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No-profit entities:

Are the non-commercial bodies (or non-profit organizations) both private and public which don’t have as the only and exclusive purpose commercial activity. The main object of the organization is “the essential activity to directly achieve the primary objectives of the law or the deed of incorporation or statute”.

Under certain circumstances the status of non-commercial entity is lost, like when the commercial economic-financial activity exceeds the institutional or non-commercial activity.

Non-profit organizations may have a different nature or legal form, such as:

  • Various types of association;
  • Recognized association;
  • Unrecognized association;
  • Foundation;
  • Committee;
  • Social cooperatives;
  • ONLUS;
  • HPI.

Recognized Association:

The associations must be constituted by public deed. The constitutive act, as can be guessed from the name itself, represents the manifestation of the willingness of the parties to give rise to the association.

The statute contains a set of rules relating to the purpose, activity, organization, operation and dissolution of the association.

The patrimony of the recognized association is formed by the contributions made by the single members who commit themselves, limited to the membership fee, to ensure that the entity can achieve the main objective.

The association acquires:

  • “Perfect” asset autonomy (i.e. split from that of the partners);
  • The limitation of liability of directors to the sole assets of the Association.

In the recognized association, two social mechanisms must be laid down:

  • The assembly is the body composed of all the members of the association; and must be convened by the administrators:
  • at least once a year for the approval of the financial statements;
  • when the need arises;
  • upon request of at least one tenth of the members.

If the directors do not provide the convocation, it can be requested by the president of the court.

The Assembly also has the following tasks:

  • approve the budget;
  • deliberate on the responsibility of directors and appoint new ones;
  • amend or modify the rules of association, with the presence of at least three quarters of the members with the majority of votes (the Act or Statute of the Association can anticipate a lower quorum);
  • to deliberate on the dissolution of the association and on the devolution of the patrimony with the favorable vote of at least three quarters of the shareholders.
  • The directors: The Civil Code provides that the articles of association or the bylaws must contain the rules on the organization and the administration. The directors who receive the mandate must expressly accept the relevant charge, which in any case cannot have unlimited duration. At the end of each term, the shareholders’ assembly will appoint new directors or reconfirm the previous ones. The directors are responsible vis-à-vis the association in relation to the rules governing the mandate; their tasks, that can be defined as social ones, are mainly related to the achievement of the associative purpose.

The liability actions towards a director who has not fulfilled the duties imposed by the mandate or caused damage to the association is deliberated from the assembly of members. The director who did not take part in the Act cannot be penalized, as he was not disposing enough information. The same applies to the administrator who, having been informed, proceeded to express his dissent.

To obtain legal personality every association must acquire the recognition. The recognition must be requested through a specific application to the government, or the request can be presented to the prefect of the place where the association will set up the headquarter, with all the necessary documentation:

• a true copy of the articles of the association;

• sworn examination of the buildings/property that make up the assets;

• official listing or appraisal for securities (listed and unlisted).

Once the recognition has been obtained, the association is registered with the public Register of legal entities, to which any type of variation concerning the Entity must be communicated, including changes in the corporate offices.

Unrecognized association:

The unrecognized association is a stable organization of people that pursues a common purpose generally in the political, trade union, cultural, recreational, sports, educational, welfare, social, educational, religious, social promotion, environmental, social tourism, etc. areas. Although the association doesn’t possess the legal personality, the unrecognized association indeed is a legal entity independent of its shareholders. Even the unrecognized association originates from the associates’ agreement; this agreement defines, from a civil law point of view, an association contract or a deed of incorporation. The Act/agreement does not require a particular form: it can be written, verbal or even tacitly result from the activity organized by the group.

Different circumstances may arise when certain forms of constitution are mandatory. When for example the deed of incorporation is requested in a written form or in the form of a certified or registered private deed to access a special tax relief arrangement for certain types of Associations.

The following elements must always be determined in the constitutive agreements in order to certify the existence of an association:

  • the purpose, which cannot be related to profit and the concrete activities that are intended to be carried out to achieve the goal;
  • the conditions defining the process of admission of members and their withdrawal;
  • the rules on internal law and administration.

To take advantage of the special subsidized regimes from tax law defined for non-profit organizations, the following elements are requested:

  • the form of a public deed or authenticated or registered private deed;
  • the acceptance of a defined set of rules inspired by the principles of democracy and transparency.

The patrimony does not figure among the essential requisites for the constitution of not-recognized association because, the assumed obligations are related to those who act in the name and on behalf of the Association, therefore in general who represents or governs the Association. The personal guarantee of the administrators, vis-à-vis third parties, allows the absence of the need for an independent self-guarantee issued by the unrecognized association.

