7 Basic Legal Steps in Establishing a Foundation and Association

7 Basic Legal Steps in Establishing a Foundation and Association. The institutionalization of civil society in the Turkish legal system is the concrete embodiment of the freedom of association, which is a constitutional right (Constitution Art. 33). Civil society organizations (CSOs), which are indispensable elements of the democratic social order, are structured on two main axes in terms of their legal nature: “Community of Persons” (Associations) and “Community of Assets” (Foundations). This comprehensive report is prepared for lawyers, entrepreneurs, philanthropists, and civil society professionals aiming to establish a civil society organization in Turkey. It examines the establishment process in depth through seven fundamental legal steps, in light of the 2025 legislative amendments, current monetary thresholds, and judicial precedents.

The report analyzes not only the procedural steps but also the legal philosophy and strategic decision-making processes behind them, centering on the Turkish Civil Code (TMK), the Law on Associations No. 5253, the Law on Foundations No. 5737, and the Law No. 5072 on the Relations of Associations and Foundations with Public Institutions and Organizations. In particular, the increase of the minimum asset requirement for foundation establishment to 2,000,000 TL as of 2025, updates in bookkeeping thresholds, and the integration of digital bureaucracy (DERBIS) constitute the current data backbone of the report.

Introduction: Freedom of Association and Dual Structure in Turkish Law

Civil society is the whole of non-profit organizations where individuals come together voluntarily for common purposes, outside the authority of the state. In Turkish law, this field is built upon two fundamental concepts inherited from Roman law: Universitas Personarum (Community of Persons – Association) and Universitas Bonorum (Community of Assets – Foundation). Although these two structures gather under the umbrella of “civil society organization,” they exhibit diametrically opposite characteristics in terms of their ontological reasons for existence, establishment procedures, and management dynamics.

Associations are formed by at least seven real or legal persons combining their knowledge and activities continuously to realize a specific and common purpose other than sharing profits. The essential element here is the “human.” The will of the association manifests in the General Assembly formed by the members, and this will can change and transform over time.

Foundations are communities of assets with legal personality, formed by real or legal persons allocating sufficient assets and rights to a specific and continuous purpose. The essential elements in a foundation are “assets” and “purpose.” Once the foundation is established, the founder’s will freezes, and the assets continue to serve that purpose within the framework of the rules determined in the foundation deed. There are no “members” in a foundation; there are “beneficiaries” and “managers.”

This report will address the establishment journey of these two structures in seven strategic steps, from the preparation phase to the acquisition of legal personality and the establishment of a sustainable operating system.

Step 1: Preference of Legal Status and Founding Will (Strategic Preparation)

When the idea of establishing a civil society organization is born, the first and most critical step is to choose the legal cover most suitable for the purpose. This stage is a fundamental strategic decision that determines the future operational capability, financial obligations, decision-making speed, and relations with the state of the organization, beyond a mere declaration of intent. An incorrect status preference can lead to administrative crises and financial burdens that are difficult to compensate for in the future.

1.1. Community of Persons vs. Community of Assets: In-depth Analysis

Decision-makers must consider the following parameters when answering the question “Association or Foundation?”:

Management Dynamics and Democracy: Associations are democratic structures. Members are the owners of the association and can change the management by voting in the general assembly, or even differentiate the purpose of the association by amending the bylaws. If the aim is to mobilize large masses, spread to the grassroots, provide financing through member dues, and establish a participatory structure (e.g., hometown associations, sports clubs, rights-based advocacy organizations), the Association is the correct choice.
Continuity of Will and Static Structure: Foundations are closer to oligarchic or meritocratic management models. The purpose and form of management determined in the foundation deed are bound by rules that are very difficult (almost impossible) to change later. The founder can keep control through the Board of Trustees structure determined while establishing the foundation or guarantee that their principles last forever. If the aim is to allocate the income of an asset (e.g., a business inn, a substantial amount of cash) to a continuous charitable work and prevent this purpose from deviating through populist general assembly decisions, the Foundation is the only correct choice.

Strategic Insight: If a business person wants to open an educational institution using their own wealth and wants their educational philosophy to continue after their death, they should establish a Foundation. However, if the same business person wants to come together with other colleagues in the sector to lobby for solving sectoral problems, they should establish an Association.

1.2. Number and Qualifications of Founders

The legislation foresees different minimum numbers of founders and qualifications for the two structures:

Number of Founders in Associations: According to the Turkish Civil Code (TMK) Article 56 and the Law on Associations, at least 7 (seven) real or legal persons with the capacity to act must come together to establish an association. This number must be provided at the time of establishment notification and maintained throughout the continuation of the association. Falling below 7 and failing to complete it within a certain period is a cause for the spontaneous termination (dissolution) of the association.
Number of Founders in Foundations: There is no minimum number of persons requirement to establish a foundation. A single real person or a single legal person can establish a foundation by allocating assets. However, in practice, more than one person is needed to form the management, audit, and executive organs in the foundation deed, or professional managers must be appointed from outside.

