number of founders 

Twenty 

4. 

Types of associations 

Common law associations 
Special  associations 
legal 
Unions  of  persons 
personality  and  to  which  the  provisions 
relating  to  companies  apply  if  no  other 
provision is made). 

(without 

They  must  be  drawn  up  in  writing  and 
are subject to rules on publicity. 

9. 

Registration  requirements 

Registration  constitutes  acquiring  legal 
personality. 
10.  Commercial  activities 

Making  a profit  occasionally  in  order  to 
obtain  resources  for  the  association  is 
authorized. 

11.  Disposal of assets on liquidation 

Article  77  of the  Civil  Code.  The  assets 
of a legal  person  which  has been  wound 
up  pass  to  the  State,  unless  provided 
otherwise  by  law,  the  charter  or  the 
statutes,  or  by  the  decision  of  the 
competent  authority.  The  State is bound 
to pursue the object  formerly  pursued by 
the  legal  person,  using  these  assets.  The 
assets  of  the  association  wound  up  may 
not  under  any  circumstances  be  shared 
among the members. 

5.  Membership nationality  requirements 

TAXATION 

The  right  of  association  is  extended  to 
non-nationals  under  Article  11  of  the 
European  Convention  for  the  Protection 
of  Human  Rights  and  Fundamental 
Freedom 

6. 

Legal personality and how acquired 

in 

office 

the  area  of 

Following the application to the Court  of 
the 
First 
Instance 
(the 
administration's 
Memorandum  of  Association  and  the 
statutes  must  be  appended),  the  legal 
authorities  verify  that  the  provisions  of 
the  law  are  complied  with  (check  on 
legality).  The  association  acquires  legal 
personality  once  the  Court's  decision  is 

INDIRECT  TAXATION 

12.  Article  13 of the Sixth VAT Directive 

Application  of  the  exemption  laid  down 
in Article 13. 

13.  Other  exemptions 
Specific 
(4%) 
pursuing an object  for  the public good. 

for  associations 

rate 

14.  Zero  rates 

No 

DIRECT  TAXES 

15.  General  position 

Income  tax.  The  basis  of  taxation  for 
a 
legal 

pursuing 

persons 

not 

44 

16. 

profit-making  object  is  constituted  by 
the  net  taxable  income  arising  from  the 
leasing  of  buildings  or 
land  and 
securities.  The  tax  is  not  payable  on 
other  income  or  receipts  necessary  for 
pursuing the association's object,  such as 
members'  regular  subscriptions.  In  the 
associations,  only 
foreign 
case  of 
receipts  necessary 
the 
for  pursuing 
association's object  are not taxed. 

for 

tax 

.Recognition  of  association 
purposes 
Associations  with  an  object  which  is  for 
the  public  good  enjoy  exemption  from 
tax on income arising from the leasing of 
land and real estate and from  securities. 
There  is  also  exemption  from  paying 
inheritance  tax  and  taxes  on  gifts  made 
to  legal  persons  which  do  not  have  a 
profit-making 
legally 
object, 
constituted  in  Greece  and  pursue  an 
religious, 
object 
a 
philanthropic,  pedagogic  or 
artistic 
nature  or  for  the  public  good.  The 
exemption  covers  all  non-national  legal 
persons  with  the  same  characteristics 
regarding assets which they might  inherit 
in  Greece,  subject  to  the  principle  of 
reciprocity. 

national, 

are 

of 

17.  Criteria for  recognition 

A  very  broad  concept  of  the  public 
good.  Covers  any object  which  is not  of 
strictly  private  interest  and  concerns  the 
interests  of  large  groups  of  persons 
(philanthropic,  religious,  social,  artistic, 
educational). 

18.  Qualifying  objects for  recognition 

20.  Gifts by companies 

Tax-deductible  provided  that  they  have 
been  deposited  in  a  loan  and  deposit 
fund. 

20(a). 

Gifts to non-resident  associations 

Not  tax-deductible. 

ACCOUNTS  AND  AUDITING 

21.  Accounts 

The  auditing  authority  is  generally  the 
local authority. 

FOUNDATIONS 
22.  Constitution 

Concession  system.  Act  of  foundation 
(act  intra  vivos  before  a  notary  or  a 
sworn  statement  -  unilateral  act  by  the 
founder)  and  presidential  decree  which 
approves  the  will  of  the  founder  and  is 
the  competent  Minister, 
issued  by 
the 
the  objects  of 
depending  on 
foundation. 

23.  Definition 

Set  of  goods  intended  to  implement  a 
project  for  the  public  good  (in  principle) 
and with a non-profit  object. 

24.  Nationality  requirements 
25.  Acquisition  of legal personality 

Concession  system.  Acquisition  occurs 
on  the  day  of  publication  in  the  Greek 
Official  Journal  of  the  decree  granting 
authorization. 

26.  Legal  capacity 

Full.  Acquiring  legal  personality  does 
not  automatically  imply  acquisition  of 
the assets assigned. 

The  competent  authority  for  granting 
exemption  is  the  tax  inspectorate  in  the 
region of the association's head  office. 

27.  Disposal of assets on liquidation 
TAXATION. 
28.  As for  associations. 

19.  Gifts by individuals 

Tax-deductible  from  taxable  income,  but 
the donor must have Greek  nationality. 
If  the  amount  exceeds  DR  100 000  in 
one  year,  it  must  be  deposited  in  a  loan 
and deposit  fund. 

ACCOUNTS  AND  AUDITING 
29.  Accounts 
Audit  board. 

30.  Auditing 

The  operations  of  the  foundation  are 
monitored  by the State. 

45 

SPAIN 

ASSOCIATIONS 

LEGAL FRAMEWORK 

Right of association guaranteed by law? 

Articles 22  (on associations)  and 34 

governing 

associations 

(on foundations) of the Constitution. 
-  Law  191/1964  of  24  December 
1964 
and 
Supplementary Decree of 20 May 1965. 
-  Law 30/1994  of 24 November  1994 
on  foundations  and  tax  advantages  for 
private  persons  engaged  in  activities  for 
the public good. 
Several 
Communities. 
Basic definition 

of  Autonomous 

laws 

Group  or  union  of  several  natural 
persons with legal capacity which carries 
out the wish of this group to pursue on a 
permanent  basis  a  given  permissible 
object  laid  down  by  the  statutes  of  the 
association 
the  strict 
sense). 

(definition 

in 

Minimum number of founders 

The  law  of  1964  specifies  a  meeting  at 
which  "several  persons"  agree,  without 
anywhere  stating  the  number of  persons 
or 
required. 
Nevertheless,  the  usual  practice  is  to 
require a minimum of three persons. 

founder  members 

Types of association 

1 -  Associations  governed  by  the  Law 
of  24  December  1964  (which  does  not 
govern  public  or  private  foundations, 
civil  or  commercial  organizations  or 
corporate bodies). 
2 -  Associations governed  preferentially 
by  special  statutes 
(associations  of 
cannon  law,  associations  established  by 
the  state to  attain  specific  objects,  trade 
unions 
associations, 
similar 
associations of civil servants and military 
personnel,  administrative  associations  of 

and 

46 

property owners,  political  parties,  sports 
associations, students etc.). 
Associations  with  social,  educational, 
cultural  or  sporting  objects,  or  those 
seeking  more  generally  to  promote  the 
public  good,  may  be  recognized  as 
"public  utilities" by the  Spanish  Council 
of  Ministers,  on  a  proposal  from  the 
Minister  for  the  Interior,  which  gives 
them  several  advantages,  including  tax 
advantages. 

Membership nationality requirements 

Non-nationals  legally  resident  in  Spain 
have  the  right  of  association  and  may 
exercise  it  in  conformity  with  the  laws 
and regulations,  (organic  law  7/1985  on 
the rights and  liberties  of  non-nationals 
in Spain) 

Legal personality 

Article  25  of  the  Civil  Code  grants  the 
status  of  legal  person  to  corporate 
bodies,  associations  and  foundations  for 
the  public  good  recognized  by  the  law, 
and 
specific 
interests,  whether  civil,  commercial  or 
industrial,  to  which  the  law  grants their 
own  personality  independent  of  that  of 
its members. 

to  associations  with 

In accordance  with  the  legal  practice  of 
the  supreme  tribunal,  legal  personality 
arises from  a contract  of  association.  In 
Article  22  (3)  the  Constitution  states 
that  associations  are  entered  on  the 
register  "for  publicity 
appropriate 
purposes only". 

Legal capacity 

Article 38  of the Civil  Code grants legal 
capacity to legal  persons, which includes 
associations  which  are  recognized  in 
law.  They  may  therefore  acquire  and 
possess  goods,  and  contract  debts  or 
engage in civil or criminal proceedings. 

Nevertheless,  associations  which  are not 
recognized  as  public  utilities  may  not 
acquire  premises  which  are  not  strictly 
necessary  for  achieving  their object, and 

DIRECT  TAXES 

15.  General  position 

they  must  obtain  authorization 
certain private donations. 

for 

8. 

Statutes 

Article  3.2  of the  Law  of  1964  lists  the 
information  which  must  be  given  in  the 
statutes. 

9. 

Registration  requirements 

Entry  in  a  register  is  obligatory.  The 
procedures  for  such  registration  vary 
depending  on  the  current  provisions  in 
the  autonomous  region  of  the  head 
office 
For 
associations  subject  to  the Law  of  1974, 
there  is a register  for  each  province  and 
a national  register. 

association. 

the 

of 

There  are  also  special  registers  for 
certain  associations  governed  by  specific 
systems. 

10.  Commercial  activities 
Authorized 

11.  Disposal  of assets on liquidation 

The  procedure  for  disposing  of  assets in 
the  association  being 
the  event  of 
disbanded  must  be  specified 
the 
statutes. 

in 

TAXATION 

INDIRECT  TAXATION 

16. 

12. 

Article  13  of  the  Sixth  VAT  Directive: 
exemptions provided for  in Article 13. 
Law  37/1992  of  28  December  1992  on 
VAT  does  not  exempt  associations 
directly,  in that  the different  rates do  not 
depend  on  the  legal  form  of  the  entity 
its  activities. 
but  on 
it  provides  for  numerous 
However, 
operations  common 
associations 
which  are  exempt  or  are  eligible  for  a 
deduction. 

the  nature  of 

to 

13.  Other specific  exemptions 

See 12. 
14.  Zero rates 
No 

47 

have 

Associations 
been 
which 
recognized  as  public  utilities  and  which 
fulfil  the  conditions  laid  down  in  Article 
42  of  the  Law  on  Foundations  and  Tax 
Concessions  for  Private  Participation  in 
Activities  for  the  Public  Good  have 
several tax advantages. 

1 -  They  are  exempt  from  corporation 
tax  in  respect  of  the  activities  which 
constitute  their  social  or  specific  object, 
including  additions  to  assets  derived 
from  acquisitions  or  transfers  of  cash 
bonds.  They  are  also  exempt  in  respect 
of  any  profit  from  commercial  activity, 
provided  this  corresponds  to  the  entity's 
object  or specific  purpose. 

Income  from  commercial  activities  or 
from  capital  is  not  exempt,  but  is  also 
eligible 
in 
particular  the  tax  band,  which  is  a fixed 
rate of  10%. 

for  certain  concessions, 

-

2 -  They  are  exempt  from  most  local 
taxes. 
Associations  which  are  recognized  or 
which enjoy tax  concessions 
Associations 
been 
which 
recognized  public  utilities  and  which 
fulfil  the  conditions  laid  down  in  Article 
42  of  the  Law  on  Foundations  and  Tax 
Concessions  for  Private  Participation  in 
Activities  for  the  Public  Good,  and  in 
particular the following  conditions: 

have 

they  must  pursue  objects  for  the 
public  good  (social  assistance,  civic 
matters,  educational,  cultural,  sporting, 
health, 
cooperation, 
environmental  protection,  promotion  of 
the  "économie  sociale"  , voluntary  social 
work or research work etc.); 

development 

they  must  allocate  at  least  70%  of 

their net income to these objects; 

they  must  submit 

their  accounts 
annually  to  the  competent  body  in  good 
order; 

in the event of liquidation, they must 
assign  their  assets  to  achieving  objects 
for the public good; 

their  statutory  representatives  must 

be honorary  officials. 

17.  Criteria for recognition  as a public utility. 

These  are  given  in  Article  4  of  the  Law 
on Associations  of  1964,  as amended  by 
the  Law  on  Foundations  and  Tax 
Concessions  for  Private  Participation  in 
Activities for  the Public Good.  The main 
criteria are: 

the  statutory  objects  must be for  the 

public good; 

activities must be open to all and not 

restricted  to members; 

the  association  must  be  non-profit, 
any  profits  must  not  be  shared  out,  and 
no  fees  must  be  paid  to  the  committee 
for  carrying out its duties; 
it  must  possess 
resources 

the  human  and 
for 
necessary 

material 
achieving its statutory  objects. 
it  must  have  been 

in  operation 
to 

two  years  prior 

continuously  for 
submitting its application. 
18.  Types of associations  recognized 

cf.  16 and  17. 

19.  Gifts by individuals 

their 

from 

taxable 

Donors  who  are  natural  persons  may 
deduct 
income 
donations  or  gifts  to  bodies  which  enjoy 
tax concessions, under  certain  conditions 
and  with  certain  limitations.  Normally, 
this  deduction  will  be  20%  of  the  value 
of the gift.  However, total  tax-deductible 
expenditure  must  not  exceed  30%  of 
taxable income. 

