Before starting with the legal forms, we want to start with the NGO and NGDO denominations. The “D” in NGDO stands for “Development” and has been added in recent years to the title of Non-Governmental Organizations. It is an addition to the acronym that does not exclude but simply specifies the definition of NGO, since it is understood that NGOs act in favor of social development and not only to give assistance and punctual responses.
In Spain there is the NGDO Coordinator and not the “NGO” and in the autonomous communities, little by little, the same logic is being implemented. From NGO they are changing the title to NGDO.
Regarding the legal forms of social initiative entities, we have chosen to define the most common: associations, foundations, federations, mutuals and cooperatives.
An association is a non-profit group of three or more people, which can pursue any purpose.
- Those with a social purpose can ask for public utility and have certain benefits (tax, free advice…).
They are open in nature, but access can be limited for reasons that a set out in the statues.
- Decisions are made in an Assembly in a democratic manner by the members (one vote per member). The Board of Directors acts as a representative before third parties and entities.
- The statutes and the aims of the association can be modified.
- It does not require an initial endowment.
A foundation is a non-profit group, exclusively for social purposes. If in the association there is a foundational requirement of 3 people, in the foundation there is a patrimonial element (usually an economic endowment) that puts one or more people at the disposal of the Management board (or Board of directors) to achieve the objectives. The management board will be in charge of establishing the organization of the foundation and the strategies for action and communication to achieve these objectives.
- Thanks to its social nature and the initial endowment of the patrimony, it has the benefits that public utility associations have. The initial endowment must be at least 30.000€ (although there may be exceptions that reduce the minimum required).
- The character of the foundation is more “closed” than the association. The statutes, requisites to be a member and part of the employer’s board can be established by the founding person.
- Decisions are made by the management board. Managers give opinions and present balance sheets.
- The change of the statutes requires express agreement between the board of trustees and the founding person (who has the last word) and, necessarily, they must adhere to the objective of the foundation.
- The initial endowment cannot be returned if the foundation is dissolved, it can only be transferred to another entity that pursues similar objectives.
In a simple way, if an association is a group of people, a federation is a group of associations (legal persons), which constitute a single entity. Another clear difference is that since they are legal entities, each of the registrations and deletions of members of the federation must be communicated to the registry.
Cooperative of social initiative and Mutual Social Security.
These two types of organizations are branches of the same trunk. Both are non-profit groups with socio-economic purposes. The most notable differences are the following:
- Mission: Mutuals focus on activities related to service and insurance (safeguarding people from the risk of vulnerability). Cooperatives focus on productive activities (promoting the economic activity of people in vulnerable situations).
- Internal structure: The mutual has a hierarchy in decision-making and not all members have the same degree of importance in the entity. In cooperatives, all members have the same level (one member, one vote) and decisions are made democratically.