In general practice, however, all unrecognized associations are endowed with assets, consisting of periodic or one-off contributions paid by members, voluntary contributions, proceeds for the provision of various services to members or third parties, etc … called a mutual fund. The unrecognized association can also:

  • acquire shares of commercial companies, including equity companies;
  • participate in the establishment of joint-stock companies;
  • be established as a business owner;

provided there is no distribution of profits between the members. The possibility to acquire goods free of charge, both by succession mortis causa and by donation has always been precluded by unrecognized associations.

For unrecognized Associations the mandatory bodies are not explicitly provided for by civil law; however, the same considerations to those of recognized associations may be extended by indirect reference.

However, two bodies are:

1. The Assembly of shareholders, or the body to which the main choices of the Association are delegated: the approval of the financial statements, the appointment of the directors, the amendments to the Articles of Association.

2. The CEOs, who are mainly responsible for management and administration.

The Shareholders’ Meetings are clearly formed by the members expressing their will by means of resolutions; moreover, the Statute usually provide for the powers and procedures for convocation and deliberation of meeting.

The various types of association:

The association can be qualified in different ways depending on its purpose.

From civil point of view this distinction is fundamental, as if the association possess certain requisites it can be registered in special Registries regulated by special rules.

Each register has certain characteristics and allows the registered entity to enjoy particular tax benefits and to be able to request certain operating contributions for the realization of projects related to the purpose of the entity. There can be:

  • Social promotion associations:

“Associations of social promotion can be both recognized and unrecognized associations, movements, groups and their coordinations or federations established in order to carry out activities of social utility in favor of associates or third parties, non-profit-making and in full respect of the freedom and dignity of the members “. The same law excludes the following categories:

  • political parties;
  • trade unions;
  • employers’ associations;
  • professional and trade associations;
  • all the associations whose purpose is the exclusive protection of the economic interests of the members.

Furthermore, the group of private associations which have restrictions with reference to economic conditions and discrimination of any kind in relation to the admission of members or provide for the right to transfer, for any reason, of the membership fee are excluded from the social promotion associations.

The procedure for setting up a social promotion association is as follows:

  • creation of the deed of incorporation and of the Statute, agistment contracts;
  • convocation of the constitutive assembly with the purpose to sign the associative contract by the funding members;
  • registration of the act;
  • request for the tax code;
  • registration in the national or regional register.

Once the association has been established, it must be registered in the regional or national register, depending on the number of locations in which it operates, in order to acquire the status of social promotion association.

  • Voluntary associations:

“Volunteering is an activity provided in a personal, spontaneous, free and non-profit-making manner, even indirectly and exclusively for purposes of solidarity; for the realization of the voluntary activity, the institution must use in a prevalent way the personal, voluntary and free of charge services of its members “.

For voluntary associations, in principle, there is no possibility to remunerate the dependent and self-employed work of the members. However, the possibility to recourse to salaried employees of the body or of self-employed workers is not precluded, provided that the activity is carried out “exclusively within the limits necessary for the proper functioning of the organization”.

  • Amateur sports associations:

“The sports association or sports club is that legal entity that arises from the desire to unite several subjects with the aim of operating in the world of sport”.

These legal entities, non-profit-making, are governed both by the general legal system and by that established by the C.O.N.I.. The form of the act is free even if the most used in practice is the written and private recorded.

Once the association is established, it is necessary to register the body in the national register of amateur sports associations and societies held electronically by C.O.N.I.

The register is divided into 3 sections:

  • Amateur sports associations without legal personality;
  • Amateur sports associations with legal personality;
  • Amateur sports societies set up in the form of joint-stock companies and cooperative societies.
  • I.P.A.B.:

The acronym I.P.A.B. stands for Institutions of Public Assistance and Charity, born around 1890 with the Crispi law. These institutions financed by public funds have always had as their main purpose to intervene in the social world through two main activities:

  • management of residential facilities for elderly, children and the disabled;
  • management of facilities such as kindergartens and schools. From a structural point of view, the legal models that identified them were:
  • associations established to pursue activities of specific interest to members;
  • foundations established to manage the assets for purposes determined by the founder.

With the approval of the legislative decree n. 207/2001 for the reorganization of the I.P.A.B., the competences and the criteria for the management of the assistance institutes has been assigned to the individual Regions.

