The following text was written by a client of us, Dan from Canada. Isaan Lawyers help them to setup their charity organization legally.
Charitable Foundations in Thailand
In the Buddhist year 2551, or 2008 for those with other calendar’s, I was lucky enough to be able to assist in the creation of a charitable foundation in Thailand. It was and still is a difficult road to walk down, but one that has great benefits for charitable works once official registration is in place.
What is a Foundation?
In Thailand, organizations can be registered as companies, associations, or foundations with no official non-profit or other similar status available. A foundation is therefore THE status to attain for doing work in the charity or non-profit sector. Foundations in Thailand do pay tax on any ‘profit’, meaning that if your income for the tax year is greater than your outflow, then you will pay taxes. However, foundations only pay 1% tax on these ‘profits’, which is less than an individual person or a company.
A foundation is a legally recognized juristic person that can enter into contracts, take legal actions, and more. These organizations generally work for the benefit of society, either for everyone’s benefit or to focus on improving the lives of a specific target group. Foundations are able to collect donations for their works and can issue receipts just like a company.
What do foundations do?
When you create a foundation, you write its constitution, the rules that it will follow and the purpose that it will serve. This means you can choose what the foundation will be for and what it will do. Some groups choose to work to help promote certain specific activities, like the Don’t Drive Drunk Foundation which produces advertising and seminars to encourage safe driving.
Other foundations are set up for a specific cause. For example, the TB/HIV Research Foundation (http://www.tbhivfoundation.org/index.php) which conducts research and finds funding for solutions to tuberculosis and HIV infection.
For our foundation, the Dragonfly Community Foundation (www.dragonflycommunity.org), we had many different projects we wanted to work on as a result of many people with different skills being involved. We chose to create our foundation with the aim of developing communities, which is a broad concept that allows us to work in areas as diverse as promoting sustainable construction methods and running an orphanage sponsorship program.
Whatever your goals are, a foundation in Thailand is able to employ people, sponsor visas and work permits, collect donations, and generally operate like any charity the world over.
What’s needed to create a foundation?
If you want to create a foundation in Thailand, this is what you need to be able to do it:
1. A Cause
Your foundation needs a purpose and a direction. You need to plan out an area that you’d like to work in and that you will be able to practically work in. Foundations have to produce work related to their objectives or risk losing their registration. So figure out what you want to and can do with a charity.
2. The Right People
Your foundation will need 2 separate groups of people, employees and directorship. You will need employees or volunteers to do the ground work for your foundation, running projects, keeping accounts, etc. The foundation can employ and pay both Thai nationals and foreigners.
On the other hand, you need a board of at least 3 people (5 are normally required to set it up) who will work for the foundation on a strictly voluntary basis. Though more positions can be created, at least 4 must be filled (if you only have 3 people, one can hold 2 of the positions simultaneously). These are Director, Assistant Director, Secretary, and Treasurer. These volunteers are responsible for directing the foundation and are needed to sign most of its important paperwork. They are also chosen to handle finances and will have signing authority over the foundation’s accounts.
Each of these people must provide personal finance details and proof of identity, so this can be a bit invasive. Foreigners can be chosen as board members, however they will face even further scrutiny and having Thai people register the foundation is easier and faster. Once registration is finished, changing these positions is relatively easy. (background of foreigners are checked)
3. A Big Deposit
In order to register your foundation, a bank account has to opened and 200,000THB deposited into it. You need a letter from the bank proving that the money exists which you will include in your application. There are 2 catches here. (it could be higher, up to 500,000 baht depending on objectives of the foundation)
The first is that the foundation cannot open a bank account before it is registered, but the money has to be in the bank before the registration can happen. Confusing? Essentially, someone connected to the foundation can use her account pre-registration, and then the money can be transferred to a new foundation account that can be created after registration.
The second catch is that this 200,000THB must stay in the bank account indefinitely. It can’t be used for foundation operations or invested, however the foundation may collect interest from this deposit. When the foundation closes or dissolves, this key money is transferred to another foundation, so for all intents and purposes, it is a deposit which you’ll never get back. For this reason, it would be a good idea to prepare funding requests to ask for this money from donors for purposes of starting your foundation before you even get started.
4. A Name, a Location, and a Stamp
You need to choose an official name for your foundation and it must be in Thai without any transliterated words. You can still use the foundation’s name in another language for your operations, but the Thai name is official.
A location has to be selected for the foundation, as an office or another kind of center. To prepare your paperwork, you need to have a lease or rental agreement in place and copies of the ownership documents and the owner’s identity card.
The foundation also needs a stamp prepared that will be its official seal. The stamp can be in any language and may contain a log or just text.
5. Paperwork From Everywhere
You need to register your foundation with a district office (amphoe) and with the province where you will be located. This requires a pile of paperwork, some of which can be picked up at the district office.
How did we do it?
The hard way. The DCF took about a year to become registered with the Ministry of Culture as an officially recognized foundation in Thailand. This is mostly because we tried to register by ourselves, simply by heading to the district office and asking what paperwork we needed to prepare. Of course there is no checklist, but instead just oral communication with the staff. Once the paperwork was prepared the first time and brought to the district office, we were told that we had some unnecessary documents (which they had told us to prepare) and were missing others (that they had failed to ask us to prepare the first time). This occurred about 3 or 4 times, with about a month of preparing paperwork between each visit to the amphoe and it became clear to us that the process could continue ad infinitum unless we did one of two things: work with a lawyer or ‘grease the wheels’.
We chose the former and enlisted the help of Isaan Lawyers in Nakhon Ratchasima to help process our paperwork. They still encountered the usual problems of not being told to prepare certain documents when asking what to prepare and forced changes to our application even though it was in line with what was legally required. Still, their legal experience enabled them to correctly interpret what was needed and cut to the chase to get the right permissions from the right offices.
Our work in Thailand is continuing smoothly 2 years after registering the Dragonfly Community Foundation and we have been able to collect numerous donations to aid our work with disadvantaged children and communities. If you are looking to do charity works in Thailand, you should register a foundation to help you achieve your specific goals. You can register yourself, or better yet work with a lawyer to help get the process completed effectively and quickly.