Hospital of the Holy Spirit
The foundation concept
Legal provisions (Civil Code - BGB, foundation laws of the states, State Administration Law of Schleswig-Holstein - LVwG) forego a definition of the term "foundation", because it is largely determined by linguistic use. It is assets that have become independent as a legal entity which with its proceeds pursues certain unalterable purposes established in perpetuity by the founder. Other than associations or societies it has no members. It almost belongs to itself.
Its destiny is - unlike that of a corporate body - not determined by the changeable will of its members, but only subject to the once-expressed will of the founder. Both it and its purpose are thus in principle applied for eternity. By placing assets into a foundation, the founder's assets are permanently reduced. Every founder must be aware of this.
Withdrawal may only take place - if the foundation charter provides for this - in the event of the dissolution of the foundation. The founder cannot decide on the dissolution of a foundation - if possible legally or via foundation law - but only a foundation executive body, which requires the approval of the authority responsible for its oversight.
The essence of a foundation is characterized by three formative, constitutive features: foundation assets, foundation purpose and foundation organisation. All three components must be established in the foundation charter. The foundation's assets, which the founder entrusts to the foundation, generally consist of land holdings, capital assets, holdings in companies, securities, time deposits, receivables or other objects of value.
Its substance must not be subtracted from at any time. Only the yield of these assets may be spent, i.e. the assets are used exclusively for the generation of so-called proceeds such as e.g. rents, leases, interest or dividends. The second feature, the foundation's purpose, is to be permanently financed from these proceeds.
The foundation must on the basis of its funding and determination of aims give reason to believe that it has sufficient means available to exist for a longer time and to be able to fulfil the purpose of the foundation, at least in the medium term. The proceeds to be expected from the compulsorily assured assets must therefore secure the fulfilment of the foundation's purpose not just in the short term.
As a rule the purpose of the foundation is charitable goals (e.g. promotion of art and culture, social facilities, religious communities). When the foundation's purpose is recognised as "charitable" by the Tax Office the foundation's field of action is subject to extensive tax exemption.
The foundation's organisation consists of at least one executive body, the foundation board. In addition, in accordance with the founder's will, advisory boards, committees and boards of trustees with a wide variety of tasks can be involved in the administration of the foundation's assets and pursuit of the foundation's purpose.