Most families give long before they structure anything. A transfer here, a pledge there, a building named after a grandparent. It works while the giving is small and while one person decides. It stops working the moment the amounts become material, the moment a second generation wants a say, or the moment someone asks the obvious question of who exactly owns the money that has already been promised away.
At that point the family is no longer making gifts. It is running a small institution, and an institution needs a legal form. In the Netherlands that form is almost always the stichting, the foundation. Understanding what it is, and just as importantly what it is not, is the difference between philanthropy that survives the founder and philanthropy that becomes a dispute.
The moment giving stops being a personal decision
The trigger is rarely generosity. It is usually continuity. A founder who has been writing cheques for fifteen years starts to wonder what happens when he no longer signs them. A family that sold an operating business finds itself with a sum earmarked for causes and no mechanism to spend it over decades rather than years. A next generation asks to be involved and discovers there is nothing to be involved in.
The second trigger is scrutiny. Once the giving is visible, recipients ask questions. Universities want to know whether a pledge is binding on the estate. Hospitals want a counterparty that will still exist in ten years. Co funders want governance they can rely on. A private individual, however wealthy, is a fragile counterparty for a twenty year commitment.
The third trigger is separation. Money that has been promised to charity should not sit in the same account as money that pays for the family’s holdings, its lifestyle, and its tax bills. Once it is mixed, every decision about the operating wealth touches the philanthropic wealth, and every creditor of the family is, in principle, a creditor of the giving.
What a stichting actually is under Dutch law
The Dutch foundation is defined in Book 2 of the Burgerlijk Wetboek. Article 2:285 describes a stichting as a legal person, created by a legal act, which has no members and which aims to realise a purpose stated in its articles with capital set aside for that purpose. That single clause carries most of the consequences. There are no shareholders, no members, no general meeting, and therefore no one who owns it. The foundation owns itself and is directed by its board, and article 2:5 places it, like any legal person, on the same footing as a natural person in matters of property law, unless the law provides otherwise.
Article 2:286 requires incorporation by notarial deed, and that deed contains the articles of association, which must cover at least the matters the article lists, among them the purpose and the way board members are appointed and dismissed. The notary is not a formality. The same article makes him responsible for ensuring that the articles contain what that article requires, and personally liable to anyone who suffers loss if they do not. Because the Wet ter voorkoming van witwassen en financieren van terrorisme, the Wwft, applies to a notary who assists in setting up a legal person, he must also identify his client and verify that identity. The resulting deed is the document that every bank, every co funder and every tax inspector will read first. A vague purpose clause drafted quickly at incorporation is the most common defect we see, and it is expensive to repair later.
The absence of ownership is what makes the vehicle useful and what makes families uncomfortable. A founder who transfers capital into a stichting has genuinely parted with it. He may sit on the board, he may shape the policy, but he cannot take it back, and any structure that quietly gives him a way to take it back undermines the entire arrangement.
The line between a foundation and a vehicle with a profit motive
A stichting is not prohibited from earning money. It can hold investments, receive dividends, own property and even run an enterprise. What it cannot do is distribute the result to the people behind it. Under article 2:285(3) of the Civil Code, the purpose of a foundation may not include making payments to its founders or to those who form part of its organs, and payments to others are permitted only where they have an idealistic or social character.
This is the real dividing line, and it is not about activity but about destination. A commercial company measures itself by what it returns to its owners. A foundation measures itself by what it applies to its purpose. Two entities can hold the same portfolio and be entirely different animals depending on where the money is allowed to go.
Families sometimes want the foundation to do double duty, holding shares in the operating group as well as pursuing the charitable purpose. That combination exists in Dutch practice, but it should be a deliberate choice with its own documentation, not a convenience. A foundation that is simultaneously a control vehicle for a business and a giving vehicle for a family will be read by outsiders as whichever of the two is least flattering.
Governance when there is no owner to appoint the board
Because there are no members, the articles must answer a question that in a company answers itself. Who appoints the board, who removes it, and what happens when the founding generation is gone. Article 2:286 requires the articles to state how board members are appointed and dismissed, but it leaves the answer to the founders. If the deed says only that the board appoints its own successors, the foundation becomes a closed circle within one generation, and the family loses the influence it assumed it had kept.
Well drafted articles usually separate three functions. There is a board that decides and executes. There is a supervisory layer, which article 2:292a allows the articles to create as a supervisory board, or a council with the power to appoint and remove board members. And there is a family body, often informal, that holds no legal power but is consulted on the direction of the giving. Keeping those roles distinct is what prevents a family argument from becoming a governance crisis.
Conflicts of interest deserve their own clause. Board members who are also family members will at some point face a grant to an institution where a relative sits on the board, or a supplier owned by the family. Article 2:291(6) already bars a board member with a direct or indirect personal interest that conflicts with the interest of the foundation from taking part in the deliberation and the decision, and it says who decides when the board is then unable to. The clause to write builds on that rule: such situations are not forbidden, but they are declared, recorded, and decided without the interested person.
