What Happens if a Charity Cancels?

Sometimes the charity simply achieved its goal. Sometimes the drivers are deceased or they don’t feel like it anymore and nobody wants to take it over. In both cases, the result is that the charity ceases to exist. How exactly does such a cancellation work? What happens with the funds that are left? And do you have something to say about this as a donor?

Cancellation. A fairly theoretical scenario for large, (inter) nationally operating charities, because their reason for founding – children, nature, culture, illness, poverty – always remains valid. Moreover, new managers are constantly emerging in these types of organizations. But this is different for smaller, local charities. Consider, for example, a local animal shelter, whose initiators are getting too old and cannot find successors. Or to a foundation that supports the missionary work of a particular priest, and the priest in question dies. Anyway, it doesn’t hurt to zoom in on the process and the consequences of the termination of a charity.

Statutes

Who can make the decision to quit is in the charity’s statutes. For a foundation this is the board; the general members’ meeting at an association. The articles of association often also stipulate that the decision must be based on a certain quorum or an increased majority. For example: an x ​​percentage of the (board) members must be present in the board meeting or the general meeting and at least x percent of those present must vote in favor of the cancellation.

The next step is for the board to inform the outside world about the intended closure. It does this by sending a special form to the Chamber of Commerce, with the request to remove the foundation or association from the trade register. In this way, customers, suppliers and other stakeholders become aware of the approaching end of the charity and can take it into account.

Liquidation

The second phase of termination is liquidation. This means that the benefits and burdens of the charity are mapped and neatly distributed. Afterwards, the liquidator must inform the Chamber of Commerce that the liquidation has taken place and by whom the administration and archives of the liquidated charity are kept.

Those who must carry out the liquidation are also listed in the statutes. “This will often be the board, a court can also appoint a liquidator. The liquidator pays and collects outstanding invoices, sells the property and other assets, distributes the income among the creditors and prepares the latest annual accounts. If the charity ends with a negative balance, the liquidator writes to the creditors with the statement that the benefits are insufficient to pay off the debts. This procedure is very similar to the settlement of a negative estate or bankruptcy. “

But what is similar now? “It doesn’t have to be exactly the same goal,” says junior civil-law notary Heijnen. ‘As long as it is justifiable choice, based on substantive arguments. A hypothetical example: if diabetes is out of the world and other diabetes organizations do not pass the quality test, it is conceivable that the remaining money from the Diabetes Fund will go to an organization that pursues a different health objective. The charity does not have to be determined by the board until the cancellation. ” There is no official control body that oversees this choice, says Heijnen. “The Tax and Customs Administration will keep an eye on it, certainly when it comes to serious amounts.”

Participation

The good news is that directors of the dissolved foundation or association cannot simply take the money or the stuff that is left over with them or leave it behind. Notwithstanding, the donors have no influence on the decision to terminate and the search for a similar charity. ‘Donors have no legal position. Foundations and associations with an ANBI status are required to publish their financial documents annually. That way, the donors can keep a finger on the pulse. “

In short: given is given. “Donors don’t buy influence,” says Heijnen. ‘If someone wants to give a large amount or leave it to a charity, he can attach the desire or obligation to spend it in a certain way. But it is difficult to earmark money specifically for an event that may never or only take place much later. In this case: the cancellation of the charity. Charities are not allowed to hoard their money for too long. “

Objection

Donors and possible third parties – patient associations for example – can object if the abandoned charity leaves its money to an organization that they believe is ‘wrong’. “However, that will not be easy, because it can easily be explained that the beneficiary foundation or association serves a goal that is in line with the original goal.”

The association council also appoints the liquidators. They must offer the immovable property (the 105,000 hectares of nature managed by the association, monuments, offices, etc.) to the state, with the obligation to preserve the land as undamaged as possible and to bear any adverse balance of income and debts for its account. take. If the state refuses, the liquidators make the same proposal. A positive balance then also goes to the state or those other organizations. They must use this to keep nature reserves and cultural-historical heritage in good condition.

The vote of the members is laid down in the statutes, it will then look at how supporters in a broad sense – including donors – are involved,” said a spokesperson.