Is het een Probleem als de (eigen)VOF & (eigen)Stichting het zelfde doen?

[Sandrina]

Good evening,

 

I hope it is alright if I write in Englisch (please feel free to answer in Dutch) I can read and speak it fluently - just my writing is still quite bad and I am afraid that I can't really express my question if I would write it in Dutch. So, please bare with me and my excuse for the 'moeite' :)

 

This is the situation:

 

1) I have a VOF together with my partner where we are giving advice to NGOs, public institutions, universities, and other agencies on positive social change. That means that we advise on communication, marketing, we give workshops, trainings, develop creative concepts of how positive social change can be achieved including the people's needs and wants etc. Consultancy actually.

 

2) Next to that we have an NGO (Stichting) where we aim to initiate bottom-up initiatives ourselves (organise events, festivals et.c) and support them in becoming more successful and reach the goal they want to reach, here we also offer trainings, workshops but also financial support.

 

They are similar as in they both aim to support positive social change. They are different in that the VOF aims to 'facilitate' social change and the Stichting aims to 'initiate' and support.

 

My first question:

I heard that if we get funding for the Stichting (for an event or festival) we are able to hire our own VOF for project management support or create concept development (as long as we also hire other people and as long as the Stichting is not the only income of the VOF). Is that right?

 

Secondly:

What is important for us is that our VOF stands as a social enterprise not just with the causes we support but also with the financial structure we have. That is why we would like to move 20% of every income we have towards our Stichting. 1st question - do you thnk we should make the structures of both 'rechtsformen' official in writing and have it signed by somebody to make sure it is legal what we do?

 

this is where the next tricky situation comes in.

Via our Stichting we pay a coworking space for 'space'. However, the same coworking space is also hiring our VOF for consultancy and other tasks. We then (according to our internal regulation) give 20% of the money given by the coworking space back to the Stichting which uses it to pay the coworking space again. Do you see how this could look weird to others?

 

I do not want to get in any legal trouble here... We mean honest business and work for a good cause - so I don't want to screw that up by doing something that is not legal :/

 

 

The reason why we have both Stichting and VOF is that we want to commit 100% to social change. Yet, with a Stichting alone we won't be able to pay ourselves salary and hence can never commit ourselves 100% to the cause. Therefore, we only focus on 'initiation and support' with our Stichting. Apply for funding to run projects etc. With the VOF we then offer specific professional service that help 'facilitate' social change, also we develop products like 'online platforms', and 'toolkits'.

 

Also (and this is tricky question Nr. 3) on our future online platform (that will serve as a crowdsourcing platform for citizen initiatives) which will be run by the VOF, the Stichting will play an important part. Where the VOF is facilitating and building the platform the Stichting will make sure that the projects that are created on the platform get the necessary funding (if they need any).

 

So, our work is very much intertwined and I am not sure if the 'overheid' maybe sees trouble in that.

 

Is there anybody who can maybe advice on this situation? Also I heard that there is the option to run a 'VOF onder Stichting' (right now they are two separated entities) - would it make sense to bring them together and if so, how do you do that and why would that be advisable?

 

Sorry agian for writing all in Englisch and especially for making it such a long one!

 

 

Thank you already for helping us :)

 

Looking forward hearing from you.

 

All the best,

Sandrina

 

[Ron van der Kolk]

Hi Sandrina,

 

Welcome to Higherlevel.

 

I have a VOF together with my partner

(…)

Next to that we have an NGO (Stichting)

First of all, you do not own the foundation. Nobody owns it. It is not "your" foundation. It should be independent in its way to reach its objective. You can control the foundation as a member of the board, but that is not the same as owning it. You can't sell it, for example. And you could be replaced just like that.

 

I heard that if we get funding for the Stichting (for an event or festival) we are able to hire our own VOF for project management support or create concept development (as long as we also hire other people and as long as the Stichting is not the only income of the VOF).

If you make the decision in the board to hire your VOF, that could be considered a conflict of interest. Organizations funding activities for the foundation will (or should) recognize this as a problem area.

 

If you'd like to continue the VOF, you could put other people on the board. They would have no obligation to hire you, though. They should be able to hire anybody they see fit to do the job. (That's not what you would probably like, but this example shows exactly why there is a conflict of interest in de current situation).

 

That is why we would like to move 20% of evrey income we have towards our Stichting.

You are free to donate your income after taxes to the foundation. Moving income before tax towards the foundation is something else altogether. Could you please elaborate on your ideas to do this?

 

1st question - do you thnk we should make the structures of both 'rechtsformen' official in writing and have it signed by somebody to make sure it is legal what we do?

I do hope you've done that already. Is there a VOF contract? Are there statutes for the foundation? They both call for professional advice, but since they are intertwined even more so! This could possibly be seen as a tax evasion scheme (both income tax and VAT) with all further consequences.

