Can companies also found non-profit organizations?
April 1, 2024 | 60,00 EUR | answered by Siegfried Eckstein
Dear tax advisor,
I have a question regarding non-profit status and the founding of an association. My name is Eiko Michels and I am the managing director of a company. We would like to establish a non-profit association to support social projects and engage in social activities. Is it even possible for companies to establish non-profit associations?
Background information: Our company has been socially engaged and has conducted fundraising activities for some time now. We would like to consolidate and structure these activities by establishing a non-profit association. This association should operate independently, but also collaborate closely with our company.
Current situation: We have already taken initial steps towards founding the association, but we are unsure if it is legally permissible for a company to establish a non-profit association. We want to ensure that we comply with all legal requirements and do not jeopardize the non-profit status of the association.
My concerns: I am worried that we might make mistakes during the founding of the association and that this could question its non-profit status. It is important to us that we act transparently and correctly in order to be able to take advantage of tax benefits.
Possible solutions: What legal requirements must be met for a company to establish a non-profit association? Are there any special considerations or restrictions we need to be aware of? How can we ensure that the association operates independently but still has a close connection to our company?
Thank you in advance for your support and advice.
Sincerely,
Eiko Michels
Dear Mr. Michels,
Thank you for your question regarding the topic of charitable status and founding a association. It is generally possible for companies to establish a charitable association in order to support social projects and engage in societal activities. However, certain legal requirements must be met in order to ensure the charitable status of the association.
First and foremost, it is important to know that a charitable association must be recognized as a corporation under public law according to German tax regulations in order to benefit from tax advantages. The association must exclusively and directly pursue charitable, benevolent, or religious purposes. This means that the activities of the association must be aimed at serving the general public and should not primarily focus on commercial operations.
When a company establishes a charitable association, certain specifics must be taken into consideration. Firstly, the company should ensure that the association's statutes clearly define the charitable purposes to be pursued and how the cooperation between the association and the company is regulated. It is important for the association to operate independently and not be seen as a mere tool of the company to gain tax advantages.
Additionally, the founding members of the association must ensure that they are volunteering and not benefiting personally from the association's work. The financial resources of the association should also be transparent and accountable in order to avoid accusations of misusing funds for personal purposes.
To ensure that the association does not jeopardize its charitable status, I recommend seeking advice from an experienced tax advisor who is knowledgeable about association taxation. A tax advisor can help you comply with all legal requirements and avoid potential mistakes during the founding of the association.
I hope this information is helpful to you and wish you success in founding your charitable association.
Best regards,
Siegfried Eckstein