20.  Gifts by companies 

In  addition,  participation  by  businesses 
in activities  for  the  public  good,  and - in 
particular - the  acquisition  of  works  of 
as  a  gift  and 
art 
expenditure 
and 
promoting 
developing  certain  arts  also  attract  tax 
concessions. 

to  be  offered 

on 

20(a) Gifts to non-resident  associations 
is  no 

There 
associations 
foundations  cf.  24). 

on 

legislation  governing 
(for 

point 

this 

ACCOUNTS  AND  AUDITING 

21.  Accounts 

Article  11 of the decree of 20 May  1965 
provides  that  associations  must  keep 
accounts  which  show  all  receipts  and 
expenditure.  These  accounts  must  be 
sent  to  all  members  of  the  association, 
and 
the 
Annual  General  Meeting,  with  a  budget 
for the following  year. 

then  submitted  annually 

to 

to 

in 

they  * must  be  sent 

the 
Lastly, 
in  the  case  of 
provincial  authorities 
associations 
an  Autonomous 
Community  which  has  no  regulations  on 
this matter,  or  to  the  Ministry  of Justice 
in  the  case  of  associations  which  have 
been recognized  public utilities. 

Auditing 

of 

associations 

the 
The  law  of  1964  provided  for 
auditing 
the 
government  authorities,  but  this  was 
1978 
implicitly 
Constitution. 

repealed 

the 

by 

by 

Associations 
public 
recognized 
utilities  must  submit  an  annual  report  of 
their  activities  during 
the  previous 
financial  year to the Ministry of Justice. 

as 

FOUNDATIONS 

Organizations  with  a  legal  personality 
may  under  certain  circumstances  deduct 
gifts  made  to  bodies  which  enjoy  tax 
concessions.  This  deduction  may  not 
exceed  10%  of  taxable  income  in  most 
cases. 

foundation  may  be 

22.  Constitution 
A 
constituted 
"inter vivos"  or  "mortis causa".  In  the 
first  case,  there  must  be  a  notarized 
written  act,  and  in  the  second  case,  its 

48 

constitution  must  be  stipulated  in  the 
will. 
Entry in a register of foundations,  which 
falls  within  the  competence  of  the 
Ministry  of  Justice,  is  compulsory  and 
constitutes  official 
formation  of  the 
foundation. 

23.  Definition 

defines 

foundations 

Article  1 of the Law  on Foundations  of 
as 
1994 
organizations constituted  on a non-profit 
basis  which,  at  the  wish  of  their 
founders,  have  their  assets  assigned 
permanently  to  an  object  for  the  public 
good. 

24.  Nationality requirements 

Non-nationals  may  set  up  a  foundation 
in Spain. 
In  addition,  like  Spanish  foundations, 
foreign  foundations  can  also  engage  in 
activities  in  Spain  which  relate  to  their 
object  and  can  enjoy  the  concessions 
foundations, 
Spanish 
granted 
to 
provided 
they  are  represented  on 
Spanish  territory  and  are  entered  in  the 
register of foundations. 

if  their 
Registration  may  be  refused 
object  is  not  for  the  public  good  or  if 
they  are  not 
in 
accordance with their national legislation 
(Article 5 of the above law). 

legally  constituted 

foundation, 
in  accordance  with  the 
statutes.  Notwithstanding,  Article  19  of 
the above  law  sets  limits to  the disposal 
of  the  goods  of  the  foundation  and 
makes several transactions subject to the 
prior  authorization 
of  government 
authority. 

In  addition,  foundations  may  not  have 
shares  in  trading  companies  in  which 
to  be  responsible 
they  are 
themselves  for  the  company's  debts. 
They may,  however,  hold  shares in joint 
stock companies. 

liable 

27. 

Disposal of assets on liquidation 

resulting 

Goods  and  assets 
from 
liquidation  of  the  foundation  must  be 
assigned to private non-profit  bodies and 
foundations  pursuing  objects  for  the 
public  good  which  are  specified  in  the 
charter  or 
the  statutes  of  the 
foundation.  In  the  absence  of  such 
stipulations, 
the  governing  body  or 
government authorities will decide which 
of these  organizations  will  assume these 
rights. 

in 

the  act  establishing 

Nevertheless,  by  derogation  to  these 
the 
provisions, 
foundation  or  its  statutes  may  provide 
that  these  goods  must  be  assigned  to 
other  public  bodies  pursuing  objects  for 
the public good  (Article  31  of the above 
law). 

25.  Acquisition of legal personality 

TAXATION 

Foundations  assume  a  legal  personality 
once  they  are  entered  in  the  register  of 
the charter.  Registration  may be  refused 
if this  act  is  not  in  conformity  with  the 
above law. 

28. 

26.  Legal capacity 

The assets of the foundation  may consist 
of  any  kind  of  goods  and  assets  which 
can  be  valued  in  financial  terms.  The 
foundation  must  be  the  owner  of  these 
and an inventory of them must  appear in 
the register. 

The assets are managed  and disposed  of 
the 
the  body  which  manages 
by 

in 

legally  entered 

Foundations 
the 
register  which  fulfil  the  conditions  laid 
down  in  Article 42  of  the  above  law 
enjoy  the  same  tax  concessions  as 
associations  (cf.  15-20).  To  do  so,  they 
must  be  accredited  by  the  Ministry  of 
Finance  and  must  expressly  apply  for 
them. 

ACCOUNTS AND AUDITING 

29.  Accounts 

49 

The management of the foundation must 
draw  up  an  inventory,  a  balancé  sheet 
and  accounts,  and  a  report  on  the 
activities  of  the  foundation  and 
its 
financial  management every year. It must 
also obtain a discharge for the budget  of 
receipts and expenditure for the previous 
year.  All  these  documents  must  be  sent 
to the government authorities. 

In addition, under certain circumstances, 
an external audit is compulsory. 

Lastly,  within 
three  months 
the 
preceding the  end  of  each financial year 
the  management  must  also  draw up and 
forward  to  the  government  authorities 
the  budget  for  the  forthcoming  year 
(Article 23 of the above law). 

30.  Auditing 

Supervision  by  a  higher  authority  is 
intended  to  assist  the  foundation  in 
exercising its right to exist and to ensure 
that  its  constitution  and  operation  are 
legal. This supervision is carried out by a 
the  case  of 
government  body 
foundations  which 
the 
competence of the government. 

in 
fall  within 

This government body is responsible  for 
auditing the accounts.  It can request the 
legal authorities to intervene temporarily 
in  the  foundation  and  can  assume  the 
responsibilities  of  the  governing  body 
during  the  period  laid  down  by  the 
judge. 

50 

FRANCE 

ASSOCIATIONS 

LEGAL FRAMEWORK 

1. 

Right to association guaranteed  by law? 

- 

(by 

the  preamble 

the 
Yes 
to 
the 
Constitution  of  1958  containing 
principles  laid  down  in  the  Declaration 
of the Rights  of Man  and  of  the  Citizen 
of  1789)  and  by 
the  Constitutional 
Council  (Decision  of  16  July  1971, 
French Journal Officiel,  18 July 1971). 

2. 

Definition 

the 

association 

convention 
is 
An 
whereby  two  or  more  persons  have  in 
common,  on  a  permanent  basis,  their 
knowledge  or  activities  for  a  purpose 
other  than  sharing  profits  (Article  1  of 
the law of 1901). 

3.  Minimum number of  founders 

Two 

4. 

Types of associations 

Non-recognized  or de facto  associations 
Recognized  associations 
Associations  recognized  as  a  public 
utility 
this 
recognition  is  a  discretionary  act  by  the 
State). 

definition, 

legal 

(no 

5.  Membership nationality  requirements 

No particular  conditions 

intended 

An association  declared  in this  way may 
acquire,  possess  or  administer  "only 
such  premises  as  are 
for 
management  of 
the  association  and 
meetings  of  its  members,  and  only  such 
buildings as are strictly  necessary  for  the 
accompishment  of 
aim" 
(Article  4  of  the  law  of  1901).  It  may 
receive gifts  and  legacies only if it has as 
its  exclusive  purpose  the  provision  of 
assistance  and  welfare 
services  or 
scientific  or medical research,  or if it is a 
cultural  or  family  association  or  an 
association  affiliated 
federation 
to  a 
recognised  as a public utility. 

stated 

its 

An  association  which  is  recognized  as a 
public  utility  has  a  somewhat  wider 
capacity,  since  the  term  "strictly"  is  not 
applied.  It  may  also  acquire  woodlands 
and  land  for  forestry,  and  it  can  receive 
gifts  and  legacies.  If it  receives  as  a  gift 
or legacy  from  a will  a building  which  is 
not  necessary  for  its  operation,  it  must 
sell  it  and  keep 
the  proceeds.  The 
charitable  works  proposed  must  be 
authorized  by  the  authorities  in  each 
case and in advance. 

Statutes 

No  prescribed  form  for  the  statutes, 
which constitute the law of the parties. 

Registration  requirements 

see  point  6  of  declaration 

None, 
procedure. 

6. 

Legal personality and how acquired 

10. 

Commercial  activities 

-  not 

associations 

Non-recognized 
applicable 
Recognized  associations  - by  declaration 
to  the  local  authorities  of  the  name  of 
the  association,  its  objects,  its  premises 
and  the  name,  profession,  domicile  and 
nationality  of each  of the  directors,  with 
statutes.  This 
the 
two  copies  of 
declaration  must  be  published  in  the 
French Journal  Officiel. 

Not  prohibited,  either  in the law of  1901 
or in legislation. Profits  can be made. 

11 

Disposal  of assets on liquidation 

The  balance  of  the  assets  must  not  be 
assigned  to  the  members;  in  accordance 
with  the  statutes  and/or  the  Annual 
General  Meeting,  it  is  generally  made 
over  to  a  non-profit  organization  which 
pursues a similar purpose. 

7. 

Legal  capacity 

51 

TAX POSITION 

INDIRECT TAX 

12  Article  13 of the Sixth VAT Directive. 

All  the  exemptions  applicable  under 
Article  13  seem  to  be  included  in  the 
General Tax Code. 
13.  Other specific exemptions 

Certain exemptions from the registration 
taxes. 

14.  Zero rates 

None 

DIRECT TAXES 

15.  General position 

When  they  are  exempt  from  VAT  and 
are non-profit,  associations are not liable 
to  corporate  taxes,  such  as  corporation 
tax, apprenticeship tax and trading tax. 
When  they  are  not  liable  to  the  taxes 
levied  on businesses  at the ordinary rate 
,they are liable to tax on their assets. 

All  associations  are liable to  local  taxes, 
i.e.  accommodation  tax  (except 
for 
unfurnished  premises  and  those  open  to 
the  public)  and  property  tax  payable by 
all  owners  of  premises  (except  low-cost 
accommodation). 

When  they  are  exempt  from  VAT  they 
are  liable  to  a  payroll  tax.  If  they  have 
more than  10 employees,  they  are liable 
to the contribution paid by employers for 
ongoing  vocational  training  and  the 
employers'  contribution  to  the  buiiding 
effort 

They  are  liable  to  tax  on  income  from 
their assets. 

16.  Recognition of associations 

If  an  association  wishes  to  engage  in 
certain  specific  activities,  it  must  obtain 
official  approval,  e.g  for  tourism  and 
leisure  activities,  certain  "authorized" 
activities  in  the  field  of  health,  social 
work  or  medical/social  work,  activities 
recognized  as  being  of  the  nature  of 

recognized 

as  public 

public  services,  i.e.  engaging  in  hunting 
or  fishing,  organizing  officiai  sporting 
competitions etc. 
Associations 
utilities 
Application  for  recognition  is  made  to 
the Ministry for the Interior and granted, 
under  certain  circumstances,  by  decree 
by  the  Conseil  d'État.  This  recognition 
imposes  certain  obligations  but  gives 
broader  entitlement  to  receive  gifts  and 
acquire and possess premises. 
17.  Criteria for recognition as a public utility 

Must  be  a  recognized  association,  and 
have operated regularly as such for three 
years,  must  pursue  an  object  for  the 
public  good,  cover  more  than  the  local 
area,  have  at  least  200  members,  and 
must  adopt  model  statutes  drawn  up by 
the Conseil d'État. 

18.  Criteria for recognition 

Recognition  is  conferred  by  the  state, 
which  assigns*  tasks  concerned  with 
public  services  to  associations.  These 
associations receive various types of aid, 
to  administrative 
which  are  subject 
constraints and rigorous monitoring. For 
instance,  the  "ordonnance"  of  8  August 
1985  gives  sporting  federations  the 
monopoly for organizing competitions. 