The Dutch legislature tightened the governance of foundations with the Wet bestuur en toezicht rechtspersonen. In the text of Book 2 in force since 1 July 2021, among other changes, the articles of a foundation incorporated since then, and of an earlier one from the first amendment of its articles after that date, must provide for the case in which all board members are absent or unable to act, the conflict rule described above applies to foundations, and the articles may create a supervisory board with its own statutory tasks. The same law rewrote article 2:300a of the Civil Code, which since that date applies the bankruptcy liability of article 2:138 to the board members of every foundation, and no longer only to foundations subject to corporate income tax: if the foundation goes bankrupt, each board member is jointly and severally liable to the estate for the debts that the liquidation of the remaining assets cannot cover, where the board has manifestly failed to perform its duties properly in the three years before the bankruptcy and it is plausible that this was an important cause of the bankruptcy, unless he proves that the improper performance by the board is not attributable to him and that he was not negligent in taking measures to avert the consequences; for this liability, article 2:138(7) treats anyone who has determined or helped determine the foundation’s policy as if he were a board member, and that paragraph excludes the claim against certain persons appointed by a court. Article 2:9, which applies to the board members of every legal person, a foundation included, makes each of them liable towards the legal person in full for improper management, unless no serious reproach can be made to him, having regard also to the tasks assigned to others, and he was not negligent in taking measures to avert the consequences; article 2:300a(3) applies both liabilities, with adaptations, to the members of a foundation’s supervisory board. Board membership in a stichting is a real office with real exposure, and family members should accept it knowing that.
Keeping the philanthropic capital away from the operating wealth
Separation is not achieved by intention. It is achieved by three practical things: distinct bank accounts, distinct bookkeeping, and a documented transfer of the capital. A foundation that is funded by ad hoc payments from the family holding whenever a grant falls due has not separated anything. It is a payment agent with a notarial deed.
The cleaner approach is to endow the foundation once, or in a defined series of tranches, and to let it live off that capital and its return. This forces the family to answer at the outset how much of the wealth is genuinely dedicated to giving. It is an uncomfortable conversation and it is far cheaper to have it while the founder is alive than to leave it to an estate.
Endowment also changes the tax analysis, the reporting, and the investment policy. A foundation with permanent capital needs an investment mandate of its own, a spending rule, and someone accountable for both. Where a family office already exists, this work usually sits there, provided the file is kept visibly separate from the family’s own portfolio.
ANBI status and what the Belastingdienst asks in return
Most families want the foundation recognised as an ANBI, the Dutch status for institutions serving the public benefit, which article 5b of the Algemene wet inzake rijksbelastingen reserves for an institution that pursues the public benefit exclusively or almost exclusively. The conditions are published by the Belastingdienst and they are more demanding than families expect. The institution must be entirely directed at the public benefit, and nearly all of its activities, which the Belastingdienst expresses as ninety per cent, must serve the general interest.
Three further conditions do most of the work in practice. No natural or legal person may dispose of the assets of the institution as if they were his own, which rules out a foundation that is in substance one person’s wallet. The remuneration of the members of the body that sets policy, in practice the board, is limited, for the work they do for the institution in that capacity, to reimbursement of expenses and an attendance fee that is not excessive. And the institution must publish specified information on a website, its own or a shared one, which for a private family is often the first moment their giving becomes public.
Among the other conditions, set out in article 1a of the Uitvoeringsregeling Algemene wet inzake rijksbelastingen 1994, are rules on the relationship between administrative costs and actual spending, on holding no more capital than is reasonably necessary for the continuity of the planned work for the purpose, on maintaining a current policy plan, and on where any surplus goes when the foundation is wound up, which must be an ANBI or a foreign institution that likewise pursues the public benefit exclusively or almost exclusively, in both cases with a similar purpose where the foundation is a cultural institution within the meaning of article 1d of that regulation. Article 1b of the same regulation, which sets the capital limit, counts as necessary, among other things, capital received by gift or bequest on condition that it be preserved. These are exactly the conditions that a dormant foundation fails, and status is not granted once and forgotten: article 5b requires the inspector to withdraw it, by a decision open to objection, from the moment the institution no longer meets them.
What it takes to keep the foundation alive year after year
The recurring obligations are modest in cost and unforgiving in discipline. The board must keep proper records, and article 2:10 of the Civil Code requires books and records to be retained for seven years. Registration details at the Kamer van Koophandel must be kept current: the Handelsregisterwet 2007 places the filing duty on each board member and requires the filings needed to keep the registered data correct and complete at all times, and the Handelsregisterbesluit 2008 lists what is recorded for a foundation, including its board members, the members of any supervisory body and the persons authorised to represent it. Beneficial ownership information must be maintained under the Dutch anti money laundering framework, which covers foundations as well as companies: article 10b of the Wwft requires the foundation to obtain and hold adequate, accurate and current information on who its beneficial owners are.
Then there is the substantive obligation, which no filing captures. The foundation must actually pursue its purpose. A foundation that receives capital, invests it, and grants nothing for several years invites the conclusion that the purpose is nominal. Where ANBI status is in place, the requirement to hold no more capital than is reasonably necessary for the continuity of the planned work makes prolonged accumulation a genuine risk to the status.
The annual cycle we recommend is simple. One board meeting that approves the accounts, one that sets the grant programme, a written policy plan reviewed each year, and a website page updated at the same time as the accounts. It takes a day of work and it is the entire difference between a foundation that survives an inspection and one that does not.
The suspicion a foundation has to live with
Philanthropic vehicles sit close, in the public mind, to avoidance vehicles. Some of that suspicion is earned. A foundation that holds the family’s assets, grants almost nothing, employs relatives, and publishes the minimum is indistinguishable from a shelter, and it will eventually be treated as one by a tax authority, a bank, or a journalist.
The defence is not secrecy. It is the ordinary evidence of an institution doing what it says: minutes that record real deliberation, grants that go to unrelated recipients, a spending rate that bears a sensible relationship to the capital, and a board that includes at least one person who is not a family member and is willing to disagree.
Families who accept that discipline get something in return that is worth more than the tax treatment. They get a structure that outlives the founder, that gives the next generation a defined role with defined limits, and that lets the family say no to a request without saying no personally. The foundation is not a wrapper around the giving. Properly built, it is the thing that makes the giving durable.
This article is informational and does not constitute tax, legal or investment advice. Each engagement is subject to scope and applicable regulation.