How to establish a non-governmental fund and manage its activities

Update day: March 1 , 2024

How to establish a non-governmental fund and manage its activities

In the context of an increasingly developing economy and society, non-governmental organizations play an important role in promoting progress and sustainable development. Among these important mechanisms, Non-Governmental Funds play a paramount role, providing resources and support for social, environmental, educational, and health activities. However, establishing and managing Non-Governmental Funds requires technical understanding and strict adherence to regulations and guidelines. This article will analyze the conditions and processes necessary to establish and manage a non-governmental organization fund, to ensure transparency, efficiency, and ethics in the operation of this organization.

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1. Conditions for establishing a Non-Governmental Fund

Depending on the specific case, the establishment of the Fund will have a number of different conditions, but in general, the following basic conditions must be met.

  • Have appropriate operating purposes: support and encourage the development of culture, education, health, sports, science, technology, community, and charity also humanitarian with not for profit purposes;
  • The founders of the Fund must be Vietnamese citizens or organizations and have at least 3 founders. Conditions for founders to be Vietnamese citizens: Have full capacity for civil acts and have no criminal record; If the founder is a Vietnamese organization: It must be legally established, have a charter or document stipulating the functions and tasks of the organization; Resolution of the collective of leaders or decision of the competent head on participation on establishing the fund; Decide to appoint a representative of the organization to join as a founder to establish the fund; In the case when a Vietnamese organization has foreign investment capital, the representative of the organization as the founder establishing the fund must be a Vietnamese citizen.
  • The fund’s founding board has enough contributed assets to establish the fund:
    • For funds established by Vietnamese citizens or organizations, it is necessary to ensure that assets contributed to establishing the fund are converted into VND as follows: A fund operating nationwide or inter-provincially: 6,500,000,000 (six billion five hundred million VND);A und operating within the province: 1,300,000,000 (one billion three hundred million VND); A fund operating within district area: 130,000,000 (one hundred and thirty million VND); The fund operates within the commune area: 25,000,000 (twenty-five million VND).
    • In cases where foreign individuals or organizations contribute assets to Vietnamese citizens or organizations establishing a fund, they must ensure that the assets contributed to establish the fund are converted into Vietnamese Dong as follows: The fund operates nationwide or inter-provincially: 8,700,000,000 (eight billion seven hundred million dong); Fund operating within the province: 3,700,000,000 (three billion seven hundred million VND); Fund operating within district area: 1,200,000,000 (one billion two hundred million dong); The fund operates within the commune area: 620,000,000 (six hundred and twenty million VND).
  • Ownership of assets contributed to establish the fund must be transferred to the fund within 45 working days from the date the fund is granted an establishment license and charter recognized.

2. Documents for establishing a Non-Governmental Fund

Documents to establish the fund are  sent as a set to the Minister of Home Affairs or Chairman of the Provincial People’s Committee. The dossier includes:

  • An application form for the establishment of the fund;
  • The draft charter of the fund;
  • The written commitment on asset contribution made by the fund’s founding members or documentary evidences of assets contributed to the fund as prescribed in Article 14 hereof;
  • CVs and criminal records of members of the fund founding board and documents prescribed in Article 11, Article 12, or Article 13 of Decree no.93/2019/ND-CP. If a founding member is subject to the management of a competent authority, written approval from the competent authority must be submitted according to the regulations on the management of officials;
  • Document concerning the election of positions on the Fund’s Founding Board;
  • Document confirming the expected location of the fund’s headquarters.

Please note that the Fund in operation msut have its seal according to the law, seal registration documents: Establishment decision or operating license from a competent authority and the  the organization’s operating charter has been approved by the competent authority.

3. Conditions for the operation of Non-Governmental Funds

Non-governmental funds will generally only operate when the following conditions are fully met:

  • The fund has an establishment license and acknowledgment of the fund’s charter issued by the Minister of Home Affairs or Chairman of the Provincial People’s Committee;
  • It has made an announcement of establishment;
  • It has obtained a written certificate from the bank where its account is opened that shows evidence of the the availability of the money amounts contributed by its founding members in its account. Also, for other assets, it has completed procedures for transfer of ownership of assets;
  • The fund must have received a decision of the Minister of Home Affairs or Chairman of the Provincial People’s Committee recognizing the fund’s eligibility to operate and recognizing members of the Fund Management Council.

4. Fund Management Agency

If the enterprise operates under the management of an agency such as the Board of Members or the Board of Directors, the Non-Governmental Fund will operate under the management of the Fund Management Council. Accordingly, this agency will act on behalf of the Fund to decide and implement the rights and obligations of the Fund.

Please note that members of the Fund Management Council must have full civil capacity and no criminal record. The Fund Management Council must have a minimum of 3 members, of which at least 51% of the members are Vietnamese citizens nominated by the founders. In case there is no nomination from the founder to establish a fund, the Fund Management Council of the previous term elects the Fund Management Council of the next term and the process is recognized by a competent state agency. The Fund Management Council includes: Chairman, Vice Chairman and members with a maximum term of 5 years.

In the context of enhancing development and improving living conditions for the community, the establishment and management of Non-Governmental Fund activities plays an undeniable role. However, with the above information, we can see that the law sets strict regulations for the establishment and operation of these Funds. This stems from the fact that establishing a Non-Governmental Fund is not just simply establishing an organization, it represents a commitment to a community and responsibility, for society as a whole. Defining clear goals that are consistent with the specific needs of the community is the key for the Fund to operate effectively and sustainably.

Besides, managing the activities of a Non-Governmental Fund requires professionalism, transparency and positivity in all aspects. By building a strict internal control system, monitoring and reporting results periodically, the Fund can ensure transparency and accountability in all its activities.

Time of writing: 20/02/2024

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