Feasibility Study on the European Foundation Statute

The Feasibility Study was prepared during 2008 by experts from the Max Planck Institute for Comparative and International Private Law and the Centre for Social Investment at the University of Heidelberg.

The Feasibility study on the European Foundation Statute

EFC comments on the study

Key findings

The European foundation sector is a major economic force and makes significant contributions to the public good of Europe.
The public benefit foundation is the only type of foundation which is accepted in every Member State and in practice public benefit foundations are the most important foundation type.
In the 27 Member States considerable regulatory differences can be found. However, as regards the public benefit foundations there are also important similarities which overall are more substantial than the remaining differences.
There are legal barriers to cross-border activities of foundations of the Member States both in civil law and in tax law. As in company law, most of the barriers can be overcome, but this leads to compliance costs which will often be higher than they would be in company law, given that the legal and personal environments vary (foundation and tax laws of the Member States seem to have more legal uncertainties inter alia because of much less case law and fewer specialised lawyers, and because board members of foundations may be less experienced in legal issues).
The calculable cost of barriers against cross-border activities of European foundations ranges from an estimated €90,000,000 to €101,700,000 per year. Additionally, there are incalculable costs (costs of foundation seat transfer, costs of reduplication, psychological costs, costs of failure, etc.) which are certainly higher.
Five policy options emerge for addressing cross-border barriers and thereby stimulating foundation activities. These policy options differ substantially in terms of their cost effects as well as in their legislative and administrative implications. In comparing the various models, the European Foundation Statute seems to suggest itself as the preferable policy option.
Apart from the reduction of the costs for cross-border activities, a possible European Foundation Statute would have further positive effects on the general governance of foundations and trusts; on the behaviour of donors and giving; on the corporate sector; and on the European economy, especially in the field of R&D.