The aforementioned decree provides that the I.P.A.B. must be transformed into one of the following types:

  • public companies of personal services (A.S.P.): they are public law bodies with statutory, accounting, technical and management autonomy. Although operating under public law, they must adopt a form of management based on accounting and management control typical for joint-stock companies;
  • ONLUS and foundations (for non- profit purposes);
  • private company structures, linked to the social and health planning.

For this purposes, a two-year time limit has been set for the I.P.A.B. in order to provide for the transformation after which the commissioner will go off.

Turning to the analysis of the transformation methods the various regional laws have provided for three operating modes or transformation:

  • merging and subsequent transformation;
  • extinction of no longer active bodies.

Regarding the A.S.P. the various regional reform laws define various points including:

  • the principles of organization, based on the separation between power of planning and management;
  • monitoring tools;
  • the procedures to be applied in the case of transformation of A.S.P. in legal entities governed by private law if negative economic results occur for a consecutive two-year period


The foundations are entities with legal personality that in the past generally did not have the purpose to conduct economic activities. Nowadays there is a strong change in the possibilities and methods to operate foundations so much to carry out the activities of real and own social non-profit entrepreneurship. Unlike what happens in the associations in which there is the pre-eminence of the personal element, that is to say a plurality of people who together set the goal to achieve a common purpose, in the foundations the patrimonial element is prominent, even if obviously human resources are the key acting agents.

In fact, the foundations are established with the only purpose to allocate a set of goods to a purpose pre-established by the founder. Another difference between associations and foundations concerns the nature of constitutive Act; the constitutive act of an association is a contract in which more than one person participates, while in that of the foundation even one person can give life to a foundation. In associations, the people who make up the body will also effect the structure of the object through the assembly resolutions.  The foundations, on the other hand, cannot be affected by people who have provided for constitution, i.e. the members of the foundation do not intervene in the life and management of the body (appointed by the Founding Act).

The foundation is therefore a collective organization:

  • set up by one or more founders who allocate and bound their assets to pursue a goal;
  • managed by the board of Directors with the use of the assets of the foundation itself.

Today the Foundations of Community and Participation are very common, or those foundations whose founders can be public and private bodies as well as legal persons who together nurture the foundations’ heritage to vitalize a territory following the objectives of cultural and artistic development, environmental protection, to safeguard assets and raise funds for specific projects. The last type of foundations originates from the interpretation of the art. 12 and 1332 of the civil code combined with the art. 45 of the Constitution.

The main characteristics of these institutions are:

  • presence of an open-ended destination patrimony to which public and private entities may also join, bringing movables, real estate, money, services, working hours, whose representatives work on the Board of Directors;
  • presence of the founders in the life of the foundation (precluded in traditional foundations), which have their own body, the General Council, which decides on the essential acts of the foundation;
  • generally, there is the presence of an internal monitoring body with an exclusive public component.

Therefore, the foundation of participation appears as an entity that gradually opens outwards.

To date, the foundation of participation is often adopted as a model for the implementation of art. 10 of the Decree established by the Ministry for Culture, which provides that the Ministry may participate in a foundation by conferring the use of restricted properties.

Therefore, the deed of incorporation must contain:

  • the purpose
  • assets.

The purpose of the foundation must have the character of public utility; the legislation provides that the foundation cannot create economic benefits for the founder.

The other vital element of the constitutive deed are the assets. However, assets are not the central element in all foundations.

In fact, there can be:

  • foundations where the assets are vital, such as foundations for scholarships;
  • foundations in which assets are the means to guarantee the functioning of the institution, such as the foundations whose purpose is the scientific research, education and assistance.

The Articles of Incorporation and the Statutory describe the methods that are used to release the assets or, if this is provided for as a constituent purpose, the services to be provided to third parties. As regards the administration of foundations, rules other than those established for recognized associations apply.

The administrative body can be formed by a single person or by several persons and the designation can be carried out:

  • by the founder himself or his/her heirs;
  • by third parties in charge (for example, public or private bodies, people with a certain role)

The administrator and the founder can be the same person.

The duration of the assignment can be permanent and the position may be held by a natural person, or by a juridical person; in this case the administrator will be personified by the director (or by the directors) of the legal entity.

The administrator in the performance of his duties must respect the allocation of the assets manifested by the founder or the founders in the deed of incorporation.

The government performs the legitimacy check on the performance of the administrative activity (ex. for school foundations, the control is carried out by the Ministry of public education). This control can be also performed by the Entity which has conferred the Juridical Personality. The main objective of the procedure is to verify the compliance with the statutory provisions and the regulations in general (civil law provisions) by the directors; it cannot extend to the criteria adopted for administration or asset management.

The Committees:

The committee is made up of several people who are bound by a contract to pursue a common purpose, forming an asset to be used to achieve the goal.