19.  Gifts by individuals 

Private  gifts  are  tax-deductible  at  the 
rate  of  1.25%  of  taxable  income  for 
recognized  associations,  and  5%  for 
foundations  and  associations  recognized 
as  public  utilities.  These  gifts  give 
eligibility  to  a reduction  in tax  equal  to 
40% of the value of the gift  (50% when 
they 
or 
accommodation  for  people  in  difficult 
circumstances).  Only  gifts  which  are 
made  to  a  French  association  or  a 
foreign  association  operating  in  France 
are tax-deductible. 

free  meals 

are 

for 

20.  Gifts by companies 

52 

to 

Gifts  from  companies  are  tax-deductible 
at the rate of 37% or 42% of the taxable 
profit  up to  2%o of turnover  for  gifts  to 
recognized  associations,  and  3%o  for 
gifts 
recognized  public  utility 
associations and to foundations. 
Only  gifts  which  are  made  to  a  French 
association  or  a  foreign  association 
operating in France are tax-deductible. 
ACCOUNTS AND AUDITING 

21.  Accounts 

Only  associations  recognized  as  public 
utilities,  associations  subsidized  by  local 
authorities  and  associations  engaged  in 
commercial  activities  above  certain 
their  budget, 
thresholds 
balance or number of employees)  have a 
legal  obligation to  provide  accounts  in a 
standardized form. 

(concerning 

FOUNDATIONS 

LEGAL FRAMEWORK 

22.  Constitution 

Public utility foundation.  The draft  must 
be  submitted  to  the  Minister  for  the 
Interior  and  then  to  the  Conseil  d'État, 
which in granting recognition as a public 
to 
utility  authorizes  the  foundation 
receive  its working  capital.  The  statutes 
must be drawn up in accordance with the 
model  statutes  issued  by  the  Conseil 
d'État,  which  lay  down  the  composition 
of  the  administrative  committee.  This 
usually  follows  the  principle  of  thirds, 
its  members  being 
one 
nominated  by  the  founders,  one  third 
being  members  ex  officio  representing 
the  public  authorities,  and  one  third 
the  "conseil 
being  nominated  by 
d'administration" 
management 
committee. 
Sheltered  foundation:  set  up  within  a 
public utility foundation without creating 
a new legal entity (rare). 
Business  foundation  (Law  of  4  July 
1990).  There  is  no  need  for  these  to  be 

third  of 

- 

recognized  as  public  utilities.  They  are 
established for  a given  period - generally 
5  years  renewable - and  their  action 
programme 
the 
administrative authorities. 

approved 

by 

is 

23.  Basic definition 

Irrevocable  assignation  of  goods, rights 
and resources  to  work  for  an object  for 
the public good which is non-profit. 

24.  Nationality requirements 

of 

persons 

one-third 

definition, 

representing 

By 
the 
administrative committee is composed  of 
the 
eligible 
government  authorities  and  designated 
persons.  To 
in  activities 
engage 
permanently  in  France  or  to  have  the 
same  capacities  as  a French  foundation, 
a foreign  foundation  must be recognized 
as a public utility. 

25.  Acquisition of legal personality 

This  is  acquired  once  the  decree  of 
recognition  as  a  public  utility  has  been 
approved  by  the  Conseil  d'État  and 
published in the French Official  Journal. 

26.  Legal capacity 

Same  conditions  for  accepting  gifts  as 
for an association  recognized  as a public 
utility, but a wider entitlement to possess 
assets including premises. 

27.  Disposal  of assets on liquidation 

As for  associations  recognized  as public 
utilities  (cf.  11),  but  the  administrative 
authority's agreement must be obtained. 

TAXATION 

28.  As for associations 

ACCOUNTS  AND AUDITING 

Auditing  and  the  obligation  to  produce 
accounts are the same as for associations 
recognized as public utilities. 

53 

IRELAND 

ASSOCIATIONS 

LEGAL POSITION 

Right of association guaranteed by law? 

The general right to  form  associations is 
guaranteed  by  Article  40.6  of  the  Irish 
Constitution.  The  more  specific  right  to 
form  associations  for  non-governmental 
organisations is set out in the  Companies 
Acts  and  in the  Industrial  and  Provident 
Societies legislation. 

Basic  definition 

There 
is  no  specific  definition  of 
"associations"  or  similar  term  in  Irish 
form  which  an 
law.  The 
association takes on is determined  by the 
type  of legal  structure  which  it  opts  for. 
This is discussed  further  below. 

specific 

Types of association 

to 

There  are  three  main  types  of  structure 
relevant 
non-governmental 
organisations: 
(a)  Unincorporated  bodies.  Such  bodies 
may  have  a  written  Constitution.  This 
would  set  out the aims and  objectives  of 
the  organisation  and  possibly  details  of 
and  Management 
the  membership 
the 
terms, 
legal 
In 
Committee. 
Constitution  is  a  contract  or  binding 
agreement  between  the  members  of  the 
group  to  abide  by  the  terms  of  the 
agreement,  i.e.  to  try  to  achieve  the  aim 
set  out  in  the  Constitution  to  carry  out 
their  activities  in  accordance  with  the 
Constitution,  etc..  However,  while  the 
as 
Constitution 
between  the  members  of  the  group,  it 
has no effect  in relation to non members. 
Thus  the  group  does  not  have  a  legal 
personality of its own. 

legally  binding 

is 

(b)  A  company  limited  by  guarantee. 
This  is  a variation  on  the  standard  form 
of legal  personality  for  business firms in 
Ireland.  In  this  type  of  company  there 
are  no  shares  in  the  company  and  the 

54 

members  simply  guarantee  to  pay  a 
certain 
amount 
towards  the debts of the company  if it is 
wound up. 

nominal) 

(usually 

limited 
there 

,  by 
is  one 

(c) Industrial  and provident  society. This 
type  of  structure  is  frequently  used  by 
co-operatives.  In  practice,  many  of  the 
rules  in  relation  to  the  industrial  and 
provident  society  are quite  similar to  the 
guarantee. 
company 
important 
However, 
difference  in  that  whereas  a  group  can 
become  a limited  company  for  any  legal 
purpose,  in  order  to  be  registered  as an 
IPS,  a  society  must  be  formed  "for 
carrying  on  any  industries,  businesses  or 
trades". 
There  are  also  various  other  types  of 
structure  which  may  be  of  relevance  to 
non-governmental  associations  including 
etc.. 
Trusts, 
However,  the  above  three  are  the  main 
types  of  structure  which  would  be  used 
in Ireland. 

Societies, 

Friendly 

Minimum number of  founders 

Both  the  company  limited  by  guarantee 
and  the  industrial  and  provident  society 
must have at least  seven members. There 
is 
form 
unincorporated  bodies. 

legal  minimum 

no 

to 

Membership nationality  requirements 

are  no 

There 
requirements  in 
main three types of legal structure. 

nationality 
relation  to  any  of  the 

specific 

Legal personality and how acquired 

legal  personality.  Both 

legal  personalities.  This 

The  unincorporated  body  has  no 
the 
separate 
company  limited  by  guarantee  and  the 
industrial  provident  society  do  have 
separate 
is 
acquired  by  submitting  the  Constitution 
of  the  body  in  the  required  form  to  the 
relevant  government  organisation  which 
is  authorised  to  certify  the  particular 
body.  The  Constitution  can  then  be 
inspected  by  members  of  the  general 
public. 

7. 

Legal capacity 

The legal  capacity of the body is set  out 
in  its  Constitution.  In  the  case  of  the 
company  limited  by  guarantee,  this  is 
known  as 
the  Memorandum  and 
Articles. In the case of the industrial and 
provident  society,  this  is  known  as  the 
Rules.  There  are  no  specific  limitations 
on  legal  capacity  in  relation  to  non 
governmental  associations  other  than 
those  generally  laid  down  by  law  in 
relation to legal structures generally. 

8. 

Statutes in proscribed form? 

In  the  case  of  the  company  limited  by 
guarantee, the statutes must be drawn up 
in  a  form  acceptable  to  the  Companies 
Office  which  is  the  relevant  registration 
body.  Sample memorandum and Articles 
are  published  in  the  Companies  Acts, 
and  these  or  some  variation  on  these 
would  generally  be  utilised  by  such 
companies.  In the  case  of  the  industrial 
and  provident  society,  again  the  Rules 
must  be  acceptable  by  the  Registrar  of 
Friendly  Societies,  who  is  the  relevant 
registration  body.  There  is  no  official 
form  of  prescribed  rules  but 
the 
Registrar  has  approved  rules  drawn  up 
non-governmental 
by 
organisations,  and 
some 
these  or 
variation on them are generally utilised. 

various 

9.  Registration requirements 

As  set  out  above,  both  bodies  must  be 
registered  with  the  relevant  registration 
authority.  Other  than  this,  there  is  no 
specific registration requirement. 

10.  Commercial activity 

There  is  no  specific  limitation  on  the 
ability of these types of body to carry on 
commercial  activity.  However,  where  a 
body  wishes  to  obtain  exemption  from 
the  Revenue 
certain 
from 
Commissioners  on  the  basis  of 
its 
it  must  be  "the 
charitable  activities, 
subject  of  a binding  trust  for  charitable 
purposes  only",  i.e.  the  Constitution  or 
Rules  of  the  group  must  contain  a 

taxes 

binding clause which guarantees that any 
money  received  by  the  group  will  be 
used  only  for  charitable  purposes.  In 
addition, it is unlikely that a Constitution 
which 
a 
commercial  nature  would  be  considered 
the  Revenue 
to  be  charitable  by 
Commissioners. 

contained 

elements 

of 

11.  Disposal of assets on liquidation 

The  Companies  Acts  and  the  Industrial 
and  Provident  Societies  legislation  do 
not  contain  any  general  restrictions  in 
relation 
to  disposal  of  assets  on 
liquidation.  Again,  where  a  company 
wishes to  be recognised  as charitable by 
the 
the 
revenue  Commissioners, 
Commissioners  will  normally  insist that 
on  being  wound  up,  any  assets  will  be 
transferred 
to  another  body  of  a 
charitable nature. 

TAX POSITION 

INDIRECT TAX 

12.  Article  13 of the 6th VAT Directive 

Article  13  has  been  implemented  in 
Ireland. 

13.  Specific  exemptions 

Specific  exemptions  of  relevance  to 
NGOs  (including  those  required  by  the 
6th VAT Directive) include: 
(a)  school  or  university  education  and 
vocational training or re-training; 

(b)  hospital  and  medical  care  or 
treatment provided by a hospital, nursing 
home, clinic or similar establishment; 
(c)  services for the protection  or care of 
children and young persons; 

(d)  supply  of goods  and  services  closely 
related  to  welfare  and  social  security by 
non-profit  organisations; 

(e)  supply  of  services  and goods  for the 
benefit  of  their  members  by  non  profit 
making  organisations  whose  aims  are 
primarily  of  a  political,  trade  union, 
religious, 
philosophical, 
philanthropic or civic nature. 

patriotic, 

55 

14.  Zero rates 

Items  which  are  zero-rated 
include 
medical  equipment  and  appliances,  i.e. 
invalid  carriages  and  other  vehicles, 
orthopaedic  appliances,  etc.,  walking 
frames  and crutches and similar items. 

DIRECT TAX 

15.  General position 

The  Companies  Acts  and  the  Industrial 
provident  Societies  legislation  do  not 
contain  any  general  exemption  from 
taxation  in relation  to  non-governmental 
organisations. 
16.  Recognised  associations 

an 

industrial 

It  is  possible  for  either  a  company 
or,  more 
guarantee 
by 
limited 
exceptionally, 
and 
provident  society,  to  seek  exemption 
from  various  taxes  from  the  revenue 
Commissioners  on  the  basis  of  its 
charitable  status.  In  order  to  qualify  as 
charitable, the objects  and powers of the 
company  or  society  must  be  so  framed 
that  every  object  to  which  its income or 
property can be applied  is charitable and, 
as set out above, its main objects  and the 
application  of  its  income  or  property 
must  be  bound  by  a  binding  trust.  This 
means  that  it  must  be obliged  by law to 
advance  only its stated  main  objects and 
to apply its income and property to these 
objects  exclusively. 

17.  Qualifying  criteria for recognition 

In  order  to  qualify  as  a  charity,  the 
object  of  the  company  must  fall  under 
one of the following  headings: 
(a) advancement  of education; 
(b) advancement  of religion; 

(c) relief of poverty, or 
(d)  other  works  of  a  charitable  nature 
beneficial  to the community. 
In  addition  to  satisfying  the  above,  the 
company  must  keep  annual  audited 
accounts and make these available to the 
it 
Revenue  Commissioners  on  request; 

56 

(other 

must prohibit the payment  of fees  and/or 
salaries 
out-of-pocket 
than 
expenses)  to  officers  and  directors  for 
services rendered;  it must  also satisfy the 
other  criteria  discussed,  including  those 
in  relation  to  the  winding  up  of  the 
organisation. 
The  taxes  from  which  an  organisation 
include  income  tax, 
may  be  exempt 
corporation 
the  case  of 
(in 
tax 
companies),  capital  gains  tax,  deposit 
interest  retention  tax,  capital  acquisition 
tax and stamp duty on a transfer  or lease 
of land. 

There  is  no  exemption  in  relation  to 
value  added  tax,  and  employees  of  a 
charity are liable to income tax under the 
PAYE  system  and  Pay  Related  Social 
Insurance. 

18. 

