Start your application
Start your application


Foundations are best known for the countless organizations that use this legal form to raise money for charities. This does not do justice to this legal form. A foundation is indeed intended to achieve a certain goal, but that does not necessarily have to be a good goal. Societal and social goals are also often housed in foundations. It is crucial that the organizations behind it have no profit motive. There is also the persistent prejudice surrounding foundations that they are suitable for obtaining all kinds of financial advantages through vague constructions.

Purpose of a foundation

It is legally established that a foundation must define a goal that it tries to achieve. This is stated in the legal provisions, which prescribe how a foundation must act. The purpose may not include distributions to the initiators of the foundation or to the board members. Distributions may only be made to entities that use that money to achieve the foundation's purpose. As a result, the foundation is not suitable as a legal form for companies and companies. Because if profit is achieved through the activities of the foundation, it may not be distributed to the owners of that foundation.

Other features

The board of a foundation is authorized to make independent decisions. In fact, it is even illegal for a foundation to have members. This in itself is positive, because when members have to be consulted when making decisions, as is the case with an association, this often causes delays. The Netherlands has quite a few foundations, about 150,000. In addition to the charities mentioned, there are many foundations with social or social causes. For example, there are foundations for museums, hospitals, sports clubs, and foundations that support healthcare, for example to financially support research into the cure of serious illnesses.

establish foundation

Establishing a foundation is an official event. You must declare in a notarial deed that you are establishing the foundation. The articles of association are part of the deed. It contains the name of the foundation, the place of establishment, the purpose, what the procedures are to appoint and dismiss board members, etc. After the foundation of the foundation and the drawing up of the notarial deed, the foundation must be registered in the Trade register at the Chamber of Commerce . That is also mandatory. A foundation can be established by one or more persons, but also by a legal person. This means that a private company can also set up a foundation.

Organization of a foundation

The most important organ of a foundation is the board. This often consists of a chairman, treasurer and secretary, sometimes supplemented by a number of general board members. If there is a supervisory board, it supervises the management. A foundation with the status of Algemeen Nut Beoogde Instelling (ANBI) is not allowed to employ directors. Other foundations are allowed to do so, although it does not happen very often. It is legally permitted for a foundation to hire personnel. A foundation can have a company to generate money. The profits that this company makes may only be used for the purpose of the foundation.

Operation of a foundation

Directors of a foundation have several options for raising money to achieve the foundation's goal. A very well-known way is to raise money through donations. Many charities make use of this. There are also foundations that focus on obtaining money from grants. The last possibility has already been mentioned: setting up a company within the foundation. The profit of the company then goes entirely to the purpose of the foundation and may not be distributed to the founders or board members.

Unless otherwise arranged, decisions in a foundation must be taken jointly by the board. However, it is also possible that one or more directors have special powers or are given permission to act individually on behalf of the foundation. This must always be recorded in the articles of association. For the rest, board members of a foundation have many liberties. As long as they adhere to the legal provisions and the statutes, they can go their own way. Sometimes there is a supervisory board that they have to take into account, but there are no members or shareholders to be accountable to.

Dissolve foundation

In principle, a foundation can be dissolved by two authorities: the board and the court. If the board wants to dissolve a foundation, this can easily be done by means of a board decision. When the court dissolves a foundation, it often has to do with the purpose. There are three arguments why a court can decide to dissolve the foundation. First, when the goal has been achieved. The foundation then no longer has a right to exist. Second, if it is unlikely that the goal will ever be achieved. A third reason is that the goal is no longer relevant and changing the goal is not an option.

Other reasons for closing a foundation have to do with violations of the applicable norms and values. This may be the case if the goals of the foundation are not in accordance with morality or public order. Even if profit distributions have been made to board members, the court can decide to dissolve the foundation. If not all, but only one of the board members has made a mistake, the foundation does not always have to be dissolved. In that case, the Public Prosecution Service or another interested party may request the court to dismiss this director for maladministration.

Dividing money after dissolution

If a foundation is dissolved by the board or the court, there is a chance that money remains or that there are debts. In that case, it will act as stated in the articles of association. After all, it is a legal obligation to lay down in the articles of association when the foundation is established how to deal with the remaining balance if the foundation is dissolved. One possibility is that any remaining money will go to a specific organization. It is also possible that the articles of association only provide guidelines on how to determine where that money is going.