Special Case: Children’s Associations The Regulation on Associations and TMK have extended the freedom of association to children as well. Minors who have completed the age of 15 and possess the power of discernment can establish children’s associations with the written permission of their legal representatives. Minors who have completed the age of 12 can become members. However, it is forbidden for those over 18 to be founders or members in children’s associations; this is to prevent “adults from using children as fronts.”

1.3. Public Relations and Restrictions of Law No. 5072

One of the most important issues founders must pay attention to is the distance from the state. Law No. 5072 on the Relations of Associations and Foundations with Public Institutions and Organizations has introduced strict restrictions to protect the “civility” of civil society and prevent the abuse of public power:

Name Ban: Associations and foundations cannot take the names of public institutions and organizations (e.g., “Police Department Strengthening Foundation” cannot be established).
Location Ban: They cannot operate within public service buildings and their annexes.
Personnel Ban: Public officials cannot serve in the organs of these organizations using their titles.
Collection of Aid: They cannot demand fees under the name of mandatory donations or contribution shares from citizens regarding public services.
Resource Transfer: Resources cannot be transferred directly from the public budget to these organizations; deductions cannot be made from salaries.

These bans are decisive in shaping the founding will. If the establishment purpose is to support a public institution (school, hospital, etc.), this support must be structured in a way that does not get caught by Law No. 5072, completely independent and based on volunteerism.

Step 2: Construction of the Basic Regulatory Text (Bylaws and Foundation Deed)

The second step is the writing of the organization’s “constitution.” These texts, called “Bylaws” (Tüzük) for associations and “Foundation Deed” (Vakıf Senedi) for foundations, determine the internal functioning, distribution of authority, purposes, and red lines of the institution. A poorly prepared bylaw or deed causes the institution to die before it is born or to struggle with constant legal disputes.

2.1. Mandatory Elements and Design Principles of Association Bylaws

An association bylaw must absolutely contain the following elements according to the Law on Associations Article 4 and Regulation provisions:

Name and Center of the Association: It must be clear, understandable, in Turkish, and original enough not to cause confusion with another association.
Purpose of the Association and Working Subjects to be Pursued to Realize This Purpose: This is the most critical article of the bylaws. Associations cannot operate in a subject not written in their bylaws. For example, if an education association that does not have “disaster relief” in its bylaws takes aid to an earthquake zone, it is legally considered to have engaged in “activity outside of purpose,” and its managers become liable. Therefore, the working subjects article should be written broadly enough to cover possible future activities (provided it is not contrary to the law).
Membership Conditions: Who can be a member, entrance fees, and annual due amounts (or how they will be determined) must be clarified.
General Assembly Meeting Mode and Time: It is mandatory to hold the ordinary general assembly at least once every 3 years. This period can be determined as 1 year, 2 years, or 3 years in the bylaws. The meeting procedure and call method (SMS, e-mail, website announcement, etc.) should be detailed.
Formation of Mandatory Organs: The Board of Directors (at least 5 principal, 5 substitute) and the Supervisory Board (at least 3 principal, 3 substitute) must be clearly stated in the bylaws. These numbers are minimums; they can be increased by the bylaws but cannot be decreased.
Branches and Representation: Whether the association can open branches and, if so, how branches will be represented in the general assembly should be written.
Dissolution and Liquidation: It should be stated to whom (usually another association with a similar purpose or institutions like the Red Crescent) the assets will be transferred in case of the association’s dissolution. If not specified, the state (Treasury) may confiscate it, or it is transferred to the nearest association with a similar purpose by a court decision.

Legal Tip: Using flexible expressions in the bylaws such as “The General Assembly meets at the place, day, and time determined by the Board of Directors” eliminates the obligation to amend the bylaws for future changes in location and time.

2.2. The “Immutability” Principle and Importance of the Foundation Deed

The foundation deed is in the nature of an “official deed” and is arranged at a notary. Since foundations do not have a dynamic organ like the “General Assembly” that can change the bylaws (amending the deed through Board of Trustees decisions is a very difficult process requiring court approval), the text of the deed must be constructed perfectly during the establishment phase.

