A nonprofit organization (NGO)
, often referred to as a foundation
is an entity established for charitable purposes. By charity one means donations and support or funding. Foundations
are legal entities recognized by the international laws and can be public or private.
fall under the governance of the Civil Law and can only take the form of private autonomous NGOs
. The founder is the one deciding the purpose of the Italian foundation
. This type of entity is usually set up for non-commercial purposes, which is why it is not recognized by the Italian Company Act
What are the main characteristics of Italian foundations?
can be established by individuals or companies in Italy
, according to the law. Italian foundations
can only be supported by its founders, which is why they are considered closed structures, as they do not allow for the contribution of outside parties. Italian foundations
are allowed to appoint directors, who are usually nominated for life. The foundation must supervise the activity of its managers or directors at all times.
Some of the important characteristics of foundations in Italy are as follows:
- Legal status: a foundation is set up as a legal entity and it has complete financial autonomy;
- Set up: this type of structure can also be set up by a will; one of our agents who specialize in company formation in Italy can provide more details about this procedure;
- Management: the foundation is subject to certain requirements in terms of administration and representation.
- Mandatory requirements: the foundation is required to have assets that are fundamentally dedicated to specific purposes.
How can entrepreneurs set up a foundation in Italy?
The most important thing to know is that there are no minimum capital requirements to open a foundation in Italy, however the funds must be sufficient for the NOG’s purposes. Italian foundations can be established by drafting a document called statutes of the foundation or organization. These documents must be attested by a notary. The Italian foundation’s statutes must contain the following:
In essence, the bylaws for the foundation, or its statutes, contain the rules and regulations for this entity. A second document, the endowment act, will be drafted in order to dispose of assets for allocation to the foundation. The foundation deed is a unilateral document that contains the will of the founder.
The founder must also give a written declaration of intention in which they will state the purpose of the NGO. In order to be legally recognized, the Italian foundation must be registered with the regional authority of the city it was established in. The foundation is also registered with the Tax Authority. Upon formation, the foundation is also required to request the recognition of the legal personality.
What are the main issues to consider when starting a foundation in Italy?
Opening a foundation in Italy can be viewed as a multi-step process, including one that will precede the actual formation and the registration with the authorities. During the preliminary procedures, the founders of the foundation will need to answer a number of important questions about the scope, the manner in which the capital will be donated and what the management structure of the foundation will be like. An example of the organizational structure of the foundation can include the following: the board of trustees, the investment committee, the allocations committee, the executive director or president and the departments for investments, administration, and grant-making.
Please note that this is only an example of the main elements in a foundation organizational structure. One of our agents who specialize in company formation in Italy can provide investors with more information on non-profit management examples and structuring as well as registering the entity.
Taxation and accounting requirements for foundations in Italy
The non-profit sector in Italy is subject to different taxation rules and the general framework that is in place for foundations, either as NGOs or other types, like community foundations, is generally advantageous from a taxation point of view. The law distinguishes between third-sector organizations as opposed to the other business forms that can be selected by an investor who wishes to open a company in Italy. These organizations are clearly defined as ones that pursue civic purposes or social utility purposes, without having the intention to derive profit from these activities. In general, these organizations carry out activities of general interest.
The corporate income tax (IRES) for non-profit organizations is 12% in Italy, compared to the regular 24% applicable to investors who open a company in Italy in different other business sectors.
All of these organizations are required to follow accounting rules and need to prepare the financial statements in accordance with the law in force that also applies to other types of companies.
Foundations in Italy facts and figures
Our team of agents who specialize in company formation in Italy presents the following numbers applicable to community foundations in the country (that have responded to a survey which took place in 2017).
• there were 20 foundations of ouf those analyzed which were involved in charity work, dedicated to aiding poverty.
• 19 community foundations were involved in education and training activities; 19 foundations are also involved in social services, art, culture and the protection of artistic heritage.
• 21 foundations were offering their services to children and youth.
According to the same source, for some foundations, the number of donors contributing to the cause can be greater in the first year of establishment. The cumulative amounts that have been granted to the community foundations that responded to the survey until the end of 2016 were more than 244 million Euros.
Please keep in mind that these numbers are based on a survey conducted on Italian community foundations. The study was conducted by Assisfero
- the national membership association of Italian grant-making foundations and private institutional philanthropy.
A foundation can be registered in order to serve one or more fields of intervention as well as to have one or more types of beneficiaries. Investors or philanthropists who wish to register a foundation in Italy can reach out to one of our agents. Those who are interested can also contact us
if they wish to open a company in Italy