Law that regulate the creation of endowment funds was enacted.

  • 16 de January de 2019

Law nº 13.800 / 19, which regulates the creation of endowments, a mechanism used for collecting and managing resources for public or private non-profit entities, focused on public causes, was sanctioned on the last 04/01.

Endowments are formed from an initial amount – usually from a donation of resources or assets – that is invested for the purpose of financing the organizations activities with their income. They are a source of resource and have the objective of making organizations more independent in project funding.

The law was the successor of Provisional Measure 851/2018, authored by then-President Michel Temer, created as one of the measures to raise funds for the reconstruction of the National Museum after the fire that occurred in September last year.

With the entry into force of Law 13,800 / 19, the endowment may receive donations from both individuals and private companies, which are invested by the fund management organization.

The managing organizations will be institutions created exclusively to capture and manage the endowment and the patrimony constituted, from resources donated, as well as to sign a partnership instrument with the supported institution, in which will be established the purpose of public interest and bond of cooperation.

The endowments established may support institutions related to education, science, technology, research and innovation, culture, health, the environment, social assistance, sports, public safety, human rights and other purposes considered of public interest.

The law also establishes compliance and governance bases for the funds and their respective management organizations, which must have a Board of Directors, an Investment Committee and a Fiscal Council or similar bodies.

The resources transfer from the direct public administration, autarchic, foundational and from a state-owned company, including the supported institution, to endowments will be forbidden. In addition, the endowments will not be guaranteed by the direct or indirect public administration and the fund management organization will be liable for its obligations up to the limit of the fund assets and rights.

Three types of donations were established, which can be accepted in the act constituting of the funds.

I – Permanent donation not restricted: Resource whose principal is incorporated into the permanent of the endowments and can’t be redeemed, and the proceeds can be used in programs, projects and other purposes of public interest.

II – Restricted permanent donation of specific purpose:  Resource whose principal is incorporated into the permanent endowment and cannot be redeemed, and the proceeds can be used in projects related to the purpose previously defined in the donation instrument.

III – Specific purpose donation: Resource allocated into a project previously defined in the donation instrument, which can’t be immediately used and which must be incorporated into the permanent assets of the fund for investment purposes, the principal of which may be redeemed by the fund management organization in accordance with the terms and conditions established in the donation instrument.

Our team is available for further clarification on the subject.