Structure, Role and Recent Evolution of Third Sector in Various European Countries

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Dec 13, 2013 (3 years and 8 months ago)

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Structure, Role and Recent Evolution of Third Sector in Various European Countries


This panel includes papers from various European countries on structure, development and role
of third sector.


Papers come from different countries: Italy, Spain and
Liechtenstein. The Liechtenstein paper,
however, deal with the third sector in all European German speaking countries.


In all European countries the third sector has rapidly grown in the last decades, both in
dimensions and in importance. Its importance c
an be noticed in terms of numbers, and papers
will try to provide them. It can be seen in terms of economical involvement, and outstanding role
in the country. The paper about Italy will focus on this statement, since in that country
foundations of banking

origin, a unique type of foundation, are present. These largely endowed
foundations, are a part of non profit sector.


From a strictly legal point of view, it is important to notice that all these countries have a civil
law system. In fact, only Liechtens
tein has a law system which is in some parts similar to the
common law. Italy has a strong Civil Law tradition; Germany is outstanding due to its
foundations (stiftungen) tradition; in Spain associations and foundations have been important
even before the
Constitution.


In any European country there is not at present any strictly legal definition of the third sector. In
Spain, " “Tercer Sector de Acción Social” insists on the need to approve a "Third Sector Act" in
the next legislative period. In Italy, law
s are rather confusing. They have a fiscal approach,
introducing fiscal advantages for donors to various organizations, but a legal definition of third
sector entities lacks.

All the papers examine laws, cases, jurisprudence and doctrine related to associa
tions and
foundations. They deal with other non profit legal forms, if existing, in the different European
countries they consider. They focus on the need of clear definitions, then on the entities'
characters, such as endowment, purpose, members, governan
ce, beneficiaries, control.

Governance, audit, both internal and external, and beneficiaries, have a very great importance
nowadays. Difference in rules can determine the preference about creating organizations in one
country or another. The paper about th
e German speaking countries will focus on this issue.


All papers notice that third sector's growth went much further than its regulation. In fact, though
laws and regulations introducing fiscal benefits were welcomed; however an organic legislation
lacks
.


The papers will try to describe how jurisprudence and doctrine have till now tried to fill this lack.
They will also describe the trends in the legal approach to the topic. They will try to provide
some data related to trends in some specific fields.


Paper Title
(Panel Paper)

Recent Developments in the Law of the Third Sector in the German
-
Speaking Jurisdictions
(Germany, Switzerland, Austria and the Liechtenstein)

Author

Francesco A. Schurr, francesco.schurr@uni.li; Chair of Company, Foundation and Tr
ust Law
-

Unive (
Non
-
Presenter
)

Abstract

At the beginning of the second decade of the 21st century, it seems to be en vogue for many
natural persons and legal persons (such as companies) within Germany, Switzerland, Austria and
Liechtenstein to establish f
oundations or other NPOs. Yet, the pieces of statutory legislation
regarding the legal instruments available are outdated in some of these states and cannot satisfy
the demands of the modern globalised world of philanthropy. Any attempt to establish an NPO

begins with choosing the ideal jurisdiction for realising a specific project. Recently a “race for
the best jurisdiction” has started within Europe and especially between the Germany,
Switzerland, Austria and Liechtenstein. This competition between jurisd
ictions will play a major
role in the future development of the law of the third sector in Europe.


The purpose of this paper is to examine the legal evolution and the current developments of the
foundation (Stiftung) and the other non
-
profit organisations

(NPOs) within the German
-
speaking
jurisdictions. Therefore the recent changes in the statutory legislation governing the foundation
in these countries will be examined as well the current developments of the case law.
Furthermore empirical data originatin
g from surveys coordinated by the Chair of Company,
Foundation and Trust Law of the University of Liechtenstein will be released and analysed.


The paper will also address the different approaches taken towards NPOs by the civil law and
common law traditio
ns within Europe. In fact, only the jurisdiction of Liechtenstein embraces
elements of both the civil and the common law traditions. While in Germany, Switzerland and
Austria NPOs can be established especially as legal persons (such as foundations, associa
tions
and non
-
profit company) Liechtenstein jurisdiction offers also the trust as a flexible tool for the
realization of non
-
profitable projects.



At present, mixed
-
purpose foundations are expanding their role and gaining an enormous
importance in various

Member States of the European Union (EU) and the European Economic
Area (EEA) and Switzerland. Therefore the paper will discuss advantages and disadvantages of
legal forms coordinating public and private purposes.



The paper will focus on the various sys
tems of governance within the law of NPOs in Germany,
Switzerland, Austria and Liechtenstein. The paper will come to the conclusion that the most
efficient form of supervising the executive bodies (such as a foundation council or a trustee) is
through the
beneficiaries taking an active role. However the German and Swiss law hardly grant
the beneficiaries any supervisory role in the overall dynamics of foundation governance.
Especially when the general public is regarded as the ultimate beneficiary of a char
ity, natural or
legal persons who have the status of beneficiaries according to the foundation documents
normally do not have any legal rights. Hence, in Germany and Switzerland, the supervising role
is assigned rather to public supervisory authorities, wh
ereas the law of Austria and Liechtenstein
transfers some supervising power to the beneficiaries.