The committee, although having common elements both with associations (organization composed of people) and with foundations (the objective is to create a common fund for the achievement of a purpose) is nevertheless a figure in its own right in the legal landscape. The purpose of the Committee is generally an object of public interest. For the establishment of a committee no special forms are required.  In case the committee intends to obtain a legal personality, the deed of incorporation must be in the form of a public instrument and must be requested in the same way as for recognized associations.

Social Cooperatives:

The social cooperatives are governed by the law of 8 November 381/1991.

This is a framework law, which refers to the regional laws for further specifications; for everything that is not governed by the aforementioned legislation or by the circulars of the Ministry of Labor and the INPS, reference is made to the provisions concerning cooperatives in general, Law 52/1992 “New rules on the subject of a cooperative society”.

Social cooperatives, although having a corporate form, are placed among non-profit organizations for the purpose they pursue, i.e. “the general interest of the community in human promotion and social integration of citizens”.

They constitute real “social enterprises” markedly different from commercial enterprises, since the former to not primarily aim to economic growth, but rather improve the social welfare through efficient management and use of resources. Furthermore, as a result of Legislative Decree 460/1997 which established this figure, social cooperatives are by law considered ONLUS, given the activity carried out, respecting their structure and their purpose.

These cooperatives generally offer two types of services:

    • Type A (social, healthcare and educational services for the elderly, disabled, and minors etc.).
    • Type B (different types of activities – agricultural, industrial, commercial or specific services – aiming to employ disadvantaged people).

Thanks to circular 153/96 of the Ministry of Labor and Social Security, these services can now be carried out simultaneously, provided that:

  • The types of disadvantage and / or the areas of intervention explicitly indicated in the social object are such as to postulate the coordinated activities for the effective achievement of the purposes attributed to social cooperatives;
  • The administrative organization of social cooperatives allows for the clear separation of the management activities carried out for the correct application of the concessions granted by the current legislation.


The ONLUS are not new subjects that are added to those already existing, but act as a tax “container” in which various legal entities in possession of the requirements provided by law enter or can enter.

With the creation of ONLUS, we intend to favor the development of advanced productive sectors in the fields of culture, sport and social solidarity, in order to create new job opportunities, as well as improving the social areas involved.

For non-profit organizations, with the exception of cooperative companies, the carrying out of institutional activities in pursuing exclusive social solidarity purposes does not constitute commercial activity. It is therefore established that the income deriving from the exercise of the directly related activities do not contribute to the formation of taxable income.

The following subjects can become ONLUS:

    • Associations
    • Foundations
    • The committees
    • Cooperative companies
    • Other private entities with or without legal personality

The ONLUS rule is essentially addressed to non-commercial entities, even if with a forcing, linked to the activities carried out, cooperatives can also be identified as ONLUS.

However, we can have three types of ONLUS:

  • Normal ONLUS:

associations, committees, foundations, cooperative societies and other private entities with or without legal personality;

  • ONLUS by law:

voluntary organizations; non-governmental organizations; social cooperatives; consortia of cooperatives that have the social base formed 100% by social cooperatives.

  • Entities with ONLUS Branch:

ecclesiastical bodies of religious confessions with which the State has entered into pacts or agreements; social promotion associations.

In addition, there are subjects that cannot become ONLUS, such as: public

bodies, banking foundations, IPAB, and political parties. The NGOs operate in sectors of activities such as: social and healthcare assistance, charity, education, amateur sport, cultural promotion and art, protection of civil rights.

The social enterprise:

The subjects that can acquire the qualification of social enterprise must have the following requisites:

  • Being a private organization, like:
  • Associations;
  • Foundations;
  • Partnership;
  • Capital company;
  • Cooperative companies;
  • Consortia;
  • To exercise in a stable and principal way an organized economic activity for the purpose of production or exchange of goods or services of social utility, aimed at achieving purposes of general interest; The main activity refers to the one that accounts for over 70% of total revenues.
  • Possession of a set of specific pre-defined requirements, including non-profit making. The absence of profit aims in compliance with the following provisions:
    • allocation of profits and operating surpluses to the performance of the statutory activities or to increase the assets;
    • prohibition of distribution, even indirectly, of profits and operating surpluses, in any denominated way, as well as of funds and reserves in favor of CEOs, partners, shareholders, workers or collaborators.

On the contrary, the following entities cannot acquire the status of a social enterprise:

  • public administrations
  • organizations whose constituent activities limit, even indirectly, the provision of goods and services in favor of members, associates or shareholders.