Setting up a foundation (stichting) in the Netherlands
Setting up a foundation (stichting) in the Netherlands
If you notice a critical need for additional support on a community issue such as health, education, the environment, arts and culture, human services (such as poverty relief, food banks, homelessness), and animal welfare, that you are passionate and very knowledgeable about and you may consider setting up a foundation (stichting) in the Netherlands which is the most common form of non-profit in this country. .
A foundation is an organization with a social, societal or ideological purpose which does not aim to make a profit. However, a foundation may make a profit if it is used to achieve the foundation's purpose.
Here are the steps to register a foundation
Define your goal
Clearly state the social, societal, or ideological purpose of the charity, i.e. its mission. Conduct some research to ensure there is a genuine gap in current services that your organization would fill. Select a unique name that reflects your mission and check its availability within the Dutch Chamber of Commerce and potentially internationally if some of your services are provided abroad.
Recruit a board of directors
According to Dutch law, foundations only require one board member though it is advised to have at least 3 (chair, secretary and treasurer) in the early stages of the organization. Most trusts will require a board with 3 members to provide funding.
More than 3 members is legally acceptable and is a good idea when there are many specific areas of knowledge needed (financial, legal, recruitment and management of volunteers and potentially staff, communications) but beware that boards that are too large can have a slower decision-making process. An even number of board members could mean that there is a tie when voting about important changes in the organization. If a foundation decides to also appoint a supervisory board, they must officialize it in the articles of association (statuten).
Hire a civil-law notary
A notary is mandatory to draft the deed of formation and the statutes (articles of association), which detail how the foundation will operate. Setting up a foundation at a civil-law notary costs between €500 and €1,500 and the Chamber of Commerce registration costs €85.
Draft statutes
These must define the foundation's social purpose, the minimum number of times the board meets per year, how many board members are needed to approve a financial transaction, rules for appointing/dismissing directors, and what happens to assets if the foundation gets dissolved.
Register at your local chamber of commerce
Register the newly formed Stichting with the Netherlands Chamber of Commerce (KvK). Make sure to quickly report any changes in board members to the KVK and your bank.
Keep financial records
You will need a local Dutch address, even if virtual (via a service provider). The board must keep records and financial summaries which need to be kept for at least 7 years. The board makes an annual board report, a balance sheet, and a ‘statement of income and expenditure’ (‘staat van baten en lasten’, in Dutch). This must be done within 6 months of the end of the financial year. The financial year is the period covered by a financial report.
These statements list the foundation’s income and expenses for the past year. If the foundation has only a board, the board prepares and approves the annual documents. If there is a supervisory board in addition to the board, the articles of association may state that the supervisory board must approve the annual statements.
Banks do a background check to prevent fraud when a foundation registers for a bank account, and need to be informed about which board members have access to the bank account. This is usually more than the treasurer to allow some internal oversight and prevent fraud. It is a good idea to have a third back-up board member with this authorization if one of the standard board members like the chair person or treasurer are unavailable for several days and the transaction is urgent.
Understanding taxes
A foundation without commercial activities does not pay tax. If you also run a business and carry out commercial activities, your foundation usually pays corporate income tax (vennootschapsbelasting) on profits. In this context, a 'business' is any organisation running on capital and labour for the purpose of making profit through commercial activities and economic transactions. Any profits must be allocated to the foundation's cause or purpose. Not all foundations have to pay corporate income tax. Whether a foundation has to pay and charge VAT depends on its specific situation (in Dutch).
As a foundation, you can obtain a public benefit organisation status, or in Dutch Algemeen Nut Beogende Instelling (ANBI) status or Sociale Belang Behartende Instelling (SBBI) status. You will then be eligible for certain tax benefits. You can request an ANBI or SBBI status from the Netherlands Tax Administration.
Recruiting volunteers
Create volunteer vacancies which clearly describe the skills, tasks, location and time commitment expected fo reach volunteer role. Volunteer The Hague can help you recruit volunteers who speak other languages than Dutch whereas Den Haag Doet can assist you with recruiting Dutch-speaking volunteers in The Hague area.
Insuring your foundation
You can contract a director ;s liability insurance Directors’ liability insurance is intended for board members, directors, supervisors, and supervisory directors of organisations, foundations, and associations. This insurance protects all officials against claims for damages following an administrative error. And allows them not to be personally liable.
Hiring paid staff
Note that setting up a foundation is considered a form of volunteer work as board members cannot be remunerated. When a foundation grows and gets enough funding that specifically allows them to recruit staff, a foundation can employ people who are not part of the board of directors but this is not common in the starting phase of an organization. Most funding available through trust grants do not cover overhead nor salaries. Other sponsoring and fundraising need to be explored to raise unrestricted funds that can be allocated to these purposes. PEP Den Haag’s advisors can inform local foundations about fundraising opportunities.