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What is the difference between associations and foundations?

26.05.2021.

A non-profit organization is an organization whose primary goal is not to generate income but to provide services that will meet the needs of society.

The most common type of non-profit organization is an association, and this includes foundations, religious communities, associations, cultural and artistic societies, etc.

A foundation, as well as an association, is a non-profit organization that has legal personality and as such is subject to legal regulations, ie foundations to the Law on Foundations, and associations to the Law on Associations.

The association is entered in the Register of Associations, and the foundation in the Register of Foundations.

The statute is the legal basis of the association which defines the goals, activities, financing, and other essential elements for its smooth operation, while the Foundation adopts the Act on the establishment of the foundation.

According to the Associations Act (OG 74/14), the definition of an association is that an association within the meaning of this Act is any form of free and voluntary association of several natural or legal persons who, in order to protect their benefits or advocate for human rights and freedoms, and nature and sustainable development, and for humanitarian, social, cultural, educational, scientific, sports, health, technical, informational, professional or other beliefs and goals that are not contrary to the Constitution and the law, and without the intention of gaining profit or other economically viable benefits, subject to the rules governing the structure and operation of that form of association.

On the other hand, according to the Law on Foundations and Foundations, which dates from 1995, a foundation is an asset intended to permanently serve a general benefit or charitable purpose, ie the income it acquires.

The association can be founded by at least three founders, both able-bodied natural persons and legal entities, both domestic and foreign. The founders can be only natural persons, only legal persons, or natural and legal persons together.

The Foundation may be established by a domestic or foreign natural or legal person (founder), as well as a city, state, but on the basis of a special Act.

In order for the association to operate and achieve its goals, it needs members who perform a certain activity and money for funding, while the management of the foundation needs people who will make decisions about granting grants and participate in the implementation of programs and assets.

The Foundation is not a member organization, has users, and may have supporters or donors while the association has members who pay or do not pay membership fees, and can be funded through donors, sponsors, or by providing services or selling their own products.

The most visible difference between the aforementioned non-profit organizations relates to the fact that a foundation cannot operate and function without assets, unlike an association.

 

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