 

Via our Stichting we pay a coworking space for 'space'. However, the same coworking space is also hiring our VOF for consultancy and other tasks. We then (according to our internal regulation) give 20% of the money given by the coworking space back to the Stichting which uses it to pay the coworking space again. Do you see how this could look weird to others?

This can and should look weird. Try to make a strict distinction, not an organic one. This seems like a conflict of interest or a chain of tax evasion. I'm not implying anything about your intentions, but this is thin ice. Both the VOF and the foundation need professional help to sort this out and controle risks and liabilities. (This is no self promotion, this area is not my line of work).

 

Also I heard that there is the option to run a VOF onder Stichting (right now they are two seperated entities) - would it make sense to bring them together and if so, how do you do that and why would that be advisable?

Are your intentions solely non-commercial except for salaries? Then you could give up the VOF and put all the activities in the foundation. You would basically have to choose between being on the board or being a paid employee of the foundation. (It’s possible to do both but I would steer clear of that due to possible conflict of interest.)

If you like to run a commercial business, see my suggestion above and remove yourself from the board.

 

[TwaBla]

Sounds like the perfect set-up for a conflict of interests. If your vennoot is also your life partner you have a cherry on top.

 

But there is no such thing as a not-for-profit police. So if nobody is bothered and the sponors don't look for checks and balances, you can get away with a lot.

 

[Sandrina]

Thank you for the fast answer Ron!

 

 

1st question - do you thnk we should make the structures of both 'rechtsformen' official in writing and have it signed by somebody to make sure it is legal what we do?

I do hope you've done that already. Is there a VOF contract? Are there statutes for the foundation? They both call for professional advice, but since they are intertwined even more so! This could possibly be seen as a tax evasion scheme (both income tax and VAT) with all further consequences.

 

Well the VOF is officially registered and so is the Stichting with statuten and everything but we did not describe within the statuten of the Stichting the role of the VOF (I think that would be even more weird).

 

I meant more like a writing in which we explain our way of work and the reason behind the way we set ourselves up. I would like to be as transparent as possible. But for one, I do not want to leave the board of the Stichting and give the responsibility to others - and secondly, I want to continue to work with my VOF for not just the Stichting but also other third parties as this will be our main source of income.

 

---

 

Via our Stichting we pay a coworking space for 'space'. However, the same coworking space is also hiring our VOF for consultancy and other tasks. We then (according to our internal regulation) give 20% of the money given by the coworking space back to the Stichting which uses it to pay the coworking space again. Do you see how this could look weird to others?

 

This can and should look weird. Try to make a strict distinction, not an organic one. This seems like a conflict of interest or a chain of tax evasion. I'm not implying anything about your intentions, but this is thin ice. Both the VOF and the foundation need professional help to sort this out and controle risks and liabilities. (This is no self promotion, this area is not my line of work).

 

Who would you advice on being able to give such advice?

Lawyer? Accountant? Notaris? KVK? Belastingdienst?

 

I am looking for a while already, and my accountant said it is fine, a friend who knows its way around in law said it should be ok... but this are rather vague answers. That's why I want to put something down in writing with somebody who can really say 'Ok, if you do it like this, with these intentions - fine.' I don't try to avoid taxes (happily paying what is asked), or try to get around something. I simply want to be able to earn my living with my VOF doing what I love (keeping the options to scale what we do) while running a Stichting that is able to accumulate funds to empower even more impact on what I do (for others mainly!).

 

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Also, I heard that there is the option to run a VOF onder Stichting (right now they are two seperated entities) - would it make sense to bring them together and if so, how do you do that and why would that be advisable?

 

Are your intentions solely non-commercial except for salaries? Then you could give up the VOF and put all the activities in the foundation. You would basically have to choose between being on the board or being a paid employee of the foundation. (It’s possible to do both but I would steer clear of that due to possible conflict of interest.)

 

I really don't want that..

 

But what is the difference between a VOF and a Stichting and a 'VOF onder de Stichting'? I tried to find something online - but without success. Maybe I also do not know how to search for it correctly.

 

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And yes @TwaBla, this person is my life partner (even if not married)...

 

 

 

Thank you very much again!

 

[Ron van der Kolk]

Thank you for the fast answer Ron!

You're welcome.

 

Well the VOF is officially registered and so is the Stichting with statuten and everything but we did not describe within the statuten of the Stichting the role of the VOF (I think that would be even more weird).

Not just weird – if you tie the foundation to the VOF in the statutes, that would probably be illegal and likely cause trouble with the tax office. The foundation should be independent.

 

But for one, I do not want to leave the board of the Stichting and give the responsibility to others - and secondly, I want to continue to work with my VOF for not just the Stichting but also other third parties as this will be our main source of income.

