Foundations, endowment funds and associations, what's the difference ?

The legal status of your foundation can take several forms: donor-advised fund, corporate foundation, foundation of public interest, endowment fund or association. Here, we present some of their administrative and fiscal characteristics.

The French foundation family

Foundations of public interest

Created by natural or legal persons, they are submitted to a complex procedure that involves input from the French Ministry of the Interior as well as the Council of State. They require a minimum capital outlay of 1.5 million euros.

In France, foundations attract more favorable tax deductions than those afforded by an association of public interest. In addition to a decrease in income tax equal to 66% of the amount of the donation, donors may also deduct 75% of their donation from their real estate wealth tax, up to a maximum of 50,000 euros and 60% from corporate tax.

Corporate foundations

Whatever the status of your company: civil or commercial companies, industrial and commercial public establishments, cooperatives and insurance companies – corporate foundations are legal persons in their own right and they are set up for a minimum period of five years. They are not authorized to receive donations or bequests outside the corporate support provided by the company and its staff. The total monetary value of  their work programs over several years must be in excess of 150,000 euros.

Donor-advised funds

A donor-advised fund operates within a sheltering foundation. The latter undertakes all procedures from creation to the management of accounting, financial and legal matters. The founder is able to focus fully on the cause and projects they are passionate about, with a high degree of autonomy, while benefiting from the sheltering foundation’s image and brand.

In France, when a sheltering foundation is recognized as being of public interest, it automatically attributes the right to benefit from tax deductions on both income and real estate wealth tax. In practice: 66% for income tax, 75% for real estate wealth tax and 60% for corporate tax may be deducted by donors liable for these taxes.

Donor-advised funds are also authorized to receive bequests and may be created via a testament.

All about endowment funds

Endowment funds require initial outlay of 15,000 euros and the statutes of the fund to be registered with the préfecture (local administrative authority). Founders must undertake to create the fund then manage its administration and accounts themselves. They are legally and fiscally liable and must ensure that the projects it supports are duly eligible as regards public interest. Concerning real estate wealth tax, donations to an endowment fund attract no tax deduction.

Foundations and associations, what’s the difference?

French nonprofits include a range of entities including associations and foundations, such as donor-advised funds and endowment funds. An association is an association of individuals pursuing the same goal. Foundations are created by an irrevocable funding commitment from their founders.

Nonetheless, associations and foundations are closely related: very often, foundations fund initiatives led by associations. In supporting them financially, foundations provide associations the power to act on the ground.

ASSOCIATION		FOUNDATION
“Association of individuals with a not-for-profit purpose”	Nature	“Irrevocable allocation of assets to achieve a not-for-profit public interest purpose”
May further the interests of a restricted group or serve the public interest	Purpose	Necessarily dedicated to the public interest
May not outlive its members	Duration	May outlive its founders
The General Meeting is governed by democratic principles	Governance	No General Meeting (Board of Directors and specialist expert committees)