Aktualizacja 24 January 2023
Foundation – what accounting? In certain situations, we may want to set up a foundation – then the question arises – what kind of accounting should we choose?
What is a foundation?
Before we move on to matters such as keeping full accounting , we must answer the question: what exactly is a foundation? It is a legal form of non-governmental organization. Right after associations, foundations are the second most popular form of this type of organization. Its essential element is capital. It must, by definition, be dedicated to the achievement of a specific goal. What this goal is and on what principles it is implemented is specified in the statutes of a given foundation. It is also important that the foundation has no members. Its creator decides about its operation and disposal of financial capital. This is why a foundation is a more independent form of organization than, for example, an association or corporation.
Where does the name of the foundation come from?
Foundation – the name of this organization refers directly to its assumptions. Its etymology refers to words from the Latin language, although we do not know which ones exactly. The most likely are:
- fundus – meaning land, or estate or property,
- fundatio – meaning foundation,
- fundare – meaning to be strengthened or fixed.
Regardless of which of these words the modern word foundation comes from, they all beautifully emphasize the purpose and importance of this type of organization.
Where did the idea for foundations come from?
Foundations had been established earlier in other parts of the world, but regulations concerning them were not introduced in Poland until 1984. It was then that accounting firms for the first time received clear information on how to keep the foundation’s accounts. This is regulated by the Act of 6 April 1944 on foundations and all other related provisions.
What are the types of foundations?
Together with the legal regulations concerning foundations, several types of this type of organization have been distinguished. Foundations can be divided:
- Due to the succession solutions of family businesses,
- Due to the way it works,
- Due to the founder
- Due to the purpose,
- Due to the form of actions taken,
- Due to the recipient
- Due to the area of activity.
Due to the succession solutions of family businesses – these are usually family foundations that are to enter into Polish law in 2022.
Due to the method of operation – it is about the method of operation that foundations adopt at the time of establishment. We distinguish here foundations that provide services, philanthropic and advocacy.
Due to the founder – with this division, private, corporate and public foundations emerge.
Due to the purpose, we distinguish foundations for public benefit, or for own benefit or for mixed benefit combining the two previous benefits.
Due to the form of undertaken activities, we can distinguish foundations that are grant-making or operational. The activities of the former consist in financing the activities of other organizations, while the latter – in financing their own projects.
Due to the recipient, we distinguish foundations that we call: service, civic or group interest foundations.
Due to the area of activity, as you can easily guess, we can distinguish foundations that are international, national or even local.
The accounting office will help us decide what type of accounting will be appropriate for the type of foundation we want to set up.
Does the foundation need accounting?
Because of course, like any other NGO, they need accounting. The accountant or accountant is tasked with recording absolutely all financial events within the foundation. This ensures transparency as to the principles of its operation and funding. Only in this way can we prove that our foundation operates and raises funds for its purposes in accordance with the law in force in a given country or countries.
Every year, our foundation will also be required to submit the so-called annual financial report, otherwise known as the balance sheet. We cannot afford to skip this duty one year. We always submit the report annually, but we cannot exceed the final date, which is July 10. What does such a report consist of? These are primarily:
- Foundation’s financial balance,
- An account listing the foundation’s profits and losses,
- Additional information.
What is more, if the foundation additionally conducts business activity, the financial statement must be submitted to the National Court Register, i.e. to the National Court Register. If, on the other hand, our foundation belongs to the category of public benefit foundations, the next obligation that applies to us is to place the balance sheet in the online report database. Usually, all these are activities that we are unable to handle on our own. The law is complicated and full of nuances that are best known to professionals, so accounting firms will deal with it best.
Foundation – what accounting?
Such accounting firms will also help you decide what type of accounting will be best for our foundation. It often differs from the accounting we do with ordinary companies, moreover, it must be part of a foundation-approved accounting system.