The board of a foundation

In this article, we will discuss the governance of a foundation. When you are going to carry out a project or initiative, there comes a time when you are going to choose a legal form. When you choose the foundation as a legal form, which is very common in the cultural sector, you will form a board. It is important that you have a strong board with preferably expertise and a relevant network.

The principle of collective governance

Collective governance means that board members jointly manage a foundation. In performing the board duties, directors are jointly responsible. There may be a division of duties within the board, making a specific director primarily responsible for a particular area of interest, for example, finance. However, this does not negate the principle of collective governance. If the director in question does not perform his duties properly, the other directors should call him to account.

Board duties and governance models.

The main task of the board is to manage the foundation. The board is ultimately responsible for the foundation. The law requires a foundation to have a board. In the standard model, this is most simply implemented. One or more directors form the board of the foundation, and they are responsible for setting and implementing policy. The board here is also the legal board.

Executive Model

It may also be that the day-to-day operations are in the hands of a director/director and policies are set by the general board. We then speak of the management model. The management is appointed by the board and is employed by the foundation. In this model, the management forms the daily management and is not part of the board as referred to in the law. However, it is possible to give far-reaching powers to the management through a continuous power of attorney. The tasks and powers of the management board can be further defined in the bylaws or in board regulations. Duties of the board may also be delegated to the management, however, the board remains liable at all times.

Supervisory board model

Another model regularly seen in the cultural sector is the supervisory board model. In this model, the executive board constitutes the day-to-day management and at the same time the board as defined by law. The supervisory board supervises the management's policy and day-to-day operations. The exact powers of the supervisory board are defined in the bylaws. In general, they have the power to appoint and dismiss members of the management board. In addition, policy plans, annual reports and financial statements must be approved by the supervisory board. The board can also give solicited and unsolicited advice to the management. These are the most common governance models. In practice, variations are possible. What must always be kept in mind is that only one body is designated by law as the "board" and that this body is at all times responsible and accountable for the policy and day-to-day affairs of the foundation.

Mandatory duties of the board

In addition to what is provided in the bylaws about the duties of the board, the law also assigns a number of mandatory duties to the board. For example, the board is obliged to keep the administration of the foundation. These records must be kept for at least seven years. In addition, the board of the foundation is also required to prepare an annual balance sheet and profit and loss account. In some cases, it may also be required to prepare and file financial statements with the trade register. These are commercial foundations that generate a certain amount of revenue.

Requirements for a board

There are no legal requirements on how to fill the board. That there is a board is the most important thing. What is certain is that the board members bear the responsibility of the foundation. In doing so, it is important that there is integrity and no unwanted conflicts of interest.

The right board members

It is important to think carefully about the people you ask to become board members of your foundation. See this primarily as an opportunity to become stronger as an organization by expanding with knowledge, skills and a network. Try to look for a mixed group. People who are too much alike generally come to less creative expressions and insights together than a mixed company.

• Look at a person's specific input, such as:
• Knowledge of the content of the project or initiative.
• Bringing in a relevant network
• Knowledge of grants and funds
• Experience in keeping records
• Good contacts with a group of people
• Etc.

Enrollment bank/den and change of board members

The foundation is established by notarized deed. This means you have to go through a notary. With this establishment, it is required that the statutes of the foundation are determined. A notary can also help you with this. Directors are also appointed. These directors must be registered with the Trade Register. Usually the notary takes care of this for you. Should you wish to deregister or register a board member at a later date, this can be done through the Chamber of Commerce. It is also advisable to have the articles of association of the foundation amended by the notary should any changes occur.

Liability

Once established, the foundation contains legal personality. This means that the foundation has independent rights and obligations. For example, a foundation can obtain donations or enter into agreements. In most cases, the board of the foundation is not personally liable for any debts. However, it is then a requirement that the foundation and the board members are registered in the trade register of the Chamber of Commerce. In addition, in the event of problems, the board will consider whether there has been gross negligence or mismanagement by one or more board members. If so, private liability may well be established. In Arnhem, directors of an Arnhem foundation are automatically insured. To prevent directors from being held jointly and severally liable if the foundation goes bankrupt, for example, you can take out director's liability insurance. So for Arnhem foundations this is not necessary.

Sign authority

In principle, the board of the foundation may only sign official documents or agreements with the other directors. This therefore means that if the foundation has three directors, an agreement can only be concluded if all three directors sign it. The foundation's bylaws may also stipulate that this authority belongs to directors individually or to two directors jointly. When this is stipulated, for example, one director may also sign on behalf of the foundation. The board can also give someone else, such as the director, a power of attorney, for example to be able to perform certain actions towards, for example, a bank or the tax authorities. These are things you can include in board regulations.

Cost of a board

When a board member performs his or her duties unpaid, it means that there is no financial compensation. In general, however, these people receive compensation for expenses incurred in connection with their work for the foundation. These may include travel expenses or office costs.

Salaried Board

It is also possible for one or more of the foundation's board members to be salaried. This means that an employment contract is drawn up between the board member and the foundation. The board member can also work for the foundation as a self-employed person. This person may not then be allowed to make decisions for the foundation on his or her own. If you have ANBI status, it is usually a requirement that the board members do it unpaid. In any case, make sure that everything is done with integrity. The Cultural Governance Code is a very useful tool in this regard.

Culture Governance Code

If you want to have good governance over your foundation, it is useful to have the Culture Governance Code at hand. This was drawn up by the Cultuur+Ondernemen Foundation, which presents itself as the knowledge center for entrepreneurship in the cultural sector. In cooperation with many people from the field, they have summarized a number of practical recommendations for the entire governance process in eight principles. The Culture Governance Code can be downloaded free of charge in PDF. In addition, a handy toolkit has been developed.

Supervisory Board

The Governance Code for Culture also addresses the role of the Supervisory Board in detail. They have the responsibility to supervise the way the foundation and the board operate. In doing so, they look at whether the objectives are achieved with integrity and correctly. They also oversee how laws and regulations are complied with. It is not mandatory to have a Supervisory Board. The Supervisory Board has its basis in the foundation's bylaws.

Board Rules

Elsewhere on this website, you can download a format of board regulations. These include the agreements that the board of a foundation makes together. You can adapt this format to specific points that are important for your foundation (or association).

Disclaimer

For this article, we used, among other things, information available on the digital Ondernemersplein of the Chamber of Commerce. In addition, we thank Deline Kruitbosch of Dirkzwager, legal & tax. Dirkzwager actively shares knowledge with anyone who needs legal or tax information.

If, from your expertise, you yourself have knowledge that would fit this topic, or if you see opportunities to improve this text, we look forward to receiving your message at info@cultuuracademy.nl.