Gifts by individuals and companies 

some 

gifts  by 
circumstances, 
In 
individuals  and  companies  may  be 
subject  to  tax  relief.  One  of  the  main 
the  non 
reliefs  of 
to 
commercial 
that  gifts  of 
between  £100  and  £10,000  to  certain 
educational 
establishments  may  be 
entitled to relief. 

relevance 
is 
sector 

ACCOUNTABILITY 

AND 

SUPERVISION 

19. 

changes 

There 
is  no  specific  supervision  of 
unincorporated  bodies.  Companies  are 
subject 
to  reporting  and  accounting 
requirements  to  the  Companies  office. 
Annual  returns  and  accounts  must  be 
submitted  and  records  must  be  kept 
in  members, 
concerning 
management, 
similar 
reporting  requirements  are  imposed  on 
societies 
industrial 
(reporting  to  the  Registrar  of  Friendly 
cases, 
Societies). 
to 
investigators  can  be  appointed 
investigate the operation  of these bodies. 
Bodies  which  regularly  fail  to  make 
returns  will  be  struck  off.  Generally, 

etc..  Broadly 

provident 

extreme 

and 

In 

the 

accountability 

however, 
and 
supervision  requirements  are  not  very 
stringent.  In  the  case  of  charities,  the 
a 
revenue  Commissioners 
supervisory 
in 
practice, this is not very onerous. 

have 
function  but  again, 

FOUNDATIONS 

recognised 

is  no  specific 

There 
legislation  on 
"foundations"  in  Ireland.  A  body  which 
the  Revenue 
by 
is 
Commissioners  as  having  charitable 
status  may  apply  to  the  Commissioners 
of Charitable Donations and Bequests to 
incorporated  under  the  Charities 
be 
Acts,  1973.  However,  there  are  only 
about 25 such bodies in Ireland. 

57 

ITALY 

ASSOCIATIONS 

LEGAL FRAMEWORK 

1.  Right of association guaranteed  by law? 

Articles  2  and  18  of  the  Constitution. 
Articles  14 to  22 of the Civil  Code. Law 
of 27 February  1985, Law No  266 of 11 
August  1991 on voluntary organizations. 

2. 

Definition 

The  law  does  not  give  a  definition.  In 
common  practice 
stable 
organization  of  a  number  of  persons 
pursuing  a  common  interest,  other  than 
profit. 

is  any 

it 

on 
consist 

acquisition  to  produce  its  effects.  The 
non-recognized 
constraints 
associations 
restricted 
of 
autonomy  on assets, in that  persons who 
have acted  in the  name  and  on  behalf of 
the  association  are  also  responsible  for 
the  debts  of  the  association  Law  No  52 
of  27  February  1985  now  allows 
non-recognized  associations  to  acquire 
fixed assets. Non-recognized  association 
and committees may take legal action. 

Voluntary  organizations  which 
are 
entered  in the  register,  even  if they  have 
the form  of non-recognized  associations, 
may  acquire  the  goods  necessary  for 
their  activities  and  receive  gifts  and 
legacies. 

3.  Minimum number of founders 

Statutes 

No 

4. 

Types of association 

Recognized  associations 
Non-recognized  associations 
Committees 

5.  Membership nationality  requirements 

No  restrictions 
Legal  personality 

6. 

for 

Only 
associations, 
recognized 
following  the  decree  of  recognition  by 
the  government  authorities.  A  condition 
for  such  recognition  is to  have  sufficient 
assets  to  pursue  the  statutory  objects. 
The  faculty  of  recognizing  legal  persons 
may  be  assigned  to  the  President  of  the 
Italian  Council  of  Ministers,  the  Region 
the 
the  Prefects,  depending  on 
or 
territorial  coverage of their activities. 
There 
constraints 
certain 
non-recognized  associations (cf. 7). 

are 

on 

7. 

Legal  capacity 

or 

assets 

Private  legal  persons  may  not  acquire 
or 
fixed 
inheritances,  or  even  legacies  without 
government  authorization.  Authorization 
is considered  to  be  the  condition  for  the 

accept 

gifts 

The  Memorandum  of  Association  must 
be  in  the  form  of  a  public  act  for 
recognition  to  be  granted.  There  are 
certain minimum requirements. 

Registration  requirements 

No  obligation,  but  if  the  association  is 
not  registered,  the  administrators  are 
jointly  and  severally  responsible,  with 
the legal  person,  for  its debts (Article 33 
of the Civil Code). 

10. 

Commercial  activities. 

Associations  may  engage  in  commercial 
activities.  Such  activity  should  not  be 
aimed  at  making  a  monetary  profit,  but 
exclusively  at  obtaining  their  purposes. 
If,  on  the  other  hand,  the  commercial 
activities  are  autonomous  in  relation  to 
the 
the  purpose  of 
association  may  be  considered  as  a  de 
facto  company,  with  important  taxation 
and  social  consequences.  Article  24  of 
the  Civil  Code  provides  that  members 
have no right to  profit-sharing. 
Disposal  of assets on  liquidation 

the  association, 

The  remaining  assets  are  disposed  of  in 
accordance  with  the  provisions  of  the 
the 
Memorandum  of  Association  or 

11 

58 

statutes.  In 
the  absence  of  specific 
provisions,  the  decisions  of  the  Annual 
General  Meeting  which  has  decided  on 
the  winding  up  are  implemented.  In  the 
absence 
the 
government  authorities decide. 

decisions, 

such 

of 

TAXATION 

INDIRECT  TAXATION 

12.  Article  13 of the Sixth VAT Directive 

Yes. 

13.  Other specific  exemptions 

and 

services  provided  by 
Goods 
voluntary  organizations  are exempt  from 
VAT.  Exemption  from  registration  tax 
and  taxes  relating  to  the  Memorandum 
of Association  and all acts relating to the 
activities of voluntary  organisations. 
Exemption  from  the  taxes  on  gifts, 
transfers,  land  registry  and  INVTM  (tax 
on  the  increased  value  of  fixed  assets) 
for  the  associations  which  receive  the 
gifts.  This  also  applies  to  legacies  and 
inheritances. 

14.  Zero rates 
No 

DIRECT TAXES 

15.  General position 

and 

Recognized 
non-recognized 
associations  are  liable  to  tax  on  the 
income  of legal  persons (IRPEG),  which 
is proportional  to the  sum of the  income 
received  as  land  revenue,  revenue  of  a 
land-income  nature,  income  from  capital 
or  income  arising  from  engaging  in  a 
commercial  activity,  whether  occasional 
or  not.  Amounts  paid  by  members  as 
contributions 
associations' 
or 
subscriptions  are  not  included  in  the 
taxable amount. 
Recognition  of  associations 
purposes 
The  IRPEG  is  reduced  by  50%  for 
scientific, 
literary, 
historical, 

tax 

for 

16. 

societies 

research 

experimental 
and 
pursuing essentially cultural  objects. 
trading  and 
from  marginal 
Profits 
production  activities earned by voluntary 
organizations  are  not  taxable,  provided 
they  are  used 
institutional 
for 
purposes of the organization. 

the 

17.  Criteria for  recognition 

Must  have  legal  personality  in  the  first 
case  and  be  a  voluntary  organization 
within the meaning of Law No 266/91. 

18.  Criteria for obtaining tax concessions 

laid  down  by 

For  voluntary  organizations,  exemption 
must  be 
the  criteria 
established  by  an  inter-ministerial  decree 
(involving  the  Ministry  of  Social  Affairs 
and  the  Ministry  of  Finance),  which  is 
being  drafted. 

19.  Gifts by individuals 

research, 

Gifts  for  the  public  good,  humanitarian, 
religious  or  political  objects  may  be 
deducted  up to a limit of 2%. 
This limit may Be exceeded  when the  gift 
is  going  to  organizations  for  promoting 
study, 
of 
acquisition, 
the 
information, 
maintenance or  restoration  of part  of the 
cultural  heritage  or  to  institutions  which 
organize  fairs  and  exhibitions  with  a 
particular  cultural  or  scientific  interest 
with  the  authorization  of the Ministry  of 
Culture. 

dissemination 

Gifts  for  the  central  institute  for  the 
support  of  the  clergy  of  the  Italian 
Catholic  Church,  and  those  for  helping 
people  in  developing  countries,  may  be 
of 
to 
up 
deducted 
LIT 2 million. 

ceiling 

a 

Gifts  to  voluntary  organizations  which 
are  entered  in  the  register  are  no  longer 
tax-deductible.  The  only  deduction 
possible at present  is that  concerning,  on 
the one  hand,  an  organization  subject  to 
corporation  tax  or,  on  the  other  hand,  a 
voluntary 
legal 
personality. Entry  in the regional  register 

organisation  with 

59 

Decree  No  601/73  enjoy  a reduction  of 
50% on taxable income on legal persons. 
Imports  of  godds  for  foundations  with 
the  object  of  giving  assistance  or 
carrying out charitable works, education, 
training,  study  and  research  are  exempt 
from  VAT. 

In  addition,  as  a  general  principle, 
foundations  which  are  not  engaged  in 
commercial  agricultural  activities  or 
trade  activities  are  not  liable  to  VAT 
within  the  meaning  of  Article  4  of 
Presidential Decree No 633/72. 

ACCOUNTS AND MONITORING 

29. 

Accounts 

No 

30. 

Monitoring 

The government authorities have powers 
to  monitor  foundations,  which  consist 
essentially  of  the  power  to  amend  the 
objects  of  the  foundation  when  these 
have  been  attained,  or  have  become 
impossible  or  meaningless.  They  have 
the power to coordinate the  foundations 
and  may  group  foundations  together 
have  become 
when 
insufficient. 

assets 

their 

of  voluntary  organizations  is  therefore 
no longer  sufficient. 

20.  Gifts by companies 

20(a). 

As  in  the  case  of  private  persons,  gifts 
for purposes concerning the public good, 
or  humanitarian,  religious,  or  political 
purposes,  can  be  deducted  up  to  a 
ceiling of 2%. 

Gifts to non-resident  associations 
For associations with their head office in 
Italy,  the  system  is  the  same,  provided 
that  they  are  entered 
in  a  regional 
register on Italian territory. 

ACCOUNTS AND  AUDITING 

21.  The  administrative  authority  has  the 
power to audit and monitor. 
FOUNDATIONS 

22.  Constitution 

foundation 

Act  of 
(unilateral  act 
inter-vivos in the form  of a public act or 
will). 

23.  Definition 

Private legal  person with  assets  assigned 
to an object. 

24.  Nationality requirements 

No. 

25.  Acquisition of legal personality 

By government authorization in the form 
of a decree of the President of the Italian 
Council of Ministers 

26.  Legal capacity 

As for recognized  associations 
27.  Disposal of assets on liquidation 

If  nothing  is  laid  down  in  the  statutes, 
the  government  authorities  assign  the 
assets  to  other  bodies  with  similar 
objects. 

TAXATION 

scientific, 
literary, 
Historical, 
experimental  and  research  foundations 
with  exclusively  cultural  objects  within 
the  meaning  of  Article  6  of  Presidential 

60 

LUXEMBOURG 

ASSOCIATIONS 

LEGAL FRAMEWORK 

1.  Right of association guaranteed by law? 

Yes, under Article 26 of the Constitution 
of  17  October  1868  as  amended,  the 
Law  of  21  April  1928  on  non-profit 
associations  and  foundations,  and  the 
Law  of  11 May  1936  guaranteeing 
freedom  of association. 

2. 

Basic definition 

Article  1 of  the  Law  of  21  April  1928 
defines  a  non-profit  association  as  one 
which  does  not  engage  in  industrial  or 
trading  activities,  and  which  does  not 
seek  to  obtain  material  gain  for  its 
members. 

3.  Minimum number of founders. 

Three 

4. 

Types of association 

Non-profit  associations (ASBL) 
De facto  associations 

5.  Membership nationality requirements 

No restrictions. 

names,  trades/professions  and  addresses 
of the administrators  and the head  office 
must  be  deposited  with  the  register  of 
trade  and  businesses.  Any  amendments 
must  also  so  be  lodged.  An alphabetical 
list  of  members  must  be  deposited  with 
the chancellery of the court for the place 
in which the association  has its offices in 
the  month  when 
statutes  are 
published.  They  must  be  updated 
annually. 

the 

10.  Commercial activities 
not 
Profit-making 
prohibited but they must nevertheless be 
occasional  and  ancillary  to  the  main 
activity. 

activities 

are 

11.  Disposal of assets on liquidation 

If the statutes contain  no provisions,  the 
decision  is taken by the  Annual  General 
Meeting.  If  the  meeting  cannot  make  a 
decision,  the  receivers  decide  on  a 
method  of  disposal  which  is  as  close  as 
possible to the social purpose. 

TAXATION 

INDIRECT TAXATION 

12.  Article  13 of Sixth VAT Directive 

6. 

Legal personality and how acquired 

Yes 

Acquired  on  the  date  when  the  statutes 
are published. 

7. 

Legal capacity 

An  ASBL  may  possess,  as  its  own 
property or otherwise,  only the premises 
necessary  for  attaining 
its  statutory 
purposes.  There  is  no  limitation  on 
furniture. 
Gifts  exceeding  LUF  500 000  must 
always  be  authorized  by  Grand-Ducal 
Decree. 
Statutes 

Written  act  duly  authenticated  or  under 
private seal. 

8. 

