Foundations use the income from their assets for their work
The principle of a foundation is simple: funders want to actively pursue charitable purposes with their fortune. About two thirds of the foundations in Germany are created by individuals or families, but more and more frequently organisations or companies, the church, or communities establish foundations as well. The founder(s) part(s) with their assets for good and the foundation invests these assets profitably. The surplus thus generated can be used for the purpose of the foundation as determined by the founder. The donated assets as such cannot be spent, they have to be conserved as the foundation’s capital stock. As a rule, a foundation cannot be suspended, according to the legal regulations; it is an institution for eternity.
Active commitment for the common good
The founder determines the purpose of a foundation and it cannot be changed later. A total of 95 percent of foundations pursue not-for-profit purposes, promoting a wide range of topics like educational programmes, research on rare diseases and many more. The government has defined clear requirements for not-for-profit purposes.
The term “foundation” comprises different forms of organization and types. The most popular forms of organisation are foundations the with legal status according to civil law and charitable trusts. The term “foundation” can also refer to other forms of organization, such as a foundation with limited liability (Stiftungs-GmbH) or an association of foundations.