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by Marijke Roelants, Lawyer,Contrast-Law
Everybody is free to associate himself or herself with others to pursue a common goal. But why would you, as an association gathering together organizations and persons from different countries, go to the trouble of forming a separate legal entity? Doesn't it just lead to administrative burden, extra rules to comply with and an overall complexity in governance?
Well, the answer is 'no'.
First of all, while you are indeed free to associate yourself with others, this also means that you are responsible for the acts of others when they act in association with you. If all goes as planned, this is not necessarily a downside but in reality mistakes happen, be it intentionally or not. It is evidently undesirable that a party should claim to be prejudiced by an act of your associate and hold you personally liable. This can be avoided if you work within a legal entity which safeguards members from acts of the association. Members of a legal entity are not personally liable because the legal entity carries the liability. This is one major reason to go for a legal entity.
Although you might see the benefit of a legal entity, maybe you are thinking that a legal entity needs funds of its own to survive, which is true. Such funding can come from different sources and one such source is membership fees. There are, however, other sources such as the organization of events, sponsors, loans and donations. It goes without saying that government funding on several levels (European, national and regional) can also be a welcome way to support the structure. Crowdfunding, a fashionable term in the financial world, can be an option too. The articles of association and the internal rules of the legal entity are helpful tools in creating flexibility for financing within the boundaries of the non-profit nature of the association.
Closely related to the above, establishing a legal entity makes it possible to build a governance structure corresponding to the needs and type of the organization and its members. One might think about a board of directors with a balanced system of selection among the members of the organization (e.g. a yearly rotation). Or one might install working groups and committees which can have a forceful role to play as a forum to further the goals of the association (e.g. for launching studies). Also for governing the association, the articles of association (statutes, charter) and internal rules of the legal entity help by setting out the rules clearly.
Last but not least, you have to factor in the possibility that at some point in time members will want to leave the international association. A mechanism to prevent conflict and to ensure a smooth exit is easier to achieve within the context of a legal entity. Again, the articles of association and the internal rules can prove to be a major support when such situations arise, especially as they have a tendency to occur at the most inconvenient moments.
Belgium is traditionally the home of many international associations. Of course, the proximity of the European institutions and other international organizations such as NATO has much to do with this. Another part of the story is that since 1919 Belgium has a prestigious legal entity specifically designed for international associations: the international non-profit association (“association internationale sans but lucratif” / “internationale vereniging zonder winstoogmerk”), often known in short as INPA. This legal entity carries prestige because each INPA is validated by a Belgian royal decree before it is allowed to come into existence. UIA is an INPA.
With the beginning of a new year, it might be the time for your association to up its game. Formally establishing a legal entity (why not an INPA?), or subjecting the articles of association and the internal rules to a thorough review, might be the step to take.