9.  Registration requirements 

The  Memorandum  of  Association  must 
be  registered.  The  statutes  and  the  full 

1-3 

Other specific  exemptions 

by 

public 

scientific, 

Operations  with  an  educational  purpose 
organized 
or  private 
establishments, operations carried out by 
youth hostels, the organizers of sporting 
or 
educational, 
cultural, 
economic  or  professional  events  when 
the  income  is  intended  mainly  to  cover 
organizational 
theatrical 
representations,  conferences,  medical 
and  paramedical  services,  provided  that 
exemptions  do  not  distort 
these 
competition. 

costs, 

14.  Zero rates 

No 

DIRECT TAXES 

15.  General position 

61 

In  accordance  with  Article  159  of  the 
Luxembourg  Fiscal  Code,  ASBLs  are 
liable to  tax  on  corporate  bodies  (ERC). 
Any person  liable to  the  IRC  tax  is  also 
liable  to  a  wealth  tax.  Article  25  of  the 
law of 29 December  1971 lays down  the 
rights  of  registration  and  the  rights  of 
succession  and  transfer  on  death.  For 
gifts  inter  vivos  and  legacies,  the  rate  is 
6%. 

good  and  other  bodies  recognized  as 
such in law. 
20.  Gifts by companies 

The  same  rules  apply  to  companies  in 
Luxembourg 

20(a). 

Gifts to non-resident  associations 

These are not  tax-deductible 

ACCOUNTS  AND  AUDITING 

16.  Recognition  of  associations 

for 

tax 

21.  Accounts 

purposes 

IRC 

from 

an  exemption 

Article  161  of  the  Fiscal  Code  provides 
for 
for 
organizations  pursuing  directly  and 
solely  charitable  or  cultural  purposes  or 
purposes  for  the  public  good.  However, 
they  are  still  liable  to  tax  if they  engage 
in  industrial  or  commercial  activities. 
Only  disinterested  activities  of  ASBLs 
tax  and  not  any 
are  exempt  from 
ancillary  or  occasional  profit-making 
activities. 

The  annual  accounts  must  be  lodged 
with the registry of the civil court  on the 
establishment  of  the  association,  or  at 
least  the  accounts  for 
ten 
financial  years, to obtain  authorization  to 
accept  gifts. 

the  past 

FOUNDATIONS 

22.  Constitution 

Assignment  of  assets  by  authenticated 
document  or  by  will,  with  approval  by 
Grand Ducal "Arrêté". 

17.  Criteria for  recognition 

23.  Definition 

associations 
pursuing 
Non-profit 
charitable  or 
religious  purposes,  or 
purposes  for  the  public  good  (public 
health,  youth  and  sport,  sciences,  arts, 
culture)  may  be  recognized  as  being  for 
the public good. 

18.  Qualifying  purposes for  recognition 

to 

Application  must  be  made 
the 
Ministry  of  Justice.  Purposes  must  be 
non-profit,  and  recognized  as  being  for 
the  public  good  in  conformity  with  the 
statutes.  A  Grand-Ducal 
"Arrêté", 
adopted  with  the  assent  of  the  Conseil 
Tax 
d'Etat, 
concessions  are  then  awarded  on  the 
basis of tax law. 

confers 

status. 

the 

19.  Gifts by individuals 

Gifts  totalling  over  Flux  5  000  per 
annum  are tax-deductible  up to  a  ceiling 
or 
of 
Flux  10 000 000.  Any  gifts  must  be  to 
recognized  organizations  for  the  public 

income 

10% 

total 

of 

Foundations  are  circumscribed  by  law, 
since the  only  establishments  recognized 
as  foundations  are  those  which  are 
engaged 
religious, 
in  philanthropic, 
scientific,  artistic,  educational,  social, 
tourism  or  sporting  activities,  using 
revenue  arising  mainly  from  capital 
acquired  either  at  the  time  when  they 
were  founded  or  subsequently,  to  the 
exclusion of the pursuit  of material gain. 

24.  Nationality  requirements 

None 

25.  Acquisition  of legal personality 

Simultaneously  with  approval  of  the 
statutes by the Grand Ducal arrêté. 

26.  Legal  capacity 

As for  associations 

27.  Disposal of assets on liquidation 

As  provided  for  in  the  statutes,  failing 
which  the  Ministry  of  Justice  assigns 
them to  a purpose as close as possible to 

62 

that  for  which  the 
established. 

TAXATION 

institution  was 

28.  As for associations 

ACCOUNTS AND MONITORING 

29.  Accounts 

Every  year,  within  two  months  of  the 
end  of  the financial year,  the  accounts 
and  budget  must  be  forwarded  to  the 
Ministry of Justice. These documents are 
published in the "Mémorial". 

30.  Monitoring 

Article  40  of  the  law  of  1928  provides 
that the Minister for Justice  shall  ensure 
that  the  assets  of  a  foundation  are 
allocated  to  the  purpose  for  which  the 
institution was established. 

63 

NETHERLANDS 

ASSOCIATIONS 

LEGAL  FRAMEWORK 

1. 

Right of association guaranteed  by law? 

- 

the 

right  of  association 

is 
Yes 
recognized 
resident 
within  the  territory  of  the  Netherlands 
(Articles  1  and 8 of the Constitution). 

for  any  person 

2. 

Basic  definition 

association 

In  accordance  with  Article  2.26  of  the 
BW  (Burgerlijk  Wetboek  -  Civil  Code), 
an 
legal  person 
is  a 
composed  of  members  and  constituted 
for  a precise purpose other than that laid 
for  cooperatives  and  mutual 
down 
societies13. 
is  constituted  by  a 
multilateral  legal  act.  It  cannot  share 
profits  among its members. 

It 

3.  Minimum number of founders. 

Two 

4. 

Types of association 

Associations under private seal 
Associations by notarized  act 
Stateless 
(international 
associations  not  under  any  specific  legal 
jurisdiction,  not  provided  for  in  law  but 
recognized by the law) 

associations 

5.  Membership nationality  requirements 

No  conditions 

6. 

Legal personality and how acquired 

Full:  associations  whose  statutes  appear 
in  a  notarized  act  (incorporation  of  the 
statutes  in  a  notarized  act  can  also  be 
done  during  the  life  of  the  association). 
Such  an  association  must  be  entered  in 
the register of associations; 

Limited:  associations  whose  statutes  are 
in  a  notarized  act. 
not  incorporated 

of 

the 

that 

claims 

responsibility 

Entry  of  such  an  association 
in  the 
register  of  associations  has  the  effect  of 
limiting 
the 
directors,  which  will  be  invoked  only  if 
the  other  party 
the 
association has not met its obligations. 
Foreign  associations:  the  Netherlands 
follows  the  principle  of  incorporation. 
association 
This  means 
constituted  abroad  is  recognized  within 
the Netherlands, and that the foreign  law 
applicable  (which  determines  whether 
legal personality can be granted) governs 
the association under Netherlands law. 

that 

an 

7. 

Legal  capacity 

statutes 

are 
Associations  whose 
incorporated  in  a notarized  act  have  full 
legal  capacity,  they  may  contract  debts, 
receive  legacies  and  acquire  fixed  assets 
without  restrictions.  Associations  whose 
statutes  are  not 
in  a 
notarized  act  '(with  limited  personality) 
registered  goods  or 
cannot  acquire 
receive legacies. 

incorporated 

8. 

Statutes 
No  obligatory  form,  except  for  statutes 
incorporated 
in  a  notarized  act,  for 
which the content  is laid down. 

9. 

Registration  requirements 

for 

notarized 

except 
by 

associations 
None, 
constituted 
or 
act 
recognized  in  a  notarized  act.  The  act 
must  be  entered  in  the  register  held  for 
this  purpose  by 
the  Chamber  of 
Commerce  and  Industry  in  the  area  of 
the head  office. 

10.  Commercial  activities 

engage 

association  may 

An 
in 
commercial  activities,  but  the  profits 
must  not  be  distributed  to  the  members. 
The purpose  of  an  association  cannot  be 
to  make  profits  and  distribute  them  to 
the members. 

These are types of associations in Dutch law. 

64 

11.  Disposal  of assets on liquidation 

or 

an 

statutes 

procedure 

The 
association 
of 
constituted  by notarized  act must  specify 
how  the  assets  are to  be  disposed  of  on 
for 
the 
liquidation 
determining  such  disposal  (BW - Civil 
Code-and  Article  2:  27  (f).  Once 
creditors  have  been  paid,  the  balance  of 
the  assets  is  assigned  to  all  parties  who 
are  entitled  to  them  under  the  statutes, 
pro-rata  to  their  rights,  otherwise  to  the 
members.  If  no-one  has  a  claim  to  the 
remaining  assets  they  pass  to  the  state, 
which  will  assign  them  in  accordance 
with the object  of the legal  person  as  far 
as possible BW, Article 23b (1). 

TAXATION 

INDIRECT  TAXATION 

12.  Article  13 of Sixth VAT Directive 

All  exemptions  concerning  associations 
apply. 

13.  Other specific  exemptions 

There  are  several  exemptions  for  goods 
and  services  supplied  by  associations, 
and  special  exemptions  for  the  provision 
of  services  and 
related  goods  by 
associations  to  their  members,  provided 
that  the  exemptions  do  not  produce 
restrictions  on  competition  and  that  the 
organization  does  not 
to 
attempt 
distribute the profits  to the members. 

14.  Zero rates 
No. 

Tax  on fixed assets:  Associations  with  a 
real  title  to  fixed  assets  or  the  users  of 
such assets must pay a local tax. 

16.  Recognition  of  associations 

for 

tax 

purposes 

is  less 

No  exact  definition.  Article  24(4)  of the 
law  on  estate  duty  provides  for  tax 
exemptions  for  recognized  organizations 
which exist for the public good. 
An  association  for  the  public  good  is 
completely  exempt  from  corporation  tax 
if the profits  in any one year are less than 
HF1 13 000  or  if  the  profit  for  the  past 
than  HF165 000, 
four  years 
provided  that  there  is  no  profit  motive, 
or  that  the  profit  motive  is  secondary 
and  the  profits  are  used  solely  for  the 
public  good  (Article  5  of  the  law  on 
corporation 
tax  and  "arrêté"  of  20 
August  1971).  Charitable  institutions, 
institutions 
libraries,  retirement  funds, 
for  the  preservation  and  management  of 
land  for  nature  preservation  purposes 
and  certain  other  institutions  on  specific 
land. 

from 

income 

Tax  on 
fixed  assets: 
Associations  not  liable  to  corporation 
tax  may  apply  for  reimbursement  of  the 
fixed 
is 
deducted  at  source  on  dividends  or 
interest. 

deduction,  which 

assets 

There  are  provisions  for  exemptions 
{inter alia on buildings used for  religious 
purposes) from  property taxes. 

DIRECT  TAXES 

17.  Criteria for  recognition 

15.  General position 

tax 

is  no  special 
(legal 

Income  tax.  In  general,  associations  are 
subject  to  the  common  law  regarding 
taxes.  There 
for 
persons).  An 
associations 
association  may 
to 
subject 
corporation  tax  (Vpb)  if it  is carrying  on 
a  business  which  brings 
into 
competition  with  businesses  liable  to 
corporation  tax,  in  respect  of  the  profit 
which it obtains from  this activity. 

be 

it 

The  relevant  legislation  does  not  give  a 
definition  of the public good. The law on 
estate  duty  specifies  that  a precise  order 
in respect  of a legacy  or  a gift  precludes 
their  being 
the  public  good. 
According  to the law,  the  public good  is 
the opposite  of the good  of an individual 
or of a restricted  group. 
obtaining 

approval 

for 

or 

18.  Criteria 

for 
empowerment 

Recognition  by 
estate duty inspectorate. 

the  registration  and 

65 

19.  Gifts by individuals 
to 

Gifts  made 
approved  Dutch 
associations  are  tax-deductible  at  a  rate 
of  between  1%  and  10%  of  taxable 
income on  sums exceeding HFL  120 per 
annum  and  per  donor.  Gifts  made  under 
contracts  in  authenticated  form  for  at 
least five years  are  tax-deductible  in  full 
in all cases where they are for the  benefit 
of  a  Dutch  association  composed  of  at 
least  25  members  (in  which  case  public 
good  is  not  a  criterion),  provided  that 
such  gifts  are  in the  form  of  an  annuity, 
legal 
that 
capacity  and  that  it  is  not  liable  for 
corporation tax. 

the  association  has 

full 

20.  Gifts by companies 

in 

associations 

or 
to 
Gifts  made 
foundations 
the 
registered 
Netherlands  which  have  an  academic, 
religious,  charitable,  cultural  object  or 
one  for 
(including 
the  public  good 
political  parties)  are tax-deductible  when 
they  exceed  a total  of  HFL 500  up  to  a 
maximum of 6% of taxable income. 

20(a). 

same 

Gifts to non-resident  associations 
to 
regulations 
The 
associations registered  abroad, which are 
specifically  mentioned  by  the  Minister 
for Finance. 

apply 

ACCOUNTS AND  AUDITING 

21.  Accounts 

Within  six  months  of  the  end  of  the 
financial  year,  the  administrative  council 
forwards  to the Annual  General  Meeting 
an  annual  report  on  the  situation  and 
management  of 
It 
submits  the  balance  and  the  profit-and-
loss  account,  together  with  comments, 
the  meeting  for  approval.  These 
to 
documents  are  signed  by  the  directors 
and other  officials. 

the  association. 

Auditing 
Internal:  The  statutes  may  provide  that 
the  association  will  have  a  college  of 
commissaires.  In  the  absence  of  such  a 

college,  and  of an  accountant  within  the 
meaning  of  Article  2.393  (1)  attesting 
the  veracity  of  the  documents,  every 
year  the  Annual  General  Meeting  shall 
appoint  a  commission  of  at  least  two 
members who  cannot be members  of the 
administrative council. 