The paper will therefore present a new model of multi
-
layered approach for foundation
governance. First, there is one level of supervision through the benef
iciaries, which is especially
suitable for mixed
-
purpose foundations. Second, there is direct supervision by the public
supervisory authority for public
-
purpose foundations. For this, however, the public supervisory
authority needs to rely on internal cont
rol bodies, such as the audit authority. The audit authority
itself is considered as an internal control body even though it has a public role. In this debate the
paper follows a rather liberal approach: Future developments in the law of NPOs need to enabl
e
the founder/settlor to establish control bodies whose functions are determined by the foundation
documents and which partly replace the right of the beneficiaries to information.


The paper therefore tries to figure out legal principles of foundation go
vernance, differentiating
between the internal and external foundation governance and proposing model solutions for the
future developments of the European Foundation.


Paper Title
(Panel Paper)

Structure, Role and Recent Evolution of Third Sector in Italy

Author

Chiara Prele, chiaraprele@yahoo.it; NA (
Presenter
)

Abstract

In Italy third sector is wide and various.

Various laws regulate legal entities. The Italian Civil Code regulates associations and
foundations, ie. the first legal entities created for pu
blic or social benefits. This law was adopted
in 1942. It is updated today, and needs a review according to third sector’s evolution. Specific
laws, related to specific activities, introduced new legal entities into third sector. These laws are
related to
various public, or social utility sectors. The creation of foundations of banking origin
in 1990 was an outstanding innovation in third sector.


Specific laws differ from one another, and various third sector legal entities are different from
one another.
However, their common feature is non distribution constrain. Non distribution
constraint is the actual character of third sector’s organizations according to Italian law and
regulations. This statement is outstanding. In fact, third sector often conducts e
conomic
activities, and plays an important role in Italian economy.


As far as economic activities are concerned, in the past no laws nor rules stated these activities.
Associations and foundations sometimes, and later more often, conducted these activitie
s, and
authors and jurisprudence debated about their compatibility with association’s and foundation’s
purposes. Today, some special laws, as decree no. 155/2006 related to social enterprise, allow
these entities to conduct economic activities. Moreover, e
ither associations or foundations or
corporations can conduct social enterprises according to recent laws. As a result, corporation as a
legal form can play a role in third sector when non distribution constraint is present.


Foundations of banking origin
are regulated by specific laws and have very specific features.
Due to their creation, they have large endowment. In spite of this, and after a long debate among
authors about their nature, the Italian Constitutional Court stated in 2003 their private natu
re. It is
now clear that foundations of banking origin are third sector entities. They mostly play a granting
role, granting activities with social utility, that other third sector organizations conduct.


Various laws related to various third sector entiti
es state that these entities should operate for
social utility. Social utility, opposite to private utility, justifies the special regulations and
benefits accorded to these entities. Benefits are mostly fiscal advantages, both for third sector
entities an
d for givers to them.

It is important to notice that recent laws, regulations and jurisprudence have been very
favourable to third sector. This character looks quite outstanding, since previously adopted Civil
Code, and therefore associations and foundatio
ns, show a very negative approach to these
entities.

This study will examine the various organizations in Italy third sector. It will try to offer a
quantitative framework of the non profit organizations, with specific analysis for each type of
NPO

numbe
r of organizations, dates of creation, empoyers, volunteers, turnover

. It will
describe their different laws and regulations. It will also examine the activities and the role that
third sector organizations conduct and play in Italian society.


This study

will examine laws, regulations, jurisprudence and commentaries about third sector in
Italy. It will also analyse third sector recent development in various social utility sectors in Italy.









SOURCES:


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Paper Title
(Panel Paper)

Recent Developments in the Law of the Third Sector in Spain

Author

Isabel Peñalosa, ipenalosa@fundaciones.org; Spanish Foundations Association (
Non
-
Presenter
)

Abstract

The Spanish third sector has grown considerably over the recent years, in terms of the number of
entities, the diversity of their mission and the variety of beneficiary groups they cover. So far, the
legislative developments that have occurred, m
ainly met the legal form of entities. In 2002
Foundations Act and Tax Incentives Act were approved, creating the working framework for
foundations. That year was also approved a new Act for associations that abolished the previous
Act dated in 1964, previo
us to the Spanish Constitution. Thus, entities such as foundations and
associations have had their own legislative developments addressing themselves to each of the
elements of these entities as legal persons: assets, members, governance, purposes, supervi
sion,
etc.


At the same time the notion of third sector has evolved and now we can find what is called
“Tercer Sector de Acción Social”, which is formed by the organizations developing their actions
mainly in the social field. The unique features of these
entities such as their involvement in
providing direct social services has provoque the discussion regarding the need of a specific legal
framework.


To analise that, we have a recent example on the social economy field. Recently it has been
approved in Sp
ain a Social Economy Act that has tried to define which of those elements that
define the legal entities are common to those that must be defined as social economy, aiming to
establish "a common legal framework "for all of them. The opinion of the sector r
egarding this
sectorial law, is that for the promotion of their activities they need improvements in their specific
legal framework.


However, the “Tercer Sector de Acción Social” still insists on the need to approve a "Third
Sector Act" in the next legis
lative period. This panel will analyze the advantages and
disadvantages of regulating, under the same statute, different legal concepts. How can affect the
actual legal regime and what is its virtuality from the point of view of promoting the third sector.

And which is the role of the representative organizations of the third sector.


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