It is a persistent misunderstanding that the foundation as a legal form offers all kinds of possibilities to obtain financial advantages through complicated legal constructions. In practice, this turns out to be very difficult, because all the money that comes in may only be spent on the charitable purpose of the foundation. Profit distributions to others are not allowed. What is allowed is to pay wages to employees of a foundation. The foundation, or the board, has the exclusive right to determine the amount of the salary. In the past, this has resulted in directors of charities receiving very high salaries.

It is not a bad thing from a legal point of view that an employee of a foundation is well paid, as long as this is not part of the purpose of the foundation. In that context there is another construction that is applied. This concerns a foundation whose purpose is to acquire voting rights from an NV or BV . As a result, that voting right is not in the hands of those who receive the dividend. The directors of the foundation are loyal to the management of the NV or BV. By influencing the voting right in this way, the management keeps control over their company. Recent legislative changes regarding voting rights per share have made this construction less effective.

Tax arrangements

A foundation without staff normally has nothing to do with the tax authorities, because they do not have to pay any tax at all. If the foundation has a company, that's a different story. Then corporation tax must be paid on the taxable profit. In that case, use can be made of some deductions, such as the investment deduction. This means that investments in operating assets may be deducted from the profit. As a result, the taxable profit and thus the level of corporation tax fall.

You can also use the option of arbitrarily depreciating company assets. This offers the opportunity to deduct a larger percentage of the investment in a business asset in a particular financial year, so that you pay less tax in that year. If the company invests in research into new products, you can in some cases make use of the Research and Development deduction. Agency and must give approval for this. If you have a foundation with employees, or if you pay the board members a salary, wage tax must be paid. As a director of the foundation, you are responsible for ensuring that this is passed on to the tax authorities.

Liability and social security

As a director who receives a salary for your work at a foundation, you pay wage tax. This means that you pay contributions for social insurance and can therefore also make use of employee insurance. If you do not receive a salary, you are not entitled to it. You would do well to insure yourself against incapacity for work. Because the foundation is a legal entity, you as a director are not personally liable for debts. This is the case if the foundation is not registered with the Chamber of Commerce. You cannot go unpunished in case of maladministration either. In that case, a judge can hold you personally liable as a director.

Advantages and disadvantages of a foundation

Although a foundation is not suitable as a legal form for a company, it is a nice legal construction that offers a number of advantages for non-profit organizations. No start-up capital is required, multiple directors can be involved, it is possible to hire staff and the directors have relatively limited liability. If the foundation has no employees and no company, no tax has to be paid. A disadvantage for you as a director is that if you do not receive a salary, you are not entitled to social insurance.

Difference between a foundation and an association

A foundation and an association are very similar. The most striking difference is that an association has members. Not a foundation. But there are more differences. It is wise to thoroughly investigate which legal form is most suitable for your organization. Before you know it, you are breaking the law without realizing it. Then it is a complicated and expensive matter to have your foundation converted into an association or vice versa afterwards. That is why we list the most important differences point by point here.

  • A foundation must comply with a different part of the civil code than an association.
  • A foundation can only be set up through a notary and must be registered with the Chamber of Commerce. An association can choose whether they want to. If a notary is used, a formal association is created.
  • Liability with an association and a foundation is different for the directors.
  • A foundation and a formal association can inherit, own land and buildings. An association that is not formal is not allowed.
  • An association has members and a foundation does not. That is regulated by law.
  • As a board member of a foundation you are chosen by the board. Directors of an association are elected by the members.
  • The articles of association of a foundation can be changed by the board and by the court. The General Assembly of Members (GMM) is the designated body in a formal association to amend the statutes.
  • For a foundation, estates are an important source of income. If it concerns a foundation of public benefit (ANBI), it is exempt from inheritance and gift tax. This also applies to associations that are an institution promoting social interests.

Arranging financial matters

Money plays an important role in foundations. In particular, foundations for charities have large and very diverse flows of money. We work with people who go door to door to collect cash, with major TV campaigns where people can deposit money, and with donors. All those cash flows must be processed in an insightful and fast manner. It is good to be aware of this as the board of the foundation and to orientate yourself on the various providers of business accounts .


Good day!

I am Gabriel from I try to respond within 4 hours

Support Gabriel B.
× I have a question via WhatsApp