External:  by  declaration  of  a  qualified 
accountant  attesting the  reliability  of the 
documents.  There  is  no  obligation  to 
publish accounts. 

FOUNDA TIONS (STICHTING) 

22.  Constitution 

By  authenticated  act  containing 
the 
statutes.  These  statutes  must  be  entered 
in the  special  foundations  register  of the 
Chamber  of  Trade  and  Industry  in  the 
area of the head  office. 

23.  Definition 

A  legal  person  created  by  a  legal  act 
which  has  no  members  and  which  has 
the aim of pursuing  the object  laid  down 
in  the  statutes  using  the  goods  assigned 
to this object. 
24.  Nationality  requirements 

the 
The  head  office  must  be 
Netherlands,  although  foundations  may 
have offices  abroad. 

in 

25.  Acquisition of legal personality 

By notarized  act. 

26.  Legal  capacity 

Foundations have full  legal capacity 

27.  Disposal  of assets on liquidation 

According  to  the  procedures  laid  down 
in the  statutes.  If  there  are  no  claimants 
to  the  remaining  assets,  they  revert  to 
the  state,  which  will  allocate  them  in 
accordance  with  the  object  of  the  legal 
person  as far as possible. 

28.  Taxation 

As for  associations 

ACCOUNTS  AND  AUDITING 

29.  Accounts 

66 

In  accordance  with  BW  2  10  (2),  the 
directors  of  the  foundation  are  obliged 
to  draw up a balance  sheet  and a profit-
and-loss  account  for  the  legal  person 
within the  six  months  following  the  end 
of  the financial year,  and  to  keep  them 
for ten years. 

30.  Monitoring 

is  not  forthcoming, 

Internal: In accordance with the statutes. 
External:  The  government  authorities 
may ask the directors for information.  If 
the 
cooperation 
President  of  the  Court  can  order  the 
the 
documents 
government  authorities.  At  the  request 
of  the  government  authorities,  or  any 
other  person  concerned,  the  Court  can 
order  the  directors  to  be  suspended  or 
dismissed  and  can  appoint  alternate 
directors. 

to  be 

shown 

to 

67 

AUSTRIA 

ASSOCIATIONS 

LEGAL FRAMEWORK 

Right of Asociation guaranteed by law? 

law 

(Staatsgrundgesetz 

Yes,  under  Article  12  of  the  basic 
national 
StGG):  Austrian  citizens  have  the  right 
"Legal" 
to 
form 
associations 
specifically 
1951  Law  on 
governed  by 
Associations. 

associations. 
are  more 

the 

Basic  definition 

legal  definition.  The 

following 
No 
definition  is based  on  legal  practice  and 
case 
is  (1) 
law.  An  association 
voluntary,  (2)  intended  to  be  permanent 
(3)  a  structured  association  of  several 
persons  (4)  intended  for  attaining  a 
given  permissible  purpose  for  the  public 
good  (5)  through  continuous  communal 
activity. 

Minimum number of  founders 

One  founder  (a  person  who  declares 
himself willing to  form  an association)  is 
sufficient.  Subsequently,  the  association 
must  have  at  least  three  members  (cf. 
also 6). 

Types of association 

legislation 

Austrian 
distinguishes 
between  "ideelle  Vereine"  (non-profit 
associations), which  are governed  by the 
1951  Law 
and 
associations  set  up  with  profit  in  mind 
(Associations Charter  of 1852). 
Membership nationality  requirements 

on  Associations, 

Non-nationals,  even when not resident in 
Austria,  are entitled  to  become  members 
of an association in Austria. 

Legal personality and how acquired 

Every association  founded  in  accordance 
with the  1951 Law on Associations has a 
legal personality.  The notice  of intention 

68 

5. 

to  create  an  association  must  be 
submitted  to  the  competent  authorities 
and  be  accompanied  by  a  draft  of  the 
statutes. 
against 
If  no  prohibition 
forming  an  association  is  issued  within 
six  weeks,  or  if  the  authorities  declare 
that  they  do  not  prohibit  its  formation, 
the association may begin to function.  At 
least  three  members  must  decide  at  an 
form  an 
initial  general  meeting 
association on the basis of statutes which 
have not been rejected  by the authorities. 
legal 
The 
personality  by  virtue  of  this  decision.  It 
acquires  its  legal  capacity  by  electing 
representatives  as 
the 
statutes. 

laid  down 

association 

acquires 

its 

in 

to 

7. 

Legal  capacity 

Full  legal  personality  after  it  has  been 
constituted. L. 

8. 

Statutes 

The  statutes,  as  provided  for  under  the 
the 
law  of  1951,"  must  state 
association  is  registered  in  accordance 
with Article  12 of the law of  1951. 

that 

TAX  POSITION 

INDIRECT  TAX 

12.  Article  13 of 6th VAT Directive 

Vereine  enjoy  the  same  exemptions  in 
Austria  as listed  in  Article  13 of the  6th 
VAT directive. 
13.  Other specific  exemptions 
There  are  no 
exemptions 
covering  a  wider  scope  than  defined  in 
Article 13. 
14.  Zero Rates 

specific 

Zero rates do not exist in Austria. 

DIRECT  TAX 

15.  General  position 
subject 

Also 
to  Corporation  Tax 
(Korperschaftssteuer)  are  "nichtrechts-
fàhige Personenvereinigungen,  Anstalten, 

Gesetz  (law  on  foundations)  or general 
national 
legislation:  with  permanent 
assets for pursuing objects for charitable 
purposes  or the  public  good.  2)  Private 
foundation,  with legal  personality, which 
has  been  provided  with  funds  by  the 
founder to be used, managed and applied 
to 
object 
determined by the founder. 

permissible 

pursue 

a 

24.  Nationality requirements 

None 

25.  Acquisition of legal personality 

Type  1 foundations  (cf.  23  above): these 
have legal  personality,  which is acquired 
when  the  appropriate  authorities  decide 
that the foundation  can be authorized. 
Type  2  foundations:  these  have  legal 
personality,  acquired  on  entry  in  the 
"Firmenbuch" (register of companies). 

26.  Legal capacity 

Both  forms  of  foundation  have  legal 
personality,  i.e.  they  can  complete  legal 
formalities  and  be  a  party  to  legal 
proceedings. 

27.  Disposal of assets on liquidation 

Type  1:  to  be  stated  in  the  winding-up 
notice  of the  authorities  concerned  with 
foundations. 

Type  2:  assets  pass  to  the  ultimate 
beneficiaries 
the 
named 
"Stiftungserklàrung" (declaration). If this 
is  revoked,  they  pass  to  the  founder  or 
to the Republic of Austria 

in 

Stiftungen" 
Zweckvermôgen ". 

and 

àndere 

16.  Exempted from taxation 

Non-profit  organizations  for the  general 
public,  for  the  public  welfare,  churches 
(§§  34  -  47  Bundesabgabenordnung), 
(60.000 
insurance  associations 
small 
ATS),  associations 
in  the  field  of 
agricultural  activities  for  the  purpose  of 
using  common  equipment  (Weidw  und 
Maschinengenossenschaften), 
etc., 
private  foundations,  unions  which  are 
legal 
representatives, 
financing  associations  for  small  and 
medium-sized enterprises. 

professional 

important 

17.  Qualifying criteria 
for 
The  most 
recognition  is  the  object  defined  in  the 
statutes  of  the  association,  such  as 
charity,  non-profit,  public welfare,  other 
specific purposes. 

criterion 

18.  Qualifying objects 

Religious  communities  recognized  by 
und 
public 
"pensions 
Unterstutzungskassen" under 
specific 
conditions (§ 6 KSTG). 

law, 

- 

The  exemptions  do  not  apply  to  limited 
taxable persons. 

19.  Gifts by Individuals 

to 

individuals 

religious 
Gifts  by 
institutions  (up  to  1.000  -  ATS  p.a.), 
high  schools,  associations  in the field of 
can  be 
research  and  development 
deducted  from  income  tax.  The  amount 
of  deductable  gifts  is  limited  to  10% of 
the total incomes the year before. 

FOUNDATIONS 

LEGAL POSITION 

22.  Constitution 

Free to create 
23.  Basic definition 

There  are 
forms  of 
two  different 
foundation.  1) Foundation in accordance 
the  Bundes-Stiftungs-und-Fonds 
with 

69 

PORTUGAL 

ASSOCIATIONS 

LEGAL  FRAMEWORK 

1. 

Right of association guaranteed  by law? 

Article  46  of  the  1976  Constitution, 
Civil  Code,  Articles  158 to  166 and  167 
to  184,  and  Decree-Law  594/74  of  7 
November  1974. 

2. 

Basic  definition 

The  law  does  not  give  a  definition.  In 
accordance  with  general  practice,  a 
group  of  individuals  who  pool  certain 
goods  or  services  for  an  object  which 
excludes making a personal  profit. 

3.  Minimum number of  founders 

No minimum. 

4. 

Types of association 

Private  associations  under  the  general 
scheme 
Private  associations  under  a  special 
scheme  (e.g.  cooperatives  and  social 
solidarity  organizations) 
Associations  without  legal  personality 
(non-recognized  associations  and  special 
committees) 

5.  Membership nationality  requirements 

Unless  the  statutes  provide  otherwise, 
non-nationals  can  be  members  of  an 
association 

6. 

Legal personality  and how  acquired 
granted 

recognition, 

Standard 
on 
condition  that  the  act  of  establishing  the 
foundation  is  authenticated  by  a  notary 
and that  its content  is in conformity  with 
Article  167-1  of 
the  Civil  Code. 
Publication  of  extracts  of  the  act  of 
the 
establishing 
the 
foundation  and 
the  Portuguese  Official 
statutes 
in 
association 
Journal 
recognizable in law by a third  party. 

makes 

the 

7. 

Legal capacity 

this 

rule, 

associations 

Associations  have  legal  capacity  subject 
to  the  ultra  vires  rule.  In  accordance 
are 
with 
recognized  as having  not  only the  rights 
and  obligations  which  are  necessary  but 
also  those  which  are  appropriate  for 
attaining  their  object.  Only  rights  and 
obligations  inherent  to  a  human  person 
are excluded. 

8. 

Statutes 

for 

Yes.  As 
the  Memorandum  of 
Association,  i.e. the notarized  act.  There 
is an obligatory basic minimum. 

9. 

Registration  requirements 

For  associations  under 
the  general 
sole 
registration  has 
scheme, 
function  of  publicity,  and  has  no 
constitutive  function. 
10.  Commercial  activities 

the 

Associations may have a financial  object, 
not  excluding  financial  advantages  for 
the  associates,-provided  that  these  are 
not in the form  of a profit  as such. 

11.  Disposal of assets on liquidation 

In  the  case  of  goods  bequeathed  or 
donated  with instructions  or intended  for 
a certain  purpose, they  must  be  assigned 
to  another  legal  person,  with  the  same 
instructions  or  object.  In  the  case  of 
other  goods,  Article  162-2  of  the  Civil 
Code  authorizes  members  in  accordance 
with  the  statutes  or  by  decision  of  the 
their 
general  meeting 
assignment. 

to  decide  on 

TAXATION 

INDIRECT  TAXATION 

12.  Article  13 of Sixth VAT Directive 

Yes. 

13.  Other specific  exemptions 

Medical or paramedical  care, educational 
establishments, 
activities, 
insurance and social assistance  services 

artistic 

14.  Zero rates 

70 

Foodstuffs,  newspapers,  reviews  and 
cultural  books,  pharmaceutical  products 
and 
transport, 
like,  passenger 
medical services, entertainments. 

the 

DIRECT  TAXES 

legal  persons  with 
also  applies 
to 
non-profit  objects  belonging 
to,  or 
established  by,  religious  denominations, 
teaching  or  educational  associations, 
scientific  research  or  culture,  literary, 
artistic etc. 

15.  General  position 

20.  Gifts by companies 

taxable 

income)  which 

Income  tax  for  legal  persons  -  ERC  -
(20%  of 
is 
payable  on  total  income  less  certain 
by 
Subscriptions 
expenses. 
members  and  subsidies  to  finance  the 
attainment  of  the  association's  objects 
are not considered  as income. 
Tax on assets. 

paid 

or 

as 

teaching 

Legal  persons  may  deduct  gifts  given  as 
cultural  sponsoring  or  to  organizations 
educational, 
such 
scientific  research  or  cultural,  literary  or 
artistic  associations  from  their  taxable 
profits  up to  a total  value  equal  to  0.2% 
of  turnover,  and  50%  of  any  sum  in 
excess of that. 

16.  Recognition  of  associations 

for 

tax 

20(a). 

purposes 

Gifts to non-resident  associations 
ACCOUNTS  AND  AUDITING 

Legal persons of an administrative public 
utility  (religious  communities,  voluntary 
firemen's  associations  etc.)  are  exempt 
from  IRC,  as  well  as  ordinary  public 
utilities pursuing  exclusively  scientific  or 
cultural  objects,  or performing  charitable 
or  social  work;  specific  institutions  for 
social  solidarity  (IPSS)  and  persons 
legally similar to these. 

