Resolved and Still Unresolved Problems in German Foundation Law

Abstract

The German civil law relating to foundations was originally based both on the BGB of 1900 (Burgerliches Gesetzbuch – German Civil Code) and on the law of the states (Lander), which have the legislative competence for public law relating with foundations, especially for the official approval of foundations. The Lander subsequently made very different use of the possibility of subjecting the private law relating to foundations to public law supervision. Thus, the different structuring of public law powers for foundations triggered off the call for a reform of foundation law with greater exploitation of the legislative competence of the Federation. Parallel to the debate on civil law reform, enhanced tax relief for charitable foundations had been implemented since the 1990s, partially providing for better status for foundations compared with other charitable corporations. Finally, the Act to Modernise the Law Relating to Foundations of 15.7.2002 has regulated the conditions for the formation of a private law foundation with legal personality exclusively in the BGB, thus eliminating the coexistence of federal and state legal requirements in this connection. The concession system has been retained in that the requirement for the creation of a foundation with legal personality under the new law is also for recognition by a state authority in addition to an endowment transaction under private law. The conditions for changing the objects of the foundation have been restricted. If the objects of the foundation have become impossible to achieve, they may be altered as an exception. In this respect the intention of the founder should then also be taken into account, and, in particular, it should be ensured that the income of the foundation assets is maintained for the group of persons that it was meant to benefit, as intended by the founder.