In this post I would like to describe the byzantine process of founding a non-profit in Germany, with all our ups and downs and unexpected setbacks, for the benefit of anyone else who might be considering founding one as well.
From the very start, we wanted to make sure Tonhain Kollektiv had a non-profit status so that we would be able to receive tax-exempt donations and also apply for grants and state funding.
The first question we needed to solve was which structure we wanted. In Germany you can either choose to be a non-profit association (gemeinnütziger Verein or e.V.) or a non-profit limited liability company (gemeinnützige Gesellschaft mit beschränkter Haftung, or gGmbH). The key differences are in the ways the legal entities are organized, and the amount of capital and bureaucracy needed to found one.
An e.V. has a more egalitarian structure. It has two main bodies, the Vorstand, or board, and the Mitgliederversammlung, or the general assembly. The Vorstand is elected by the Mitgliederversammlung and is in charge of executing the goals of the charter and the decisions made by the Versammlung. Every year a Versammlung is convened so the members can vote on the budget and other important topics. The Vorstand consists of one or two chairpersons, who represent the association, and are liable for any mistakes the Verein makes. Currently, Kathy Ran and I (Benjamin Lai) are the chairpersons of Tonhain Kollektiv e.V..
The other option, the gGmbH, has a more hierarchical structure and is structured more like a typical business, with a managing director, or CEO, and shareholders. In Germany, you need at least 25 000 Euros to start a GmbH. (Side note: There is also the option of an Unternehmergesellschaft (gUG) where you only need 1 Euro to start it, but all profits must stay within the company until the capital stock reaches 25 000 Euros). The GmbH also requires considerably more bureaucracy and paperwork and has much more stringent book-keeping requirements.
Since we preferred the egalitarian structure of the Verein and wanted to start up as quickly as possible (and also didn't have 25 000 Euros laying around), for us the better option seemed to be the Verein, so we went for that.
For a Verein you need at least seven members to sign off on the charter (Satzung). So from our initial members Benjamin Lai, Yehjin Chun, Rainer Crosett and Luke Hsu, we needed to find at least three more members. Thankfully, Kathy Ran, Friedemann Slenczka and Leonard Disselhorst all decided they wanted to come on board the Tonhain Kollektiv ride. We were also very honored that luminaries of the classical music world joined us as honorary members: Indira Koch, deputy concertmaster of Deutsche Oper Berlin, Prof. Jens Peter Maintz, the Tonhain Kollektiv cellists' professor and Prof. Wolfgang Emanuel Schmidt, Yehjin's cello professor in Weimar.
We also had to decide who would be in the Vorstand. Since we wanted to make sure all the musicians in our group had a voice in deciding on important matters, we decided to have a somewhat unusual structure of having seven members as part of the Vorstand. With most of us as full-time musicians with busy touring schedules, you can imagine that planning our weekly Vorstand meetings is a bit of a logistical challenge, but thanks in large part to the organizing prowess of Kathy Ran, we have been managing it well so far.
The next important step is to draft the charter or the Satzung of our Verein. This is extremely important, because the tax authorities decide on the basis of the Satzung whether or not the association is considered a non-profit. In Germany only certain associations can gain non-profit status, namely if the goals are seen as "promoting the general public". In our case, we want to promote classical music and the arts, a valid non-profit goal. We are very thankful to Brigitte Russ-Scherer, from Podium Esslingen, who advised us and helped us draft our Satzung, which you can also find on our website. She gave us the very important advice of pre-submitting the draft of our Satzung to the tax authorities to ask if our Verein would be eligible for non-profit status. This I did, and I was promptly given the confirmation that it was indeed conforming to the requirements needed for non-profit status.
After finishing the Satzung you need to call a founding assembly where the members can officially vote on accepting the Satzung. Our founding assembly took place on June 13, 2023 online and the Satzung was accepted unanimously. With the protocol of our assembly, the next step was to take it to the notary to have it notarized and submitted to the district court.
Our founding documents were notarized on July 17. 2023, and on July 21 we suffered our first legal setback. The district court remarked that there were some minor inconsistencies in our Satzung and demanded it be revised. For example, in one part of the Satzung, it says that only natural persons can become a member of the Verein However in a later section, it is stated that death ends membership and, in brackets, that in case of legal entities, the disbandment of the legal entity would lead to the ending of membership. This was deemed contradictory by the district court.
In the section on membership fees, we originally wanted to keep it open-ended so we said that the general assembly can vote on whether or not membership fees are required. This was also deemed insufficient by the district court since it had to state definitely whether membership fees were required or not. Ugh, such minor quibbles... but such is the state of bureaucracy in Germany!
So we had to revise our draft and call for another emergency assembly to vote on the revised Satzung. This we did on August 1, 2023, and I submitted the signed minutes of the meeting to the district court. On August 4, 2023 we faced our second legal setback. All our meetings had been online, but since our Satzung did not mention that online assemblies were allowed, the district court needed written confirmation that all members agreed to have the meeting online. One might think that, after the pandemic, online meetings would be widely accepted as the norm... but no, in Germany, land of norms and laws, everything has to follow correct procedure.
So I had to send another written confirmation to the district court, that yes, everyone agreed to have the assembly online. Finally, on August 21, our Verein was officially registered. But in order to actually be able to start accepting donations, we would need an important document from the tax office: a Feststellungsbescheid. This piece of paper officially gives us the permission to hand out a grant certificate (Zuwendungsbescheinigung) to donors.
To get a Feststellungsbescheid I had to fill out a seven page form, the “Fragebogen zur steuerlichen Erfassung” or “Questionnaire for tax registration”. We are very grateful to Friedemann's aunt Katharina Campenhausen for advising us on how to fill out this form correctly. We got our Feststellungsbescheid on August 24. With this document in hand, we were then able to apply for a bank account. We chose Sparkasse Berlin. After a considerable delay, we were finally able to start using our account on October 5.
In conclusion, founding a Verein in Germany is a complicated procedure that requires careful preparation, the support and advice of professionals, and most of all a lot of patience. And this is all just so that we can finally start with the real work of our Verein: creating a new curated, interdisciplinary chamber music concert series in Berlin! If you would like to support us with our work, please go to our page "Support us" to find our donation account details.