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Design of Statutes for NPOs in Germany

German associations and federations need appropriate statutes

Designing statutes for NPOs

Perfectly compliant statutes, together with the accompanying bylaws and other rules and regulations of the association or federation, provide the essential basis for the success of an association's activities in Germany. When founding a new association, it is therefore all the more important to ensure, from the outset, that the statutes are drafted in a professional manner. But, even the statutes of already registered associations may require adaptations in order to correct weaknesses or errors detected over time. 

Legally compliant statutes help maintain and protect the non-profit status in Germany

Any association or federation seeking to obtain, or already recognized as having, the German non-profit status, has to comply with the complicated requirements laid down in nonprofit law. In order to achieve said compliance, the association needs individually tailored statutes meeting the requirements of non-profit law while also ensuring that the desired activities are adequately reflected.

Any new foundation of an association has to be preceded by an examination of the purposes pursued and the activities envisaged by the founding members in consideration of the specific strategy and the concept of the association. As a result, it can be examined whether the project will be recognized under non-profit law. Once this examination has been accomplished, a brief but precise description of the envisaged activities must be included into the association's statutes.  

Using sample or standard statutes that do not take account of the individual project may entail later problems with German tax authorities if the actual management fails to comply with the nonprofit intentions laid down in the association's own statutes. In such case, the association even runs the risk of withdrawal of the non-profit status by the competent tax authority.  

But even already registered associations seeking to avoid disadvantages or liability risks for the association or its board often need to update their statutes as a result of ongoing developments in court rulings or the pertinent legislation. The compensation arrangement for board members, which needs to be contained in the association's statutes, is just one of many examples we are commonly faced with when advising associations.

Optimizing the association's statutes to facilitate its activities

The statutes of an association should be the basis that ensures successful and satisfactory performance of the association's activities. This fact should not only be borne in mind in case of a new foundation of an association but also concerns already registered ones. In many cases, older statutes are no longer adequate for an increased number of members or new missions of the association. Experience from practice shows that optimizing procedures and decision-making processes has become necessary to enhance the efficiency of the association's activities.

In the context of voting processes, for instance, clear and unequivocal regulations are required to avoid disputes concerning the effectiveness of resolutions within the association or with the German register of associations. With a view to an increasing number of members, the majorities required to amend the statutes or the purpose of the association should be reduced in deviation from the legal requirements. Otherwise, there is a risk that amendments to the statutes or the purpose become unenforceable in fact, which could paralyze the association in this regard.

For large associations or federations, the statutes are also the basis of the organizational structure of functional subdivisions and their relationship with the entire organization. In the absence of statutory provisions concerning subdivisions, it is important to pay particular attention to drafting of the association's statutes accurately. 

Minimizing liability risks

Drafting legally compliant statutes also helps minimizing the association's liability risks. It is possible, for example, to include arrangements, which not only provide for a division of duties and a clear assignment of responsibilities within the board but also ensure that certain tasks are assigned to special representatives. Although liability risks cannot be completely excluded, it is possible to reduce them to a level that is manageable for the board.

Successful revision of the statutes

As one of Germany’s leading law firms in nonprofit law, drafting statutes for associations is one of the focus areas of our work. Thanks to many years of experience, we know the crucial issues and which provisions are necessary to ensure that the association can work successfully.

Apart from the actual drafting of the statutes, in case of an already registered association, it may be equally important to make the revised statutes a success and ensure they are adopted by the general meeting. We will be pleased to provide support by a convincing presentation of the reasons why the revision has become necessary either by preparing an information letter to the members or by giving a presentation in the general meeting. Of course, we will also take care of the further steps for you, including precautionary consultations with the tax authorities and the German register of associations.

Your contact for statutes in Germany

WINHELLER supports your German NPO in establishing statutes

Your contact partners for queries regarding Nonprofit Law, Association Law and the drafting of statutes for associations are Attorney Johannes Fein and Attorney Philipp Hornung. The easiest way to contact us is by e-mail (info@winheller.com) or by phone (069 / 76 75 77 80).

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References

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Advising the nonprofit foundation (Germany's first crypto foundation) on its establishment as a hybrid foundation and equipping it with IOTA tokens.

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Juve Award Legal 500 Germany 2019 azur100: Top Employer for Lawyers 2018
Focus Top Law Firm 2018