What forms of charitable trust, charitable company, or philanthropic foundation are commonly established by individuals, and how is this done?
France also strictly controls charitable and philanthropic matters. This is the main reason why it is not a common practice for French resident individuals to establish charitable trusts, company or philanthropic foundations subject to French law.
However, very wealthy individuals wishing to establish charitable or philanthropic structures may consider creating charitable trusts or philanthropic foundations governed by laws of countries (other than France) which encourage private charitable initiatives.
Charitable activities are usually carried out in Italy by Italian foundations (see 18).
- Amuta - It is a legal entity established under the Amutot Law 1980. There must be a minimum of two founders, the founders must be at least 18 years old and the Amuta is prohibited from distributing any profits to its members. In addition, an Amuta cannot be registered if any of its objects negates the existence or democratic nature of the State of Israel, or if there are reasonable grounds for concluding that the Amuta will be used as cover for illegal activities.
- Non-profit corporation (a charitable company) - This is a corporation incorporated under the Companies Law 1999 for one of the "public purposes" specified in the applicable schedule to the Companies Law. For example, protection of the environment, education, sport, charity or welfare. Its articles of association must prohibit any distribution of dividends to its shareholders.
- Public endowment - This is established as a trust in relation to assets to be used for public purposes and governed by the Trusts Law 1979. A public endowment can be established in accordance with one of the following alternatives: (1) a trust agreement; (2) by an endowment deed signed in the presence of a notary; (3) by will; (4) under the Inheritance Law 1965. A public endowment must be for the benefit of the public.
The following non-profit entities are the most commonly established by individuals in Greece:
- Foundations [see also notes in art. 18] of the Greek law: Due to their wider social impact/significance, a Presidential Decree is issued to ratify their substance and establishment, while they may established either during one’s lifetime or through their will.
- Non Profit Civil Partnerships: These may be established through a much simpler procedure by two or more individuals during their lifetime and can not pursue profit; their scope may be charitable, philanthropic, social, educational, research, religious, political etc.
- Cooperative social ventures: These are quasi non-profit and newly legislated entities that are supervised and regulated by the state; they and may distribute up to 35% of their profits solely to their employees. Their scope must be charitable or philanthropic while individuals from less privileged backgrounds are encouraged to participate actively.
- Fundraising Committees: These entities are established by at least 5 persons; they are ratified by virtue of Presidential Decree and may carry out solely fund raising activities to serve public or charitable purpose.
Charitable foundations (“gemeinnützige Stiftungen”) in the meaning of the German civil code are quite common. They have to be approved by the foundation supervisory authority (“Stiftungsaufsicht”) and constitute a legal entity. As such they realise their altruistic purpose chosen by the settlor. In contrast to charitable foundations the legal regime of charitable companies is much less rigid. For example, the terms of a charitable company can be changed much easier than the articles of a charitable foundation.
Two types of legal bodies are frequently used by individuals for charitable reasons: private foundations and non-profit associations. Unlike a non-profit association, a private foundation has no members. Its assets must be used by its directors for an ‘altruistic’ private purpose, e.g. the wellbeing of a disabled child. A non-profit association is often dedicated for furthering a more social cause.
British Virgin Islands
Charitable trusts and companies with charitable objects are often created and this is done by following the same procedures as those which apply to beneficiary trusts and companies. The Non-Profit Organisations Act, 2012 contains registration and other requirements which could be applicable, but these will not apply if the charity’s funds are not raised or distributed primarily within the BVI or (in the case of a trust) if its sole trustee or all its trustees are regulated under BVI statute.
The DIFC Trust Law provides for the creation of a charitable trust if it is created for the relief of poverty, the advancement of education or religion, the promotion of health or art, the protection of the environment, or any other purposes which are beneficial to the general public.
The proposed DIFC Foundations Law also provides for the creation of a foundation to hold property for charitable objects. For a charitable foundation to be valid, a Guardian must be appointed to oversee the charitable objects.
The manner in which to create charitable trusts and foundations is as detailed above.
Charitable trusts are common in New Zealand. They are governed by the Charitable Trusts Act 1975 and the Charities Act 2005, and they are tax exempt in New Zealand. A charitable trust can be either society or trust based, the main difference being that a society-based trust must have a minimum 5 people on its board and a set of rules or constitution under which it operates.
The definition of charitable purpose is broad; a charitable trust can be established to aid in the relief of poverty, the advancement of education or religion, or any other matter for public benefit. Charitable trusts must be registered with the Companies Office, and the trustees must apply to the IRD for the tax exemption.
Under Monegasque law, a charity may be created in Monaco in the form of an association (Law 1.355 of 23 December 2008) or a foundation (Law 56 of 29 January 1922).