Find out what recognized and unrecognized associations are. Let’s see the differences between the two types of entities, what recognition is and when it is convenient.
The recognized association: notary and minimum assets
The recognized association is that non-profit body that has obtained the recognition of legal personality through the registration of the body in the register of legal persons. Recognition involves the separation of the association’s assets from that of the institution’s administrators. This means that those who act on behalf of the association do not run the risk of having to answer for the obligations of the entity with their own personal assets. This can happen, however, in the case of an unrecognized association.
Recognition can only be granted following a request and can only be obtained by respecting certain requirements:
- the establishment of the association by notarial public deed
- the presence of a minimum amount of assets
This fulfillment involves high costs precisely because of the requirements described above. However, the request for recognition is not mandatory and can also be made after the constitution. For these reasons, most non-profit organizations choose, at least initially, not to apply for recognition.
The minimum assets for recognition
To obtain the recognition of the association, a patrimony of about € 15,000 must be paid. However, each region may require different assets depending on the type of institution.
The assets of a non-profit association are made up of all the assets owned by the entity, including real estate, and the sums of money owned. This may derive from any activity carried out, from the payment of membership fees, voluntary contributions, etc.
The unrecognized association: the differences
The unrecognized association is the most common choice for a non-profit organization. The main difference with respect to recognized associations is the absence of the separation between assets and that of the directors. Setting up an unrecognized association is very simple: no special requirements are necessary and very low costs must be faced. In fact, to perfect the constitution it is not necessary to go to the notary or have a minimum amount of assets. The assets of the unrecognized will consist of the membership fees paid by the members and any other income such as donations or proceeds from the activity of the entity.
You will then have to register with the Revenue Agency. The association’s registration is the necessary steps to make public entity birth, certify the date of incorporation and access to the tax benefits. Even if the entity is not recognized but only registered, it will therefore be able to request the sector tax concessions provided for non-profit organizations.
The debts of the association
For unrecognized associations, the assets of the administrators are not separated from that of the association. Therefore, in the event that the corporate assets are insufficient, the corporate bodies (those who have acted in the name and on behalf of the entity) may be called upon to pay the debts of the entity personally with their own assets.
When it is convenient to recognize the entity: the factors that affect
The recognition of an association is not a frequent requirement. However, it is convenient for:
- to exclude the personal responsibility of the directors in case of debts of the entity
- access public funding dedicated to non-profit organizations when the disbursement of these sums is foreseen only in favor of recognized bodies
- receive donations enjoying a favorable tax regime on the sums received
Recognition is therefore more common among the more structured organizations, spread nationally and with important assets (e.g. ONLUS such as Doctors Without Borders or Save the Children Italy). However, the vast majority of the non-profit sector remains represented by unrecognized organizations.
Establishment of recognized and non-recognized associations: do you need a notary?
To create a non-profit organization, it is necessary first of all to draw up the deed of incorporation and the statute of the association. These are the constitutive documents that contain the data of the founders and administrators and specify the purpose that the entity intends to pursue.
If you want to establish a recognized non-profit, these documents must be drawn up by means of a public deed at a notary. To obtain recognition, a specific application must be submitted to the Region (if the entity operates in the regional territory) or to the Prefecture (when the entity carries out activities throughout Italy) to obtain registration in the register of legal persons.
To open an unrecognized association, on the other hand, the drafting and signing of the deed of incorporation and statute by the founding members is sufficient. This is enough to give life to the entity, without the need to proceed by public act. However, it is always advisable to contact a professional for the drafting of the constituent documents to avoid errors. In any case, an unrecognized body may still apply for recognition later. It will be sufficient to go to a notary and pay the minimum necessary assets.
The costs of establishing an unrecognized association concern the professional’s remuneration for the drafting of the statute and the registration fees to the Revenue Agency which vary according to the entity. On average, the total costs are around € 650. For a recognized association, however, it will also be necessary to take into account the cost of the notarial deed of approximately € 2,000 in addition to the payment of the minimum assets (approximately € 15,000).
To these initial costs must be added the expenses necessary for the initial formalities and for the management of the association. Once the association has been established, it will be necessary to contact an accountant who takes care of the accounting of the entity such as the preparation of the financial statements, the accounting management, etc. The average cost for these services is around € 1,000 + VAT.