Kenes has a track record in establishing associations in Geneva, Switzerland, and can help with any questions on this topic. Please contact Isabel Mortara, KAW Executive Director (imortara (at) kenes (dot) com) if you have an interested in establishing an association.
Many of Kenes’ clients started small – as a symposium or a conference. Following several successful editions of the event, clients sometimes make the decision to establish a formal not for profit entity which provides a framework for future conferences and some activity between them.
Kenes Association Worldwide (KAW), the dedicated unit of Kenes specialising in association management, has close to 50% of its clients registered in Geneva, Switzerland. Swiss Law is one of the most open on the subject, with the easiest registration and reporting process in Europe, making Switzerland an attractive place to establish an association or a foundation.
So have you ever wondered what the DNA of an association is? How are they structured? Why do they have this special non-profit status?
Let’s take a look at the basics.
How did it all start?
The term “non-governmental organisation” was first coined in 1945, when the United Nations (UN) was created, in order to define a state-independent organisation with which the UN has a relationship.
As a rule, a non-governmental organisation meets the following criteria:
- a structure of an organisation, with statutes and a legal form
- founded by individuals or organisations independent of the state
- its decision-making bodies are independent of government authorities
- its aims are non-lucrative and of public interest, which usually go beyond the interests of its own members
What is the meaning of a non-profit?
The non-profit association is the most common legal form for NGOs and most of Kenes’ clients have this type of legal form. The aim of the association must be not for profit. This does not imply that the association must refrain from generating profit, but any profits that are made may not be distributed to members and must be used by the association in order to achieve its aims and mission.
What is the structure of a non-profit association?
A non-profit organisation is generally composed of three main bodies:
- the General Assembly of members, which meets annually and which makes the most important decisions such as electing the Secretary & the President; approving the annual budget, reviewing reports and financial statements for the year and voting on their adoption; decides on any modification of statutes and on the dissolution of the Association if it ever comes to this
- the Board of Directors of the association, which is responsible for managing the association throughout the year and must give a report to the members at the General Assembly. The Committee is elected by the General Assembly and is composed at a minimum of: a President, a Secretary, and a Treasurer.
- the Auditor, who is responsible for checking the accounts must report to the General Assembly. A full audit is an obligation when any two of the following parameters are exceeded over two consecutive financial years: balance sheet CHF10 million; turnover CHF20 million; number of employees 50. Otherwise not obligatory, though it is often recommended to have a voluntary limited audit.
How hard is it to set up a non-profit association?
In Switzerland, setting up a non-profit association is unrestricted and relatively easy. A minimum of two people are required to create a not-for-profit association though it is recommended to have three people (President, Secretary, Treasurer). The people interested in forming an association must meet in a constitutive assembly in order to:
- adopt the statutes of the association and
- nominate the official bodies: the General Assembly and Board of Directors
The association then becomes a legal entity with rights and obligations. The drawing up of statutes constitutes an obligatory and fundamental step in the setting up of an association. The statutes define the functioning of an organisation and are the basis of all its activities.
In Switzerland, there is no compulsory registration of associations with the authorities except for associations that:
- have activities of a commercial nature in order to fulfil their purpose
- are under obligation to have their accounts audited
Registration is recommended as it is often beneficial to the reputation of an association.
Does a non-profit association pay taxes?
Associations are considered to be legal entities and consequently are subject to taxes, for Swiss-based organisations this may be at a federal or cantonal level. Federal or cantonal tax exemption is not automatic but must be formally requested to the Cantonal tax authorities and in order to qualify for this exemption, several additional conditions must be met.
Associations are also subject to Value Added Tax (VAT) but registration is not required unless commercial turnover (generally excluding membership fees) exceeds CHF100,000. Most of Kenes’ clients qualify for some type of tax exemption, making this another reason why Switzerland is an attractive place to register a scientific or medical association.