The law that sets forth the legal status of the foundation is Ordinance 26/2000. The foundation is formed by one or two persons that, based on a legal document, establish dedicated assets, permanently and irrevocably, to a purpose that would serve general interest or a community.
The assets required for the establishment of the foundation should include contributions in kind and in cash, whose total value should be at least 100 times the national minimum wage as of the date of the establishment of the foundation (i.e. in Romania, the national minimum wage is 1.250 Romanian lei), except for foundations whose exclusive scope is raisings funds that will be made available to other associations or foundations for programmes carried out by the latter; in this case, the assets required for the establishment of the foundation may have a total value of at least 20 times the national minimum wage.
The contributions of the founding members are nonreturnable; the assets are dedicated for the fulfillment of the foundation’s scope. The scope of the foundation, prefigured as non-patrimonial, is also the object of activity of the foundation and the key-element of the legal document for the establishment of a foundation.
The bodies of the foundation are:
- The Board of Directors – at least 3 members;
- The auditor/Board of auditors - an even number of members.
The scope of the foundation is:
The scope of a foundation must be altruistic, determined, legal and permanent.
Foundations cannot be established for the benefit of their founding members, even if that benefit is non-patrimonial.
Contents of the Memorandum:
- identification details of the founding member(s); name or company name and their residence or registered seat, as the case may be;
- the scope of the foundation;
- the name of the foundation;
- the registered seat of the foundation ;
- the duration of the foundation - fixed-term (in this case the duration must be stipulated) or indefinite, as the case may be;
- the initial assets of the foundation;
- the names of the members of the foundation's initial management, administration or control bodies or the rules for appointing the members of these bodies;
- the person or persons delegated to carry out the procedures for acquiring legal personality;
The main difference between the Memorandum and the Articles of Association is that, while the Memorandum expresses the will of the founding members (natural persons or legal entities), the Articles of Association determine the framework of the foundation’s future activity.
- it is a solemn document and its authentication by the notary public is mandatory.
Contents of the Articles of Association:
- it will be drawn up and authenticated by the notary public;
- it includes the elements of the Memorandum (except for the persons delegated to carry out the procedures for acquiring legal personality and names of the members of the foundation's first management bodies)
- the presentation of the foundation’s scope and objectives;
- a classification of the patrimonial resources;
- the attributions of the foundation's management, administration and control bodies;
- the procedure regarding the appointment or change of members of the foundation’s management, administration and control bodies, during its existence;
- the destination for the foundation’s assets in case of dissolution.
Revenues of the foundation:
Even if foundations are non-lucrative legal entities, they still need patrimonial resources in order to fulfill the purpose for which they have been established.
According to art. 15 par. (1) lett. d) of the Romanian Fiscal Code, foundations are exempted from paying corporate tax, whereas art. 15 par. (2) includes in the category of patrimonial revenues of nonprofit organizations resources derived from:
- a) contributions in kind and cash from members and supporters;
- b) registration taxes, as established by the legislation in force;
- c) revenues obtained from sports visas, taxes and penalties, as well as revenues derived from attending sports competitions and demonstrations;
- d) donations and money or goods received through sponsorships;
- e) dividends and interests obtained after placing liquid assets which are derived from revenues exempted from taxes;
- f) revenues for which the tax on artistic performances is due;
- g) revenues derived from public funds or from nonreturnable funding;
- h) revenues derived from occasional activities such as: fundraisings that have an attendance fee, celebrations, raffles, conferences, which are used for social or professional purposes, according to their status ;
- i) exceptional revenues derived from the transfer of tangible assets owned by nonprofit organizations, others than those that are or have been used in economic activities;
- j) revenues deriving from publicity and advertising, which were obtained by nonprofit organizations of public utility, from areas such as culture, scientific research, education, sports, health, as well as chambers of commerce and industry, unions and associations of business owners (in accordance with the legislation regarding the establishment and the operational rules of these organizations).
- k) sums that were received following the non-compliance of the conditions on which the donation/sponsorship was made, according to the law, on the condition that these sums be used by nonprofit organizations this year or in the following years in order to fulfill their scope and objectives, according to their Memorandum or Articles of Association, as the case may be;
- l) revenues derived from indemnities paid by insurance companies for the damages of the organization’s tangible assets, other than those which are used in economic activities;
- m) sums received from the income tax owed by natural persons, according to the provisions of Title III.
The dissolution of the foundation:
Following its dissolution, the non-lucrative legal entity will be liquidated as of right.
Even though the provisions of art. 6 of Ordinance No. 26/2000 stipulate that the Memorandum is null and void if there are no mentions regarding the destination of the assets in case of dissolution, art. 60 offer the court the possibility of distributing these assets to other legal entities that have the same scope and, in some situations, the possibility of approving their takeover by the local or state budget.
The remaining assets following the liquidation cannot be transferred to natural persons!!
The remaining assets following the liquidation can only be transferred to private or public legal entities that have the same scope or a similar one, through a procedure stipulated by the Articles of Association of the foundation or of the organization.