17.  Criteria for  recognition 

In  the  first  two  cases,  the  organizations 
must  cooperate  with  the  government 
authorities,  at  national,  regional  or  local 
level.  IPSSs  and  similar  bodies  must  be 
registered  with 
social 
the 
security  department.  Nevertheless,  the 
the  discretion  of  the 
decision 
authorities.  The  extent  of the  exemption 
may vary depending on the objects. 

regional 

is  at 

18.  Qualifying  objects for  recognition 

Exemptions  are  granted  by  the  Ministry 
of Finance at the request of applicants by 
means 
(despacho) 
published  in the  "Diâro da Republica 

decision 

of 

a 

19.  Gifts from  individuals 

Natural  persons  may  deduct  gifts  to  the 
organization  specified  in  Article  56  of 
the law on the 1RS up to a value equal to 
15%  of  their  net  taxable  income.  This 

21.  Accounts 

The conseil  de surveillance -  supervisory 
council  -  is  the  body  responsible  for 
monitoring 
the 
administrative  body.  It  ensures  that  the 
accounts  of  the  association  are  properly 
kept. 

activities 

the 

of 

The  accounts  of  associations  which 
enjoy  tax  concessions  must  always  be 
available to the tax authorities. 

FOUNDATIONS 

22.  Constitution 

By  an  act  inter  vivos  or  a  will.  The 
notarized  form  of  the  act  is  required, 
except  in  the  case  of  a  non-public  will. 
The  charter  establishing  the  foundation 
must  state  the  object  of  the  foundation 
and  specify  the  goods  allocated  to  it. 
in 
The 
authenticated  form. 

statutes  must 

always  be 

23.  Definition 

is  no 

legal  definition. 

There 
In 
accordance  with  general  practice,  the 
foundation  is an  organization  pursuing a 
permanent  object  to  which  assets  have 
been assigned. 

24.  Nationality  requirements 

71 

No,  but  the  head  office  must  be  in 
Portugal. 

25.  Acquisition of legal  personality 

Foundations  acquire  legal  personality  by 
individual 
the 
is 
responsibility  of 
administrative 
authority. 

recognition,  which 
the 

26.  Legal capacity 

As for  associations 

27.  Disposal  of assets  in the  event  of winding 

up 

The  assets  of wound-up  foundations  are 
disposed  of  according  to  the  common 
system for associations and  foundations 

TAXATION 

28.  As for  associations 

ACCOUNTS  AND AUDITING 

29.  Accounts 
30.  Auditing 

Foundations remain under the permanent 
supervision  of  the  competent  authority 
for  recognition.  Foundations  must  have 
a tax council. They may be wound  up by 
them 
the  authority  which  recognized 
once  their  object  has  been  attained  or 
has  become  impossible  to  attain,  in  the 
event  of illicit  use  of resources,  if public 
order  is  endangered  or  if  the  object 
being  pursued  no  longer  corresponds  to 
that laid down in the statutes. 

72 

FINLAND 

ASSOCIATIONS 

LEGAL FRAMEWORK 

1. 

Right of association guaranteed by law? 

Yes.  Article  10a of the  Constitution  Act 
as amended  in  1995 and  Article  1 of the 
Associations Act of 1989. 

2. 

Basic  definition 

A  contract  by  which  several  people  act 
together  for  the common  realisation  of a 
non-profit  purpose.  (The association  is a 
permanent body in the sense that it is not 
momentary 

3.  Minimum number of  founders 

Three 

4. 

Types of association 

A. Registered  associations: 
- non profit  associations 

- economic associations (for  example co 
operative societies established  before  the 
entry  into  force  of  the  Act  on  co 
operative societies of 1954) 

to  permission 

-  associations  subject 
(provided by the Associations Act) 
-  associations  organised  by  a 
act/statute  (for  example 
Advocates  Associations) 

legal 
the  Finnish 

B. Non-registered  associations  which  do 
not have legal  capacity 

5.  Membership nationality  requirements 

Associations Act: none 
Exceptions: if the primary purpose of the 
association  is  to  exercise  influence  over 
State  affairs,  it  may  have  as  members 
only  Finnish  citizens,  foreigners  residing 
in  Finland  and  associations  whose 
or 
are  Finnish 
members 
citizens 
or 
residing 
foreigners 
in  Finland 
associations  who 
have  member 
associations  made  up  of Finnish  citizens 
or foreigners  residing in Finland. 

Members  of  the  Board:  The  chairman 
and  at  least  half  of  the  members  of  the 
board  must  be  resident  in  Finland  if  the 
Ministry  of  Trade  and  Industry  has  not 
granted  an exception. 

6. 

Legal personality and how acquired 

is 

acquired 

personality 

Yes.  According  to  the  Associations  Act, 
legal 
by 
registration.  Only  registered  associations 
can have legal  personality.  The  members 
of  a  registered  association  shall  not  be 
personally  liable for  the  commitments  of 
the association. 

7. 

Legal  capacity 

A  registered  association  has  full  legal 
capacity  as  a  legal  person.  A  registered 
association  may  obtain  rights,  make 
commitments  and  appear  before  a  court 
or  another  authority  as  a  party.  Non-
registered  associations  do  not  have legal 
capacity 

8. 

Statutes 
Yes. 

9. 

Registration  requirements 

Registration  is  not  compulsory  as  such. 
If registration  is wanted,  requirements  of 
registration 
the 
are 
Associations Act. 

provided 

in 

in 

a  Memorandum 

A  notification  of  formation  shall  be 
recorded 
of 
Association  which  shall  include the  rules 
of  the  association  and  the  name  and 
domicile  of  the  chairman  of  the  board 
and  the  persons  who  have  the  right  to 
sign for  the  association.  The  notification 
of  formation  shall  be  signed  by  the 
chairman  of the board 

10.  Commercial  activities 
A  non-profit 
association  may  only 
practise  a  trade  or  other  economic 
activity  that  has  been  provided  in  the 
that  otherwise 
association's  rules  or 
relates to the realisation of its purpose or 
that 
to  be  deemed  economically 
is 
insignificant. 

73 

For  economic  associations  there  are  no 
general  statutes (see types of  association 
n. 4) 

11.  Disposal of assets on liquidation 

the 

After  liquidation,  the  remaining  assets 
should be used as required  in the rules of 
the  association.  In the  absence  of  such a 
rule 
the 
remaining  assets  at  the  State's  disposal 
to  be  used  to  promote  the  same  or 
similar 
liquidated 
as 
association 

liquidators  must  put 

objects 

the 

TAX POSITION 

INDIRECT TAX 

taxable  income)  on  their  income  from 
real  property  used  for  other  than  non 
profit  purposes. 
The  National  Board  of  Taxation  may 
grant  exemption  from  tax  on  income 
from  business  or  real  property  if  the 
is  socially 
operation  of  associations 
significant 

17.  Criteria for  recognition 

Associations  operate  exclusively  and 
directly for the public good  in a material, 
spiritual  or  social  sense;  their  activities 
do  not  concern  only  a  limited  group  of 
persons;  members  must 
get 
economic  benefits  (shares  of  profit  etc.) 
from  the operation 

not 

12.  Article  13 of Sixth VAT Directive 

18.  Qualifying  objects for  recognition 

for 
organisations, 

the  public  good 
Corporations 
(charitable 
sport 
associations  etc.) are liable to tax  it their 
income  is  deemed  to  be  income  from 
business  activities  according 
the 
Income  Tax  Act.  This  means  that  in 
practice  all  exemptions  of  relevance  to 
associations  coming  under  Article  13 
have been  implemented 
13.  Other specific  exemptions 

to 

None 

14.  Zero  rates 
services 
Printing 
publications  of  associations 
for 
public good  are subject  to zero rate 

for  membership 
the 

DIRECT  TAX 

15.  General  position 

Generally  subject  to  company  tax  (28% 
of  taxable  income)  on  all  their  income; 
liable to  real  estate  tax  on  taxable  value 
of land and buildings 

16.  Recognition  of  associations 

for 

tax 

purposes 

According  to  the  Income  Tax  Act,  non 
profit  associations  (associations  for  the 
public  good)  are  liable  to  company  tax 
only  on 
for  business 
income 
activities,  and  communal  tax  (12,04%  of 

their 

Dividends, interests  and  capital  gains are 
not  subject  to  income  tax  unless  the 
property  belongs  to  a  business  activity. 
Business  income  does  not  contain,  inter 
alia: 

- sales proceeds, and other proceeds  from 
occasions  arranged  for  financing 
the 
operation  of associations; proceeds from 
other 
bulletins 
membership 
the 
directly 
publications 
operation  of associations 

and 
serving 

19.  Gifts by individuals 

taxable 

Gifts  given to non-profit  associations are 
income.  Gifts  are  not 
not 
deductible 
taxation  of 
individuals 

income 

in 

20 

.Gifts by companies 

In 

taxable 

Gifts  given to non-profit  associations  are 
company 
income. 
not 
taxation,  gifts  are,  within  certain  limits 
(FIM 5000-150.000),  deductible  if given 
for  scientific  or  artistic  purposes 
to 
associations  nominated  by  The  National 
Board  of Taxation 

20(a). 

Gifts  to non-resident  associations 
ACCOUNTS  AND  AUDITING 

21.  Accounts 

74 

FOUNDATIONS 

TAX POSITION 

22.  Constitution 

28. 

See references  above  to  the tax position 
for associations 

ACCOUNTS AND AUDITING 

29. 

Accounts 

Foundation  must  have  a  minimum  of 
two auditors and two  deputy auditors to 
audit their accounts and administration 

30. 

Auditing 

The Ministry  of justice  ensures  that  the 
administration 
foundation 
complies with the law and the by-laws of 
foundation 
the 

the 

of 

According to the Act on Foundations, as 
amended in  1995, the establishment  of a 
foundation  is  subject  to  a  permission 
granted by the National Board of Patents 
and Registration. 

23.  Basic definition 

A  foundation  is  established  with  a deed 
of  foundation  which  must  include  the 
purpose  of  the  foundation  and 
its 
property. 
A 
is  governed  by  an 
independent  administration,  the board  of 
which  shall  be  set  out  in the  by-laws  of 
the foundation 
24.  Nationality requirements 

foundation 

The  members  of  the  board  of  trustees 
and  the  persons  authorised  to  sign  the 
name of the foundation  must be resident 
in  a  member 
the  EEA 
Agreement.  However,  at  least  one  of 
in 
those  persons  must  be  resident 
Finland,  if  the  Ministry  of  Trade  and 
Industry has not granted an exception to 
this requirement. 

state  of 

25.  Acquisition of legal personality 

Legal  personality 
is  acquired  by 
registration. Registration of a foundation 
is compulsory. 

26.  Legal capacity 

Full  legal  capacity  as  a  legal  person; 
after a foundation  has been registered, it 
can  acquire  rights  and  undertake 
obligations as well  as sue and be sued in 
its own name 

27.  Disposal of assets on liquidation 

If  the  foundation,  after  its  debts  have 
been  paid,  has  assets  and  if the  by-laws 
do  not  provide  for  their  use,  they  shall 
pass  to  the  State,  which  shall  without 
delay  transfer  the  assets  to  be  used  to 
further  a purpose  related  to  that  of  the 
foundation 

75 

SWEDEN 

ASSOCIATIONS 

LEGAL FRAMEWORK 

1.  Right of association guaranteed by law? 

Yes.  Chapter 2,  Articles 2  and 20  in the 
Constitution of  1974 

2. 

Basic definition 

An  association  (ïdeell  fbrening")  is  a 
legal person in which several persons act 
together  for  a  certain  purpose.  The 
association  may  not  have  any  economic 
aims  or  at 
least  no  commercially 
organised activity 

3.  Minimum number of founders 

Not regulated 

4. 

Types of association 

Ideell fbrening which  is not  regulated by 
statutory law 

5.  Membership nationality requirements 

No special requirements 

6. 

Legal personality and how acquired 

The  association  is  considered  to  have  a 
legal personality if there are statutes and 
a board 

7. 

Legal capacity 

The  association  is  able to  acquire  rights 
and obligations, to  sue etc.,  without any 
special restrictions 

8. 

Statutes 

No,  but  the  statutes  have  to  be  as 
complete as necessary for the aim of the 
association 

9.  Registration requirements 

There  are  no  general  requirements.  An 
association  with  an  economic  activity 
sometimes  has  to  be  registered  in  the 
Trade Register 
10.  Commercial activities 

In principle not allowed. The association 
may,  however,  carry  on  some  business 

76 

activity  as long as it is not  commercially 
organised 

11.  Disposal of assets on liquidation 

The  assets  are  divided  in  accordance 
with  the  statutes.  If the  statutes  do  not 
regulate  this  matter,  the  assets  may  be 
divided among the members 

TAX POSITION 

INDIRECT TAX 

12-14  General position 

Associations  with  charitable  purposes 
are generally  not  subject  to  indirect tax. 
Other associations are subject to indirect 
tax on the same conditions as other legal 
persons. 

DIRECT TAX 

15.  General position 

net  wealth 

Normally not subject to income tax or to 
tax.  Non-profit 
the 
associations  pay  no  income  tax  for 
business with a natural connection to the 
non-profit  activity.  Income  from  other 
business activities are taxable. 

