Skip to main content

Law on Foundations (amended in 2001)

This document has been provided by the
International Center for Not-for-Profit Law (ICNL).

ICNL is the leading source for information on th e legal environment for civil society and public
participation. Since 1992, ICNL has served as a resource to civil society leaders, government
officials, and the donor community in over 90 countries.

Visit ICNL’s Online Library at
http://www.icnl.org/knowledge/library/index.php
for further resources and research from countries all over the world.

Disclaimers Content. The information provided herein is for general informational and educational purposes only. It is not intended and should not be
construed to constitute legal advice. The information contai ned herein may not be applicable in all situations and may not, after the date of
its presentation, even reflect the most current authority. Noth ing contained herein should be relied or acted upon without the benefit of legal
advice based upon the particular facts and circumstances pres ented, and nothing herein should be construed otherwise.
Translations. Translations by ICNL of any materials into other languages are intended solely as a convenience. Translation accuracy is not
guaranteed nor implied. If any questions arise related to the accuracy of a translation, please refer to the original language official version of
the document. Any discrepancies or differences created in the tr anslation are not binding and have no legal effect for compliance or
enforcement purposes.
Warranty and Limitation of Liability. Although ICNL uses reasonable efforts to include ac curate and up-to-date information herein, ICNL
makes no warranties or representations of any kind as to its a ccuracy, currency or completeness. You agree that access to and u se of this
document and the content thereof is at your own risk. ICNL discl aims all warranties of any kind, express or implied. Neither ICNL nor any
party involved in creating, producing or delivering this document shall be liable for any damages whatsoever arising out of access to, use of
or inability to use this document, or any e rrors or omissions in the content thereof.

No 5338

THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF COSTA RICA

DECREES:

The Following

LAW OF FOUNDATIONS

Article 1. – May the legal persona of th e functions be recognized (*) as private entities
of public service that are established for no profit through the destination of patrimony
and with the objective of realizing or helping to realize, educational, beneficial, artistic,
literary or scientific activities and in gene ral all those that mean social well-being.

(*) NOTE: so it is found in the original publication. Must mean “foundations.”

Article 2. – The founder must be a physical or legal persona, national or foreign.

Article 3. – The foundations will be constituted thr ough public registration or testament.
The founder may not change any constitutiv e provision of the foundation once it has
begun its legal life.

Article 4. – In the constituting document will be assigned the name, residence,
patrimony, purpose, duration and administrativ e method of the foundation. The duration
of the foundation may be perpetual.

Article 5. – The foundations acquire legal person a through registration in the Public
Registry’s Person’s Department.

Article 6. – Previous to the registration in the Registry, a proclamation will be published
in the Diario Oficial, with a summary of the terms under which the foundation is
constituted. The dissolution, fusion and any othe r acts that change its structure will also
be published. The publication will be done by the public notary or Civil Judge, as case
may be.

Article 7. – The foundations do not have commerci al ends. Nevertheless, they may
execute operations of this kind to increase their patrimony, however, the profits obtained
must be exclusively destined to the accomplishment of its goals.

Article 8. – The donated goods for the creation of a foundation will be sole patrimony of
the same and may only be used for the completion of the purpose for which it was
created. Any such goods will be exempt from the payment of any type of tax and
registration dues.

Department of Parliamentary Services Legislative Processes Area

Article 9. – The donated goods of an existing foundation will have the same exemptions
established in the previous article.

Article 10. – The foundations will be exempt from the payment of registration dues and
from national and municipal taxes, excepting tariffs, which only the Ministerio de
Hacienda can revoke, according to the types of goods in question and their destination.
(Note: article 2, paragraphs d) and e), of the Regulatory Law of Exemptions, No 7293,
March 31, 1992, concedes privileges only to foundations with non profitable purposes
that dedicate themselves to the attention of abandoned, homeless or at social risk
minors, and that are properly registered in the Public Registry (paragraph c), such as
ones dedicated to the recollection and treatment of garbage, the conservation of
natural resources, the environment and any other basic activity for the control of
environmental hygiene and public health . Exemptions not provided in these
paragraphs a tacitly repealed as conforming to article 1 of Law 7293, ibidem).
(Note: According to paragraph a) of article 17 of Law 8114, July 4, 2001, the
exemption referring to the payment of ge neral sales taxes is rejected, without it
affecting any other exemption or any su bjection established in this norm).

Article 11. – The administration and direction of the foundations are the charge of an
Administrative Board. The founder will appoin t one or three persons as directors and
should also establish the procedure to s ubstitute these members in the constitution
documents. If the founder appoints only one di rector, the Administrative Board will be
integrated by three persons; if he appoints three, the number of directors will be five. In
both cases, the two members who complete th e Administrative Board will be assigned
one by the Executive Power and the other by th e municipality of the canton where the
foundation resides. The obligation of the Ad ministrative Board member will be free of
charge.

Article 12. – The founder may dictat e the regulatory orders for running the activities of
the foundation. If he does not do so, the Admi nistrative Board must do so during the first
sixty days after it’s been installed.

Article 13. – The member named direct or by the founder or the first, in case there are
three, will be obligated to convoke the others to establish themselves within the first
fifteen days since the moment the foundation should start its activities. In this case, there
will be no need to either publis h or record the reelection. If it is not recorded in the
Registry these changes will be valid for thir d parties. In the installation meeting the
directors will designate a president of the Administration Board among themselves,
whose functions will last a year and can be reelected.

The president will have the legal repres entation of the foundation, with general
empowerment and will subject to this law, to the constitutional provisions and rules of
the foundation and the provisions of the Administrative Board.

The president can substitute hi s representation with an executive delegate, when existing,
or in another person, providing this substituti on is approved by the Administrative Board.

Department of Parliamentary Services
Legislative Processes Area

Article 14. – The Administrative Bo ard can designate an executive delegate as its
representative in the management of matters of the foundation. The executive delegate
and any other necessary employee will have the duties and remunerations agreed upon by
the Board.

Article 15. – The Administrative Boar d will provide a report of its activities to the
General Comptroller of the Republic on the first of January of every year.

The Comptroller will supervise the operation of the foundation, through all the mediums
it sees fit and when it deems it pertinent. If in the course of a review an irregularity
occurs, it must inform it to the General Atto rney of the Republic, for action to be taken
which corresponds to the just ice tribunals, if necessary.

Article 16. – If the Administration Board finds that the foundation cannot be run
according to its constitutive provisions and ru les, it will request the Civil Judge in its
jurisdiction to order the met hod in which it should be administered or to order the
improvement of its deficiencies, always requi ring that it maintain its original purpose of
creation. To this request ther e will be attached a report to the General Comptroller of the
Republic. These diligences will be followed through voluntary juri sdiction procedures,
with intervention from the General Attorney of the Republic. The same conduct will be
followed to remove administrators when th ey default on their obligations. After the
Judge grants removal, he will communicate that the post must be replaced according to
article 11.

Article 17. – Only the appropriate Civil Judge, at the request of the Administrative Board
or the General Comptroller of the Republic , can declare the dissolution of a foundation,
when it has achieved its goals for which it was created or for motives of absolute
impossibility in the execution of the same.
If the Judge grants dissolution, he will or der that the property be passed to another
foundation or, in its absence, to a similar publ ic institution if the creators of foundation
did not deed them to another purpose and signed the necessary documents transferring
the property.

Article 18. – The foundations must complete the following requirements to be able to
receive donations, subsidies, transfers of goods and propert ies or any other economic
support from public institutions for the achievement their purpose:

a) Have been formed for at least one year.
b) Have been active since their formation, quality which they achieve with the
execution of at least one project a year.
c) Have an up to date registry of its persona and legal entity.
d) Have the concurrence of the Genera l Comptroller of the Republic, when
appropriate, which shows that received dona tions and transfers were executed and
liquidated according to the stated purpos e and conforming to the principles of
good administration.

Department of Parliamentary Services Legislative Processes Area

The foundations benefited according to the provisions of this article must provide an
annual report to the General Comptroller of the Republic regarding the use and
destination of funds received. If such repor ts are not presented within the month of
the start of the obligation, the comptroller en tity will officially inform the appropriate
active administration and the foundation will be forbidden to receive funds from
public institutions while this obligation is not met.

To count on absolute transparency in the obtainment, source and management of
these public funds, the foundation must keep a separate account of the donations it
receives and their origin. It must specify in what they will be invested. This account
must be supervised by the internal aud itor which all foundations are obligated to
have, who will execute his functions accordi ng to the lawful norms in the area it
supervises and to the established in the t echnical audit manuals issued by the General
Comptroller of the Republic.

The audit report must be submitted to the co mptroller entity with the report of the
Administrative Board, accord ing to the provisions of article 15 of this Law.
(This article 18 was reformed by the only article of Law 8151, November 14, 2001.
Published in La Gaceta No 232, Issue No 84, December 3, 2001).

Article 19. – This law is effective from its publication.

Transient. – The foundations that exist at the promulgation of this law may take
refuge in the provisions of ar ticle 16. In this case, the Judge, apart from ordering
administrative procedure, will also order registration in the Registry of Persons
through the protocolizati on of the contributory part of the resolution.

Institutions that are of the same nature as foundations and are registered otherwise
can also shelter themse lves under this provision.

Communiqué to the Executive Power

Legislative Assembly. – San Jose, day nine of th e month of August, nineteen
hundred seventy-three.

Department of Parliamentary Services Legislative Processes Area

LUIS ALBERTO MONGE ALVAREZ
President.

PEDRO GASPAR ZUNIGA, EMILIO DURAN PICADO,
Second Secretary. First Pro-Secretary.

Presidential House. – San Jose, day twenty-eight of the month of August, nineteen
hundred seventy-three.

Execute and Publicize

JOSE FIGUERES

The Presidential Minister,
GONZALO SOLORZANO GONZALEZ.

Revised: 04-12-2001
Ratified: 28-08-1973
Publicized: 11-09-1973
In Effect: 11-09-1973

Department of Parliamentary Services
Legislative Processes Area

-->