A non-governmental organization (NGO) is a non-profit legal entity.

The Law on Non-Profit Legal Entities regulates the rules for the establishment, registration and operation of NGOs. An NGO can be one of these two types – an association or a foundation. It can be for public benefit or private benefit.

The Foundation is a non-profit legal entity that has no personal substrate, ie, unlike the association, it has no members. It is established by a unilateral constitutive act during life or in case of death. With this constituent document the property of the foundation is provided free of charge.  It uses it in accordance with the non-profit purpose for which it was established. In addition to the basic data about the foundation, the constitutive act should also contain the powers of its body / bodies, the provided property and the goals.

What are the bodies of the foundation?

Each foundation must have at least one body – a board of directors. The Management Board may be individual or collective. There is no requirement for how many people can be appointed to the board. Other bodies may be provided for and established by the memorandum of association, only at the request of the founder.

NB! If your foundation is designated to carry out a public benefit activity, it must have a collective supreme body and a governing board. Collective bodies are obliged to keep books of the minutes of their meetings. A public benefit NGO must also prepare a report on its activities once a year.

A feature of the foundation are the so-called reserved rights. They are determined freely by the founder and are used by him or a third party appointed by him. They may be related to the manner of carrying out the activity or determining the composition of the management body. In the event of the death of the person enjoying the reserved rights, the latter shall pass to the relevant body of the foundation.

The Foundation may carry out economic activity only if it is related to the subject of the main activity for which it is registered, and using the income to achieve the goals specified in the constitutive act.

How is an NGO (association or foundation) transformed and terminated?

Each NGO can be transformed from one type to another, merged, merged, separated and divided. However, a non-profit legal entity designated to carry out a public benefit activity CANNOT be transformed into a non-profit legal entity to carry out a private benefit activity. The termination of an NGO is carried out at:

  • expiration of the term for which it has been established;
  • by decision of the supreme body or
  • with a decision of the District Court at the seat of the NGO, when it has not been established by law or has been declared bankrupt.

Similar to commercial companies, upon termination of the NGO liquidation is carried out. When an NGO is liquidated, its assets are used, first and foremost, to satisfy creditors (ie to pay off all debts). And the property that remains after the liquidation is distributed according to the statute or the constitutive act, by decision of the supreme body or the liquidator. In case this cannot happen, the property becomes the property of the municipality at the seat of the NGO. The municipality, on the other hand, is obliged to use the received property for an activity as close as possible to the purpose of the terminated non-profit legal entity.

What is the procedure for registering a foundation?

  1. Once you have prepared the required documents, you should submit them to the District Court at the seat of your foundation. This can be done by the founder, a person authorized by him or a body of the foundation, as well as by the executor of the will, the heir or any of the persons who would benefit from the activities of the foundation, according to the founding act. The court then decides to enter the newly established foundation in the register of the District Court.
  2. If the NGO is established for public benefit , it should also be registered in a special public register with the Ministry of Justice. There, an application is submitted again, in which the implementation of a public benefit activity and regulations for its implementation must be proved.
  3. To establish the foundation, it is necessary to provide a grant. At the discretion of the founder, it may be movable property, incl. a sum of money, or real estate. Immovable property can be both a right of ownership over real estate and a limited real right. For example, the right to use a certain property for the needs of the foundation, the right to build in order to build a building for the needs of the foundation, etc. In these cases, the memorandum of association is also entered in the Property Register / Registry Office at the District Court at the location of the property.

How can you fund your foundation?

There are several options for funding a foundation:

  • By carrying out an economic activity that is related to the subject of the main activity for which the foundation is registered. The income from the activity must be used to achieve the goals defined in the constitutive act. For example: you create a foundation to help children left without a parent. The Christmas cards made and sold generate income that should be used only for its intended purpose – ie. to purchase clothes, shoes and books for these children or in any other appropriate way.
  • By recruiting sponsors and donors ;
  • Through Google AdGrants – for public benefit NGOs only. Google’s innovative program allows you, after applying, to receive a donation of $ 10,000 per month to advertise your site on search engines.
  • Through European funding.