Foundations Law in Spain

Abstract

The Spanish foundation sector has evolved considerably over recent years, in terms of the number of foundations, the diversity of their mission and the variety of beneficiary groups they cover. The reports of the Instituto the Instituto de Análisis Estratégico de Fundaciones (INAEF) (Institute for Strategic Analysis of Foundations), put the total number of all Spanish foundations registered by the end of 2009 at 14.450, of which 9,050 are estimated to be active (70% of the total). Of these, only 15% were formed prior to 1978, whereas 19.7% came into being between 1979 and 1994, and the remaining 65.3% were created between 1995 and 2009. As we shall see, the passing of a legal framework has contributed to this growth and, with a few shortcomings, constitutes a clear recognition of the foundational institution in our country. The pages that follow contain an analysis of the legal system for civil foundations in Spain, in light of the recent evolution of the foundation sector and the legislation which governs it, and focus on those aspects which we consider require thought in the face of forthcoming reforms, in that they provide inadequate or excessive regulation or no regulation at all. The day-to-day matters which concern foundations, the variety of activities and means of funding highlight the numerous issues which need to be examined. In terms of regulation, reflection is also needed on so-called self-regulation or soft law, a phenomenon which arose from the area of corporate governance of other legal persons and has gradually extended to the area of non-profit organisations. The promotion of transparency is without doubt one of the foundation sector’s obligations, and self-regulation will contribute towards this. That said, how much room is there really for self-regulation within the current legal system on foundations in Spain? Foundations Law needs to be examined from two perspectives: that of the foundations themselves and their relationship with donors, funders and interest groups and then that of the supervisory administrations. The adequate and efficient functioning of the latter is also a sine qua non for the development of the activities of the former and for their activities to have a greater impact on society. In the opinion of the sector, foundations have to meet a great many obligations in our country, but occasionally supervision is reduced to formal aspects alone, resulting in resources being diverted unnecessarily all round. Finally it is essential that we refer to the tax framework of foundations in Spain and the system for tax incentives, especially the latter, as it is in this area where recent reform has been most modest.