19.  Gifts by individuals 

Gifts  over  10  000  SEK  are  normally 
subject to gift tax. With the exception  of 
religious  communities  and  associations 
serving  educational,  medical,  national 
social  work  or 
research, 
defence, 
charitable  purposes,  the  gift 
is  not 
deductible for the donor. 

20.  Gifts by companies 

The same as 19. 

ACCOUNTS AND AUDITING 

21.  Accounts 

No special  supervision for associations. 

FOUNDATIONS 

22.  Constitution 

All physical  and legal  persons can create 
a foundation. 

23.  Basic definition 

A  property  which  according  to  the 
dispositions  of the founder  (gift  or will), 
is  singled  out 
to  be  permanently 
managed for a certain purpose. 

24.  Nationality requirements 

None. 

25.  Acquisition of legal personality 

A  foundation  has  legal  personality  as 
soon as it has been created, i.e. when the 
property  has  been  transferred  to  the 
separate management. 

26.  Legal capacity 
27.  Disposal of assets on liquidation 

In  principle,  a  foundation  cannot  be 
liquidated  as  long  as  it  has  assets. 
However,  in special cases the assets may 
be  used  for  a  purpose  which  is  very 
close  to  the  original  purpose.  A  special 
permit  of  a  governmental  authority  is 
required for such a procedure. 

TAX POSITION 

28. 

Foundations  serving  national  defence, 
educational,  medical, 
social  work, 
research  or charitable  purposes  are only 
taxable for business income. 

Foundations  with  a  non-profit  purpose 
are not  subject  to  gift  tax.  Gifts  are not 
deductible for the giver. 
Foundations  are  subject  to  indirect  tax 
on  the  same  conditions  as  other  legal 
persons. 

ACCOUNTS AND AUDITING 

29.  Accounts 
30.  Auditing 

Foundations  are generally  supervised  by 
a local government authority. 

77 

UNITED  KINGDOM 

ASSOCIATIONS 

(Voluntary 

Organisations) 

LEGAL  FRAMEWORK 

1.  Right of association guaranteed by law? 

there 

There  is no  written  right  to  associations 
although 
freedom  of 
association. There is a freedom to  create 
trusts although  in some cases trusts  with 
non-charitable objects may be void. 

exists 

2. 

Basic  definition 

There  is  no  single  generally  accepted 
legal  definition  of  an  association.  In  its 
widest  sense,  an  association 
is  one 
formed  by  two  or  more  people  who  of 
their  own  volition  join  together  in  a 
common  purpose  which  is not  in  pursuit 
of financial gain. 

3.  Minimum number of  founders 

In practice two. 
Types of association 

4. 

Unincorporated  associations 

Trust 
Company limited by guarantee 
Industrial and Provident  society 
Incorporated  by Royal  Charter 

Incorporated  by Act of Parliament. 

5.  Membership nationality  requirements 

No  requirements  for  associations  as 
such.  In the  case  of a charity  in England 
and  Wales,  the  Charity  commission  will 
only register if within jurisdiction. This is 
normally  construed  to  mean  that  in  the 
case  of  an  unincorporated  charity  a 
trustees  should  be 
majority  of 
resident  in  England  and  Wales,  in  the 
case of a company registration within the 
jurisdiction is  sufficient. 

the 

6. 

Legal personality and  how acquired 

register 

registration  with 

Company  limited  by  guarantee-obtained 
of 
by 
Companies. 
Industrial  &  provident  Society-obtained 
by registration  with Registrar of Friendly 
Societies. 
Incorporated  by  Royal  Charter-obtained 
through Royal  Charter., 
Incorporated 
Parliament-obtained 
Parliament. 

of 
Act 
through  Act  of 

by 

Unincorporated  associations-No. 
Trust  no;  however,  the  body  of  trustees 
can  obtain 
through 
Certificate  of  incorporation  issued  by 
Charity  Commission. 

legal  personality 

7. 

Legal  capacity 

There  are  no  restrictions  in  statute; 
however,  in  some  areas  capacity  will  be 
derived  from  the  objects  and  powers 
included in the governing  document. 

8. 

Statutes 
No. 

9. 

Registration  requirements 

the 

For 

with 

Registration 
Charity 
Commission  for  charities in England  and 
Wales. 
associations, 
other 
registration  will  depend  on  the  legal 
structure. Registration  with the Registrar 
of  Friendly  Societies  for  Industrial  and 
Provident  Societies, registration  with the 
Registrar  of  Companies  for  companies 
limited by guarantee. 

10.  Commercial  activities 

There  is a restriction  on  the  commercial 
activities  of  charities.  They  can  engage 
in  primary-purpose  trading  but  not  in 
permanent  trading  as  a  means  of  fund-
raising.  Charities  that  wish  to  trade  to 
any  substantial  degree  must  set  up  a 
separate  trading  subsidiary  which  can 
then  covenant  its  profits  back  to  the 
parent  charity  and 
tax  can  be 
recovered. 

the 

78 

corporation 
inheritance tax. 
17.  Criteria for recognition 

tax,  capital  gains 

tax, 

To qualify for the exemption, the income 
or  gains  must  be  applied  to  charitable 
purposes  only  and  trading  income  other 
than  primary-purpose  trading  will  often 
be subject to corporation tax. 

18.  Qualifying objects for recognition 

19.  Gifts by individuals 
When  an 
individual  or  corporation 
executes  a  deed  of  covenant  promising 
to pay a particular sum to a charity for a 
period  to  exceed  three  years,  a  sum 
representing tax at the basic rate must be 
deducted  and the Inland revenue refunds 
to the charity the basic rate of income or 
corporation 
sum. 
Additionally,  if the individual is a higher-
rate tax payer, he can receive further tax 
relief  trough  the  adjustment  of  his  tax 
code.  A company  can  claim  a deduction 
from its profit  for the gross amount, and 
obtains tax relief at its marginal rate. 

that 

tax 

on 

Similarly,  since  1990  individuals  have 
been  able  to  make  one-off  payments 
under  Gift  Aid.  Currently  the  minimum 
donation is £250 in monetary form 

20.  Gifts by companies 

20(a). 

Gifts to non-resident associations 

ACCOUNTS  AND AUDITING 

21.  Accounts 

11.  Disposal of assets on liquidation 

the 

this  will  be 

in 
governing 

In  associations, 
accordance  with 
document. 
In the case of charities, to other charities 
with  similar  purposes.  If  the  governing 
document  does  not  include  provisions 
dealing  with 
the  Charity 
this, 
Commission  may  give  directions  by 
Order or Scheme. 

TAX POSITION 

INDIRECT TAX 

12.  Article  13 of Sixth VAT Directive 

Not  all  exemptions  of  relevance 
charities have been implemented. 

to 

13.  Other specific  exemptions 

of 

supply 

or 
for 

(a)  The 
education 
vocational  training  otherwise  than 
profit. 
(b)  The  provision  of  nursing  and 
medical care in an approved institution. 
(c)  The  provision  of  welfare  services 
otherwise than for profit. 
(d)  Fund-raising events. 

14.  Zero rates 

These  include  sales  of  donated  goods, 
supply  of advertising  for  fund-raising  or 
educational  purposes,  certain  aids  for 
disabled people, vehicles and ambulances 
for  disabled  people,  certain  medicines 
and  medical  equipment  supplied 
to 
charities. Construction of new residential 
property and buildings used for a certain 
charitable purposes are zero rated. 

DIRECT TAX 

15.  General position 

No  specific  exemptions  for  associations 
as such. 

16.  Recognition  of  associations 

for 

tax 

purposes 

Charities are exempt from most forms of 
direct  taxation  including  income  tax, 

79 

Financial  Statement 

1. TITLE OF OPERATION 

from 
Communication 
Organisations and Foundations in Europe. 

the  Commission  on  Promoting 

the  Role  of  Voluntary 

2.  BUDGET HEADING  INVOLVED:  B5-3202 

3. LEGAL BASIS 

Council  Decision  of  9 December  1996  on  a  Third  Multi-Annual  Programme  for  Small 
and Medium sized Enterprises in the European Union  1997 - 2000. 

4. DESCRIPTION  OF  OPERATION 

Expenses  incurred  in  connection  with  meetings  of  experts  and  information  campaigns 
with  a  view  to  defining  future  approaches  on  the  role  of  associations  in  the  European 
Union. 

4.1 

Period covered and arrangements for renewal 

The meetings of experts and information  campaigns will be for the period of  1997 only. 

5. CLASSIFICATION  OF EXPENDITURE  OR REVENUE 

5.1 

5.2 

NCE 

DA 

<Pz) 

A small proportion  (meetings of experts and information  ) is  100% financed. 

The  other  subsidies  for  cofmancing  with  other  resources  in  the  public  and/or  private 
sectors will be adjusted  in accordance with Community interests. 

Conventional  subsidies  for  colloquia,  seminars  and  round  tables  are  allocated  at 
particular  percentage rates, depending  on the needs of the  organizers  and the  importance 
of the event as regards the économie sociale sector 

7. FINANCIAL  IMPACT 

There will be a series of meetings and conferences  in  1997.  Total costs  100.000 ECU 

8. FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 

Bearing  in  mind  contractual  obligations  and  the  principles  of  economy  and  sound 
financial  management,  all  agreements  and  contracts  between  the  Commission  and  the 
recipients of payments include anti-fraud  provisions (monitoring, reports to be  submitted, 
etc.)  for  checking  subsidies  and  acceptance  of  services  and  studies  ordered  by  the 
Commission before  payment. 

9.  ELEMENTS  OF 
COMMUNICATION 
FOUNDATIONS 

COST-EFFECTIVENESS 
VOLUNTARY 

ON 

FOR 
ANALYSIS 
ORGANISATIONS 

THE 
AND 

9.1 

Specific  and quantified  objectives; target population: 

The  establishment  of a co-ordinated  policy  for  networks  of European  voluntary 
organisations and  foundations. 

An  information  network  on  the  économie  sociale  (European  citizens'  advice 
bureaus)  has  been  set  up  by  the  European  Committee  of  Workers  Cooperative 
Productive  Societies, the Euro-Citizen Action  Service, the Comité Européen des 
Associations  d'Intérêt  Général  and  the  European  Foundation  Centre  in  order  to 
meet the need  for  enterprises  in the économie sociale sector to  interact  with the 

fl 

Community's  business community  via the European  Euro-Info  Centres  network 
(the network for networking); 

9.2 

Justification: 

It  is  necesssary  to  discuss  with  the  Member  State  governments  and  voluntary 
the  policy 

organisations  (associations)  and  foundations  how  best  to 
recommendations  set out in the document. 

implement 

9.3 

Monitoring and evaluation of the operation 

The voluntary  organisations and foundations  sector is highly  diversified. 

This  situation  calls  for  great  attention  at the  preparatory  stage  of  the  proposed 
actions  so  as  to  strike  the  right  balance  between  perceived  requirements  and 
resources  employed. 

When  the  actions  are  launched,  the  indicators  will  be  proposed  in  accordance 
with the specific  features  of the action on the basis of a standard fact  sheet to be drawn up 
by  the  departments.  This  fact  sheet  must  take  account  of  the  eligibility  criteria  for  the 
various funds  and sources of finance. 

Assessment  of the results obtained 

The  scheduled  actions  are  of  prime  importance,  since  they  must  enable 
to  take  advantage  of  the  benefits  of  the 
associations  and  foundations 
frontier-free  Single Market while complying with competition rules and without 
sacrificing  their  identity  as  partnerships.  The  results  will  be  assessed,  for 
example,  on  the  basis  of  the  objectives  for  each  action  in  the  light  of  the 
European  aspects  identified  on  the  ground,  and  of  the  difficulties  encountered 
by  économie  sociale  businesses,  because  of  their  involvement 
in  local 
developments, in using the Structural  Funds correctly and to the  full. 

10  ADMINISTRATIVE  EXPENDITURE  (SECTION  III,  PART  A  OF THE  BUDGET) 

s-z 

Actual  mobilization  of  the  necessary  administrative 
resources  will  depend  on  the  Commission's  annual 
decision  on  the  allocation  of  resources,  taking  into 
account  the  number  of  staff  and  additional  amounts 
authorized  by the budgetary  authority. 

10.1 

Effect on the number  of posts 

Type of p ost 

A 
B 
C 

Official 
s or 
temporar 
y  staff 
Other 
resources 
Total 

Staff to be 
assigned  to 
managing  the 
operation 
Permane 
nt 
posts 

Temporar 
y posts 

1 

1 x A 

Source 

Duratio 
n 

Existing 
resource 
s  in the 
DG or 
departme 
nt 
concerne 
d 
1 

Additio 
nal 
resourc 
es 

no 

1 

1 

12 
months 

The  cost  of  a staff member 
100.000 ECU. 

;A1 to A5  level)  is estimated  at 

n 

10.2 

Overall  financial  impact  of  additional  human 

resources 

Method  of calculation" 

ECU 

Amount 
s 

Officials 
Temporary  staff 
Other  resources  (indicate  none 
budget  heading) 

Total  none 

10.3 Increase  in  other  administrative  expenditure 
as a result of the operation 

Budget  heading 

Amount 
s 

Method  of  calculation 

ECU 

Total  none 

within existing  budget 

W 

ISSN 0254-1475 

COM(97) 241  final 

DOCUMENTS 

EN 

05  06  10  16 

Catalogue  number  :  CB-CO-97-282-EN-C 

ISBN  92-78-21231-8 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg