Creating a foundation: private or public utility, step by step

A legal entity without members

A foundation dedicates assets to a disinterested purpose. It has no members. One or more founders transfer property to it, and a board of directors then manages that property. Book 11 of the Code of Companies and Associations (CCA) governs this legal form.

The difference from a non-profit association therefore lies in its structure. An association brings people together around a project. A foundation, by contrast, starts from assets that serve a cause. Like an association, it grants no financial benefit to its founders or directors, except within its purpose.

Private or public utility foundation?

The CCA offers two models. Your choice depends on the project and on the level of oversight you accept.

The private model

The private foundation remains the most accessible form. One founder is enough, whether a natural person or a legal entity. The law sets no minimum assets. This foundation comes into being through a notarial deed or a will. It acquires legal personality once the filing at the enterprise court registry takes place.

Its uses vary widely. For example, a family can support a social cause over the long term. A collector can also preserve a collection after death. Finally, some private foundations hold the shares of a family business to keep it united.

The public utility model

A public utility foundation pursues a purpose of general interest. Examples include philanthropic, scientific, artistic or cultural work. Recognition requires a royal decree, following an application to the FPS Justice. This status strengthens credibility with donors. However, formalities and oversight increase.

How to set up a foundation, step by step

The process follows a simple order.

At filing, the foundation receives its enterprise number in the Crossroads Bank for Enterprises (CBE). Next, it records its beneficial owners in the UBO register. Our article on publication in the Gazette explains this step. You can also browse notices on the Moniteur belge website.

What the articles contain

Among other points, the articles cover:

• the identity of the founder or founders.
• the name and the registered office.
• the disinterested purpose and the activities that make up its object.
• the composition, appointment and powers of the board.
• the conditions for amending the articles.
• what happens to the assets on dissolution.

Pay particular attention to the amendment rules. With no members' meeting, nobody can easily adapt articles that prove too rigid.

The board of directors

The board runs the foundation day to day. The articles set its composition and how members join it. The founder may sit on the board but gains no personal benefit. Also plan the succession of directors, since a foundation often outlives its founders.

Directors remain liable for their mistakes. To gauge that risk, read our guide on directors' liability.

Tax and donations

In principle, the foundation falls under legal entity tax. However, it switches to corporate tax if it mainly carries out profit-making operations. In addition, a tax in lieu of inheritance duties of 0.17% applies once its assets exceed €25,000.

Donors can obtain a 45% tax reduction. This requires a gift of at least €40 per year to an approved institution. The foundation must therefore hold that approval before promising the benefit. The conditions appear on the FPS Finance website.

Duties after creation

Like an association, a foundation keeps accounts suited to its size. Small entities may keep simplified accounts. Above the criteria set by the CCA, double-entry bookkeeping becomes mandatory. Large foundations then file their annual accounts with the NBB. Every year, the board also approves the accounts and the budget. Read more on filing annual accounts.

Common mistakes

• Providing too few assets for the stated purpose.
• Drafting articles that nobody can amend.
• Promising tax-deductible gifts without approval.
• Mixing the founder's property with the foundation's assets.
• Forgetting the UBO register after filing.
• Choosing the foundation while the project relies on active members.

Take a worked example, purely for illustration. A founder contributes €10,000 to fund student grants every year. That capital may run out quickly. In that case, narrow the purpose or plan regular contributions.

Foundation or non-profit association?

Choose an association if the project relies on members. It needs two founders and private articles. Choose a foundation instead if assets must serve a cause over time. One founder is enough, but you need a notarial deed or a will. To compare, read our guide to setting up a non-profit.

To sum up

A foundation puts assets at the service of a purpose, with no members and no profit sharing. The private model suits family or discreet philanthropic projects. The public utility model serves general-interest causes that a royal decree recognises. In both cases, well-designed articles prevent lasting deadlocks.

Budgeting for your foundation? Juristelo helps you build a multi-year financial plan, so that you can check whether the assets will last.