Finding the right legal structure

Before you decide on a legal form, it is worth taking an honest look at your current situation. First, clarify what you want to achieve, what responsibilities this entails, and what structure will truly support your work.

A legal structure can open up scope for action, for example when it comes to contracts, funding or donations. However, it also entails obligations. Depending on the structure, these may include articles of association, governing bodies, documentation, accounting, tax matters or reporting requirements.

The impact on collaboration is also important: a formal structure can provide clarity, but it can sometimes also alter processes, motivation and decision-making procedures.

Helpful questions to ask are:

• What do we want to achieve in the long term?
• What tasks and responsibilities will this entail?
• What risks do we need to safeguard against?
• How important are flexibility and quick decision-making?
• What impact would a formal structure have on motivation and collaboration?
• What image do we need to project to funding bodies, cooperation partners or the administration?

Not every initiative needs its own legal structure straight away. A voluntary initiative can operate flexibly, get off the ground quickly and keep administrative burdens to a minimum. This is particularly suitable when the tasks are manageable and no major financial or legal obligations arise.

At the same time, structure and formalities also offer protection and security. Without a legal form, the group has no legal personality of its own and faces limitations. This can complicate matters such as contracts, grants, donations or the hire of premises. Liability issues should also be clarified at an early stage.

If no other form of cover is available, volunteers in Baden-Württemberg may, under certain conditions, be covered by the state’s collective liability and accident insurance policies. Whether insurance cover applies, and to what extent, depends on the specific case.

A registered association can act as a separate legal entity. For example, it can enter into contracts, acquire property or employ staff. Recognition as a charitable organisation can also help to build trust amongst funding bodies, donors and partners.

Under certain conditions, a non-profit association can apply for grants, benefit from tax advantages and issue donation receipts. Tax-free allowances for volunteers may also apply, depending on the circumstances.

However, there are formal requirements to be met. These include, amongst other things, a constitution, general meetings, board elections, minutes, bookkeeping and rules governing the use of funds. Amendments to the constitution, economic activities and the dissolution of an association are also subject to specific requirements.

As a rule, at least seven members are required to register an association in the register of associations. The costs and specific steps involved should be checked locally.

Guide to Association Law

In addition to the registered association, there are other legal forms that may be suitable for charitable projects. These include, for example, the non-profit limited company (GmbH) and the non-profit entrepreneurial company (UG).

A non-profit limited liability company (gGmbH) or non-profit entrepreneurial company (gUG) may be a sensible option if the focus is more on binding management, professional structures or commercial activities. Unlike an association, there is no general meeting of members as the central governing body. Responsibility lies more with the shareholders and the management.

A gUG can be established with a small amount of share capital. A gGmbH requires significantly more share capital. Both forms entail legal, tax and organisational requirements.

Which legal form is suitable depends on your objectives, your planned structure, your resources and your level of responsibility. Individual legal and tax advice is particularly important here.

If you do not wish to set up your own legal entity, you can join an existing organisation or work with an umbrella organisation. This may be a good option if you wish to make use of existing infrastructure and do not want to shoulder formal responsibilities on your own.

Depending on what they offer, umbrella organisations can provide support in the form of premises, a postal address, specialist advice, financial management, public relations or access to networks.

Potential partners include, for example, local social services organisations, community associations, church parishes, city districts or umbrella organisations. In Stuttgart, depending on the topic, the following may be relevant, amongst others: 

• Forum der Kulturen / House of Resources 
• KISS Stuttgart Self-Help Contact Centre 
• treffpunkt 50plus 
• Stadtjugendring 
• Stuttgart Sports Association

Find out more about networking and cooperation