Purpose Element: The purpose of the foundation must be lawful, specific, understandable, and continuous. Vague purposes such as “doing all kinds of charity work” may cause the registration of the foundation to be rejected. The purpose must be achievable with the assets allocated to the foundation.
Assets: The type, value, and income-generating potential of the assets allocated to the foundation are clearly written in the deed.
Management Organs: Who will manage the foundation, how managers will be selected, their terms of office, and meeting quorums must be detailed in the deed. In foundations, a dual structure of “Board of Trustees” (highest decision-making body) and “Board of Directors” (executive body) is generally preferred.
Prohibitions: Foundations contrary to the basic principles of the Constitution, national unity, or observing race or community discrimination cannot be established. In the Republic of Turkey, the concept of “community foundation” applies only to non-Muslim minority foundations recognized by the Treaty of Lausanne; it is legally impossible to establish a new community foundation.

Step 3: Asset Allocation and Capital Formation (Financial Foundation)

The third step is laying the economic foundation of the legal structure. The principle “No foundation without money, no association runs without money” summarizes this step.

3.1. Minimum Establishment Assets in Foundations (2025 Thresholds)

The General Directorate of Foundations determines the “minimum assets to be allocated to their purposes” for new foundations to be established each year with the decision of the Foundations Council. This amount serves as a barrier testing the seriousness of the foundation and its capacity to realize its purpose.

Current Data: For the year 2025, the minimum assets for the establishment of new foundations have been determined as 2,000,000 TL (Two Million Turkish Liras).

This amount can be cash, or it can be real estate or securities whose value has been determined by SPK-licensed real estate valuation experts or court experts. However, since the valuation of non-cash assets prolongs the process, cash establishment is generally preferred.

Bank Blockage Process: Founders must deposit 2,000,000 TL into a temporary account to be opened in the name of the foundation. The bank issues an official letter stating that the money is blocked until the foundation acquires legal personality. This letter is the sine qua non of the court registration file. After the registration decision is finalized and recorded in the General Directorate of Foundations registry, the blockage is resolved, and the money is opened for the foundation’s use.

3.2. Financial Start and Dues Policy in Associations

There is no legal minimum capital requirement for association establishment. Theoretically, an association can be established with 0 TL. However, in practice, founders need to create a pool to cover establishment expenses such as rent, notary, books, stamp tax, and seals.

The “Entrance Fee” and “Annual Dues” determined in the bylaws are the first official revenues of the association. Associations have the authority to collect dues from their members by law and do not obtain separate permission for this. However, the concepts of “collecting donations” and “collecting aid” should not be confused. While associations can freely receive donations from their own members, they must obtain permission from the Governor’s Office according to the Law on Collection of Aid No. 2860 to collect aid from the public (non-members) (excluding associations working for the public benefit and some exceptions).

Option to Establish an Economic Enterprise: If foundations and associations wish to engage in income-generating commercial activities to realize their purposes (opening courses, selling books, operating locales, marketing products, etc.), they must establish an “Economic Enterprise” with a tax identification number separate from the main legal entity. Economic enterprises are subject to Corporate Tax, VAT, and all other commercial taxes. This structure was introduced to prevent unfair competition.

Step 4: Official Application and Formal Requirements (Bureaucratic Process)

The fourth step is the submission of the prepared texts and collected assets to the official authorities. At this stage, associations and foundations follow completely different paths.

4.1. Notary Approval for Foundations (Gaining Official Status)

The arrangement of the foundation deed is subject to the “official form” condition according to the TMK. The founders apply to the notary with the draft foundation deed they prepared. The notary prepares the deed “ex officio” (in the form of arrangement). All founders must sign the deed in the presence of the notary.

Required Documents: Identities of the founders, authority documents (if legal person), 2,000,000 TL bank blockage letter, real estate deeds if any.
Cost: Notary expenses vary depending on the number of pages of the deed and the value of the commitments it contains, but according to 2024-2025 tariffs, it may vary on average between 5,000 – 10,000 TL (increases as page count increases).

4.2. Notification to Civil Administration for Associations (Birth of Legal Personality)

Associations are established not by a “permission system” but by a “notification system.” This is a democratic gain preventing the arbitrariness of the administration.

Place of Application: The Governorate (Provincial Directorate of Civil Society Relations) in the province where the association center is located or the District Governorate in the district.

List of Required Documents:

Establishment Notification Form (Annex-2): Completely filled and signed by all founders. This form also includes contact information for the temporary board chairman to receive a DERBIS password.
Association Bylaws: 1 original copy with every page signed by all founders (Since civil administrations scan digitally, the number has dropped, but it is useful to go with spares).
Domicile Document: Title deed photocopy or lease contract of the association center. If the association center is to be established in a place appearing as a residence (home), a “letter of consent” given unanimously by all flat owners in the apartment is required. This condition is not sought in business inns.
For Legal Person Founders: The “Association establishment” decision taken by the authorized organ of the legal personality (Company, another association, etc.) and the representative assignment letter.

