The legal environment of the endowment cooperation and the NPO in Taiwan

1. Definition

According to the Civil Code, the juridical persons are divided into two categories, one is for profit and the other is not for profit. Non-Profit juridical persons could be divided into the Endowment Cooperation / Foundation and the Non-profit Organization.

In the following report, I would like to analyse the difference in law or regulations and report on the advantage and disadvantage between the Endowment Cooperation / Foundation and the Non-profit Organization.

s. I will refer Endowment Cooperation as the Endowment Cooperation / Foundation and refer NPO as Non-profit Organization.

2. Background

If you would like to establish a NPO in Taiwan, you must follow the Civil Associations Act, however if you intend to establish a endowment cooperation, you must check your business category, running at a national, municipal or city level and follow the related regulations stipulated by different government departments which always require the endowment asset (including property and funding) up to $10 to 30 million at national level and $60 to 200 thousand at municipal or city level.

For a NPO, at least with 30 initiators who are over 20 years old and following some simple procedures, it is easy to establish one.

Both must register in local court wherever their business runs to get the juridical position.

3. Comparison table

The comparison of the Endowment Cooperation and the NPO by law in Taiwan

4. The strength and flaws of the Endowment Cooperation

In general, endowment cooperation is more stable than NPO with reasons as bellow,

1. The endowment cooperation owns endowment asset but only the interest of it could be used for the social welfare purpose. If the board member could manage the assets properly, their financial condition is better.
2. The power is controlled by the board members not like NPO whose policy is made by the public will. Besides, the chairman of the foundation could be reelected as long as the board members think he or she is qualified to manage the asset properly.
3. Accountability is very important for endowment cooperation cause they must manage a big number of asset and donation.

But, there are some flaws or constrains to it,

1. You must invest a lot of asset and not many NPOs can transform into endowment cooperation easily.
2. You must invite famous or powerful patrons to increase the exposure for raising donation form the public.
3. It could be very dominated by family members or small group of people whose management could result in bad reputation or exclusive to the outsiders.
4. Sometimes, the power is controlled by whose endowment asset is more than others.

5. The threats and challenges to NPOs in Taiwan

The chairman can only be reelected once after expired office term for 3 years and the important policy must be decided by the members voting. It could lead to the instability of the association however you could also take it as a more democratic and open running model.

It is a common phenomenon that most NPOs' funding is from government grants which are restricted funding, not much for staff salary expense. With the restricted funding, NPOs are forced to do something which is not necessary meeting their vision or mission to survive. Some people criticizes that NPOs become the government's broadcasting system, follow their will and loose position to monitor them.

But, there is another voice addresses that the government is not capable of everything, if NPOs are eligible to provide professional services and represent as the grass-root power of the community, it could be a mechanism of collaboration and partnership between the government and NPOs.

Accountability is very important for NPOs too. Even NPOs apply for grants from government who always require accountability of the grant under the pressure of legislators. However, the budget relocation and low salary for staffs are also threats for NPOs in Taiwan.

6. Conclusion

In Taiwan, if you want to establish a sustainable organization, to establish a NPO could be the short term goal and a cooperation as the long term vision.

However, to make your organization sustainable not only depends on endowment asset insurance but also a democratic body to engage the public, accountability, project management, communication and outreach, raising funds and public awareness, etc. To pursuit for professionalism is a lesson that the endowment cooperation and the NPOs in Taiwan should continue to learn.

7. References

1. 全國法規資料庫(Mandarin)、Laws & Regulations Database of the Republic of China(English)
2. Civil Associations Act (「人民團體法」英文版)
3. NPO法規介紹–財團法人許可登記及監督(連結全失效，大部分要點或準則已廢除)
4. 行政院環境保護署審查環境保護財團法人設立許可及監督要點（97.08.26.）
5. 「教育部主管教育事務財團法人設立許可及監督準則」
6. 新竹市教育事務財團法人設立許可及監督準則
7. 新竹市文化藝術財團法人設立許可及監督準則
8. 臺北市財團法人暫行管理規則
9. 臺北市政府社會局主管業務之財團法人設立許可及監督輔導管理補充規定
10. 全國性人民團體數
11. Culogy:非營利組織行政管理讀書會講義-什麼是NPO/NGO組織？，葛皇濱