Setting up an NGO in Romania
- Who can set up an NGO?
According to Romanian law (Government Ordinance no. 26/2000), an NGO can be set up by individuals or even companies.
Therefore, you can be an NGO member in your own capacity, but also through your limited liability company or other legal entity. Even minors over the age of 14 can be NGO members, but with the consent of their parents or guardians. Expats or foreigners can also be members in NGOs, not only Romanian citizens.
Another important thing is that NGO members must have a clean tax record (no “cazier fiscal”). So for example people who got in trouble for not paying their taxes on time or have fiscally abandoned a company will not be approved as NGO members.
- What type of NGO should I choose?
The most common type of NGO is the association. But there are also another couple of NGOs to choose from:
- Association – the most common NGO
Associations can be set up by submitting the NGO documentation at the local court, corresponding to the association headquarters. This can be done either in person or by regular mail (no emailing or faxing possible). A judge will rule by either approving or rejecting the formation of your NGO, and you’ll have a short hearing term in court. You can either attend this hearing term, in order to offer additional information or answer questions that the judge may have, or simply wait for the judge’s ruling. If there are documents missing from your NGO file or there are mistakes in the documents you submitted, you will normally receive an additional judiciary term to fix them.
One of the main conditions is that an association must have at least 3 members. Unlike companies, which you can set up even on your own, for an NGO you must gather more persons as members.
- Foundation – the “wealthy man’s” NGO
While associations usually function by people coming together and doing projects in the interest of the community – so it’s more of an action-based NGO – foundations are quite the opposite. They are basically a way for a person (or even more people) to put together money and assets that are used in a specific purpose, e.g. helping homeless people or children suffering from cancer. So while associations usually start with little money, given that 200 lei is the minimum required capital, foundations on the other hand revolve around their high capital and the manner they try to put it to good use.
- Federation: a group of more associations or foundations
Sometimes associations or foundations unite their forces for a good cause, in order to make bigger projects or attract better financing. And in doing so, they can form federations.
his doesn’t mean that the given association or foundations loses its rights as distinct legal entity. Even as part of a federation, the NGO they will preserve its identity and be able to have activity of its own, as well.
- What activities can my association have?
Associations can only act as non-profits. So compared to companies, which by definition are supposed to make money and profit, an NGO raises funds in order to serve the community and, respectively, the purpose for which they were founded. This purpose must be legal and moral (e.g. educational, artistic, humanitarian, environmental), otherwise the association will be terminated by law.
Also, associations cannot be governmentally or politically affiliated. When people come together to serve their country as politicians, they form political parties, not associations.
- How can I finance my NGO?
- member contributions
- donations, funds from sponsors or money left by testaments
- funds obtained from authorities (either local, national or international), by applying to different projects
- interest or dividends from placement of NGO funds
- dividends of commercial companies set up by the NGO
- income from economic activities (e.g. an association can also have a café or art gallery affiliated with it)
- Can I receive a salary in my own NGO?
Yes. Although NGOs are non-profits, it doesn’t necessarily mean that all people working for associations are volunteers. NGOs ca also have employees, who can also be founders of the NGO themselves.
- I want to dissolve my NGO, what can I do?
If you want to terminate your NGO, you’ll need to have a general meeting of NGO members and take a decision thereof. This decision should be filed with the local court where the NGO is registered. In the dissolution process you will also need help from a legal liquidator. But be careful, if you have any money or assets left in the NGO, they will be redistributed to other similar NGOs, not to the founders of the association. The dissolution of the association will be registered in the Register of Associations and Foundations and, following this change, you will no longer be able to have any activity on the NGO.
An association is also dissolved by law, even without the members’ consent, if it was set for a certain duration which has expired, or a certain purpose which has already been obtained. Also, if the members’ number drops below 3 (the legal limit), or the general meeting or board fails to meet as per the NGO statute. The association will also be dissolved by court order if the NGO becomes insolvent, or their activities are illegal or contrary to public order.
- What happens if I fight with a fellow NGO member and want to take him out of the organization?
First of all, you must check your NGO statute to see how can a person lose their member status. Usually it’s by decision of the general meeting or the board, with a certain quorum and majority of votes. Secondly, you must check if by taking that member out you still have the minimum number of members required by law. If not, you will need a new member to fill his place.
If you cannot get the member out, another option is to dissolve the association altogether and form a new one, with the people you desire. All in all, if you still do not agree on an approach, you can try to have an arrangement with the member who is no longer wanted or doesn’t want to be part of the NGO anymore himself, and keep him just “in the papers”, only requesting his help when certain majorities or quorums have to be met in meetings. A person doesn’t have to be actively involved in an NGO to still be a member or founder.
- How can a lawyer help me with my NGO?
A good lawyer can simplify the process of registering or making changes in your NGO, save you time and even money you spend on court files that might be rejected by the judge for not meeting the legal requirements.
Also, if you want to take the process into your own hands and make the registrations yourself, a lawyer can offer legal consultancy and explain the steps you should take in this respect. Also, after the NGO is registered, they can provide help with contracts, sponsorship agreements and even fiscal matters.
Ruxandra Visoiu – Managing Partner