Donations for Establishing Private Benefit Foundations: Evidence Requirements and Collection Accounts

Corporate Clients Insights, Private Clients Insights, Charities and NGOs

The establishment of a foundation in Bulgaria represents a specific procedure that requires the provision of property through donation. Unlike associations, which are based on membership, foundations are created with a unilateral founding act of donation. When establishing a private benefit foundation, the founder must familiarise themselves with the specific requirements for different types of donations and the evidence required under the Commercial Register and Register of Non-Profit Legal Entities Act (CRRNPLEA).​

Legal Framework for Establishing a Foundation

According to s 33 of the Non-Profit Legal Entities Act (NPLEA), a foundation is established during the founder’s lifetime or upon death with a unilateral founding act, through which property is provided gratuitously to achieve a non-profit purpose. For the establishment of a foundation during the founder’s lifetime, the act must have notarially certified signatures. When rights in rem over an immovable property are transferred, the founding act is registered by the registration judge at the local court of the property’s location.​

Donations in Kind: Specifics and Form

The property provided when establishing a foundation is not limited to monetary sums. It may include immovable property, movable property, property rights, and other assets. The law does not require a minimum amount of provided property, but for the validity of the founding act, it is sufficient that the requirements for specifying the purposes and the provided property are met.​ The donated property must always be described in the founding act.

Donation of Immovable Property

When donating immovable property to establish a foundation, the founding act must be executed in the form of a notarial deed. This deed serves as evidence of the completed donation and is subject to registration in the Property Register. The necessary documents for the notarial procedure include:​

• Document of the donor’s ownership of the property;
• Certificate of tax assessment from the municipality where the property is located;
• Cadastral sketch or plan of the property;
• Declaration from the donor regarding the absence of tax and fee obligations.

Donation of Movable Property

For donations of movable property, the general rule is that no specific form is required, i.e. even an oral agreement would suffice. However, for the purposes of furnishing evidence to the CRRNPLEA (see below), they must be donated with a contract in writing. The written form with notarial certification of the donor’s (i.e. the founder’s) signature is required for certain assets in regards to which the law provides this same form for a valid transfer; a typical example would be motor vehicles. This form is more simplified compared to the requirements for immovable property but remains mandatory for the validity of the founding act.​

CRRNPLEA Requirements for Proving the Donation

According to Article 33s of Ordinance No. 1 of February 14, 2007, on maintaining, storing, and accessing the Commercial Register and the Register of Non-Profit Legal Entities, when registering a foundation in the Register of Non-Profit Legal Entities, certain documents must be submitted, including evidence of the provided founding donation.​

Evidence for Monetary Donations

When the founding donation is in monetary form, a deposit slip for the deposited founding donation in a foundation collection bank account is, as a matter of settled administrative practice, required by the CRRNPLEA even though there is no such legal requirement and an agreement in writing ought to suffice. This requirement is a fundamental practical condition that ensures the property has actually been provided to the foundation before its registration even though, counterintuitively, the same is generally not required for donations in kind (see below).​

Evidence for Donations in Kind

Unlike monetary donations, for donations of immovable property or other assets in kind, the evidence of the donation differs substantially:

• Immovable Property: Evidence is the founding act in the form of a notarial deed, as registered in the Property Register. This deed simultaneously certifies both the establishment of the foundation and the transfer of ownership of the property.​
• Movable Items: Evidence is the donation agreement.​

For donations in kind, the CRRNPLEA does not require a collection bank account, as the property is provided directly through the respective legal instrument. The CRRNPLEA accepts as sufficient evidence the notarial deed (in the case of immovable property) or the description of the provided property in the donation agreement (in the case of movable items).​ In the latter case, where no notarial form is required, even substantial donations, e.g. a gold bar, should be deemed proven by virtue of the existence of the donation agreement itself.

Collection Bank Account: Practical Aspects

A collection bank account is a special account opened before the foundation’s registration and serves for depositing the monetary founding donation. Opening a collection account is done at any commercial bank in Bulgaria.​

Opening Procedure

To open a collection account for a foundation in the process of establishment, the following must be submitted to the bank:​

• Founding act of the foundation (with notarial certification of signature);
• Protocol-decision for establishing the foundation;
• Identity documents of the founder(s).

The bank issues a deposit slip or confirmation letter for the deposited funds, which is submitted to the CRRNPLEA  as evidence of the provided monetary donation.​

Consequences of Not Providing Evidence

Failure to provide proper evidence of the completed founding donation leads to refusal of registration by the Registry Agency. This results in loss of paid state fees and requires resubmission of documents after correcting the irregularities. Therefore, it is important for the founder to prepare carefully and consult with specialists before submitting the registration application.​

Conclusion

Donations in kind represent a legitimate and frequently used method for establishing private benefit foundations in Bulgaria. Unlike monetary donations, which require opening a collection bank account and submitting a deposit slip, for donations in kind, evidence of the provided property is expressed in the notarial deed (for immovable property) or in the description of the property in the donation agreement (for movable items), which may have to be notarially certified if it concerns motor vehicles or some securities. Proper compliance with formal requirements and submission of appropriate evidence are key to successful registration of the foundation in the Register of Non-Profit Legal Entities.