The number of private foundations in Austria is decreasing since 2012. Tax benefits for private foundations have largely been abolished. Are private foundations still up to date? How can private foundations become fit for the future? I explored these questions on 18 May together with experts of Schoellerbank, BDO and INARA in a panel discussion at Hotel Palais Hansen Kempinski Vienna.
Bespoke Foundation Governance
The unanimous tenor of the panel discussion: Private foundations can still offer added value in comparison to corporate and other organisation forms. They are important tools particularly for family businesses in company succession. However, to meet that purpose a bespoke foundation governance needs to be implemented.
Reform of the Private Foundation Act
The cornerstones of the ongoing efforts to revise and amend the Private Foundation Act include strengthening of beneficiaries’ rights and more flexibility in tailoring the foundation governance to individual needs. It is to be hobed that the envisaged reform of the Private Foundation Act will be implemented soon despite upcoming national elections.
Exploit legal Flexibility
Even the Private Foundation Act as currently in force provides ample flexibility to tailor the foundation governance according to individual needs. However, such flexibility is often not fully exploited, in which case implementation of the founder’s will may not be granted. Furthermore, disputes between beneficiaries are more likely to arise, if the foundation govenrance does not take sufficient account of their needs. In any event, only the founder in person has the right to amend the declaration of foundation. It is thus up to the founder to take the steps required to implement his will as best as possible.