Finding the Right Legal Form to Get Set Up

Tips

Tools

1. Unincorporated associations are simple to get started, but in practice it becomes complicated for a nonlegal association to enter into contracts of employment with its staff, open bank accounts or lease premises. That is usually the reason why another legal form becomes inevitable when the NGO reaches a certain size.

NGO-in-a-Box^*
Offers a set of peer reviewed and selected free and open source software, tailored to the needs of NGOs.
Provides organizations with software as well as implementation scenarios and relevant materials

National Federation of the Disabled^*—Nepal
Constitution, as amended, of a nonprofit federation under the Organization Registration Act (Nepal)

Northern Ireland Council for Voluntary Action^*
Model memorandum and articles for a charitable company (UK)

Oneworld International Foundation (UK)^*
Memorandum and Articles of Association of a Company Limited by Guarantee (Html)

Community Insurance FAQ Website (Australia)^*
Insuring not-for-profit community organizations, developed by the Municipal Association of Victoria

World Legal Information Institute^*
Free, independent and non-profit access to worldwide laws, including full texts of human rights treaties and
conventions

Human Rights Treaties at the University of Minnesota^*
Full-text library of over 200 international human rights treaties and conventions

The International Center for Not-for-Profit Law’s Online Library and Knowledge Center^*
Searchable directory of research, including country laws, major cases, general legal documents, reports and legal opinions

European Convention on the Recognition of the Legal Personality of International Non-
Governmental Organisations ^*(No. 124 of 1986)
Full text of first treaty to facilitate the mutual recognition of the legal identity of NGOs operating transnationally

MS (Mellemfolkeligt Samvirke) Danish Association for International Co-Operation^*
Archived documents, including statute for an open members’ organization and 3-year rolling plan of action with virtual (cyber) membership feature

2. It has become simple to establish a believable "cyber presence or existence" online even though an NGO may actually lack a substantial membership or legal form in reality.

3. Registered charities and foundations usually enjoy tax exemption privileges, so it is a worthwhile abiding by the form restrictions and reporting requirements. But NGOs with advocacy and activist missions might find the trust form ultimately too restricting.

4. For the sake of transparency the source of the original benefactor’s trust funds could be mentioned either in the public literature, web site or annual report, even if this disclosure is not required by law.

5. There is a wide body of legal knowledge and tradition from small to medium-sized enterprises to draw upon for the key principles governing not-for-profit company NGOs.

6. The main benefit for founders and members of a nonprofit corporation is that they are not ordinarily personally exposed to the debts and other liabilities incurred by the NGO, which now has a separate legal personality of its own. Responsibility for the NGO’s debts and liabilities stops with the cash, property and other assets held by that NGO.

7. It should be an easy matter to get quickly registered or incorporated under a special NGO law at a centralized, one-stop agency—provided the domestic country is hospitable to NGOs in principle and acting in good faith.

8. NGOs set up under specially crafted laws do not have to force their activities and reporting to fit into the provisions of other vehicles such as trusts and commercial companies.

9. A government may not try to stop the establishment of an NGO if it is only promoting greater minority rights or a different government form.

10. The hope for getting specialized NGO laws enacted is often slim as there is not a large "constituency" for NGOs in the legislature. The key point for such a law is that it allows for a simplified separate NGO or NPO status to be gained by easy unified filings or registration without too much discretion being vested in the reviewing officer.

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The views expressed in this paper are the views of the author/s and do not necessarily reflect the views or policies of the Asian Development Bank Institute nor the Asian Development Bank. Names of countries or economies mentioned are chosen by the author/s, in the exercise of his/her/their academic freedom, and the Institute is in no way responsible for such usage.