If you want to continue both your work for the VOF and the foundation, cut the ties between the VOF and the foundation to remove the conflict of interest.

 

I meant more like a writing in which we explain our way of work and the reason behind the way we set ourselves up.

An explanation in writing why you did this is not going to help much if problems arise.

 

Who would you advice on being able to give such advice?

Someone with a Dutch legal background (lawyer, notary) who specializes in setting up VOF’s and foundations and preferable has knowledge of Dutch fiscal policies.

 

I am looking for a while already, and my accountant said it is fine, a friend who knows its way around in law said it should be ok... but this are rather vague answers.

Have they actually looked into this case in some detail? If that accountant works for both the VOF and the foundation and thinks this constellation is a good idea I’m happy not to be in his shoes.

 

I simply want to be able to earn my living with my VOF doing what I love (keeping the options to scale what we do) while running a Stichting that is able to accumulate funds to empower even more impact on what I do (for others mainly!).

I'm not questioning your intentions. But you depend on the VOF for your income and that income is partially supplied by a foundation that you control - see the problem?

 

But what is the difference between a VOF and a Stichting and a 'VOF onder de Stichting'?

The foundation can act as an entrepreneur, but understand that you then will no longer own the company and get the profits – the foundation will. It would make the conflict of interest even worse, as you would become fully dependant on the income from a company controlled by a foundation that you and your life partner control.

 

Please note that your question is broader than the focus of this forum. This forum is about active entrepreneurship - foundations are out of scope. That means we can go into detail regarding your VOF (and the relation with the foundation), but not regarding (proper set up of) the foundation.

 

[Sandrina]

I simply want to be able to earn my living with my VOF doing what I love (keeping the options to scale what we do) while running a Stichting that is able to accumulate funds to empower even more impact on what I do (for others mainly!).

I'm not questioning your intentions. But you depend on the VOF for your income and that income is partially supplied by a foundation that you control - see the problem?

 

I absolutely do, that is why I landed on this page. But is this only a problem for us as possible sponsors and funds might think that this is a weird situation and hence deny as funds or could that be a real legal issue?

 

[Ron van der Kolk]

But is this only a problem for us as possible sponsors and funds might think that this is a weird situation and hence deny as funds or could that be a real legal issue?

It would be a very undesirable situation with potential legal issues. There is no specific law against incidently hiring your own VOF as a board member (as far as I know and without putting this in the statutes) and there is no active supervision as TwaBla has pointed out. But you can't exactly say that the work of the board has been independent over the years, so claims against the foundation (if they ever arise) could lead to personal liability of the board.

 

[Ward van der Put]

You might also want to have a look at the rules and regulations for the Dutch "Public Benefit Organisation" (Algemeen Nut Beogende Instelling or ANBI).

 

It is not uncommon for a Dutch not-for-profit foundation (stichting) to operate one or more profit centres in subsidiaries (usually a BV). However, conflicts of interest can and will arise if a board or staff member is not only in it for the non-profit goals, but also for a personal profit. That would be the case for the "salary" from your VoF, which actually is profit.

 

It should, sad to say, also be noted that this setup is abused for tax evasion and to hide the true intentions of its founders. The non-profit income from the foundation trickles down as "operating costs" to the profit of subsidiaries or "preferred suppliers" that are run by the same persons. This may hurt the funding of your foundation: it has a bad reputation. For an ANBI foundation this is therefore also prohibited by law.

 

If serving the goals of the foundation is leading, the logical thing to do would probably be to terminate the VoF and earn your salary as an employee of the foundation. The main downside is loss of control over the foundation.

 

[TwaBla]

 

You mention several times how the stichting is used to get funding (for projects or festivals) which is then chanelled to the VOF for consulting and supporting work.

 

Look at TV and you will see endless commercials that suggest we all donate money for animal welfare. That money goes to a foundation that pays a service company for consultation and marketing services, probably so much that only a tiny percentage triggers down to the poor dogs, donkeys, monkeys, parrots. The founders are filling their pockets.

 

The setup you chose is easy to abuse, and that is why you probably will never get ANBI-status. But if your sponsors and donators don't mind, nobody else is bothered.

 

[TwaBla]

Via our Stichting we pay a coworking space for 'space'. However, the same coworking space is also hiring our VOF for consultancy and other tasks. We then (according to our internal regulation) give 20% of the money given by the coworking space back to the Stichting which uses it to pay the coworking space again. Do you see how this could look weird to others?

And if you are trying to make that 20% tax deductable it is not just weird but an example of abuse.

 

Is the VOF (the two of you) working from the same space as the Stichting? Does the VOF pay any rent and to whom?

 

It is probably all peanuts in terms of money, but it sounds like a messy setup to me. You will find yourself in a position where funds from the stichting are used to pay for the VOF or its founders sooner or later.

 

And you plan to go crowdsourcing? ::)