Moment of Legal Personality: When the documents are submitted completely to the civil administration, the administrative officer checks the documents and instantly issues a “Receipt of Acceptance” (Alındı Belgesi). The date and time on this document is the moment the association is legally born, that is, it gains legal personality. The association attains legal capacity from this moment on.

4.3. Digital Integration (DERBIS)

During the notification, a DERBIS (Association Information System) password is requested on behalf of the Temporary Board Chairman. DERBIS is the e-government of civil society. Declarations, general assembly results, member notifications, address changes, and foreign aid notifications are made entirely through this system. Obtaining and activating the password is mandatory for the operational process to begin.

Step 5: Judicial Registration and Legal Audit

The fifth step is the approval and finalization of the gained status by the judiciary or administration.

5.1. Registration Case in Foundations (Constitutive Element)

In foundations, the notary transaction alone does not confer legal personality. For the foundation to gain legal personality, it is mandatory to file a “Foundation Registration Case” at the Civil Court of First Instance of the place of residence.

Nature of the Case: It is a non-contentious judicial matter (no defendant). However, the court writes a warrant to the General Directorate of Foundations (VGM) asking for its opinion. VGM participates in the process effectively as a “secret party.”
Matters Examined: The court examines the legality of the foundation deed, whether the purpose is among the prohibited purposes, and most importantly, whether the allocated assets (2 Million TL) are sufficient to realize the purpose (via Expert Witness).
Costs (Year 2025):
- Application Fee: 281.80 TL.
- Fixed Decision Fee: 281.80 TL.
- Together with Expert Witness Fees, Notification Expenses, and Foundation Announcement Fee, the total litigation cost hovers in the band of 15,000 TL – 25,000 TL.

Decision and Registration: When the court gives a registration decision, this decision is sent to the VGM. VGM records the foundation in the “Central Registry.” It is then announced in the Official Gazette. The foundation gains legal personality as of the date of registration in the court registry.

5.2. Bylaw Review in Associations (Auditing Element)

Although associations gain legal personality with the “receipt of acceptance,” this status is like “subject to inspection.” The Governorate examines the bylaws and the criminal records of the founders within 60 days.

Detection of Deficiency: If an illegality in the bylaws (e.g., missing mandatory organs) or an obstacle in the founders (e.g., conviction of a crime prohibiting establishing an association) is detected, the Governorate sends a “correct within 30 days” notification.
Dissolution Case: If the deficiencies are not remedied within the period, the Governorate notifies the Public Prosecutor’s Office, and the Prosecutor files a lawsuit for the dissolution of the association at the Civil Court of First Instance. Therefore, bylaw preparation (Step 2) is of vital importance.

Step 6: First Organization After Establishment and General Assembly

After gaining legal personality, the transition process from “Temporary Management” to “Permanent Organs” begins. This is the step of ensuring democratic legitimacy.

6.1. The “First 6 Months” Rule in Associations

The Law on Associations mandates holding the first ordinary general assembly meeting and forming the mandatory organs (Board of Directors and Supervisory Board) within the first 6 months following the establishment notification.

Risk: If the general assembly is not held within this period, the association is considered spontaneously terminated (dissolved). The civil administration can apply to the court for the liquidation of the association.
Process: Member registrations are made, general assembly call is made (according to the procedure in the bylaws), the meeting is held, organs are elected.
Notification: The General Assembly Result Notification is sent to the civil administration via DERBIS within 30 days following the meeting.

6.2. Commencement of Duty of Organs in Foundations

In foundations, organs (Board of Trustees, Board of Directors) are already specified name by name in the foundation deed. With registration, these organs start their duty directly. There is no obligation to “elect organs in the first 6 months” in foundations as in associations because the organs are appointed. However, foundation managers must issue signature circulars and make an “Asset Notification” to VGM.

Step 7: Sustainability: Bookkeeping, Financial and Administrative Audit

The seventh and final step is to protect the legal and financial health of the living organization. This step is the backbone of the institution’s accountability to the state.

7.1. Mandatory Books to be Kept and 2025 Thresholds

Associations and foundations must keep books like commercial enterprises. The bookkeeping method changes as “Operating Account Basis” or “Balance Sheet Basis” according to annual income.

Common Mandatory Books for Associations and Foundations:

Decision Book: Board of Directors decisions are written in date/number order and signed.
Member Registration Book (Associations Only): Member information is processed.
Document Registration Book: Incoming-outgoing document tracking.
Fixture Book: Fixtures such as furniture, computers, etc., are recorded.
Operating Account Book: Revenues and expenses are processed line by line.
Receipt Document Registration Book: Serial numbers of donation receipts (stub tracking) are processed.

Transition Thresholds to Balance Sheet Basis (2025): Associations working for the public benefit and associations/foundations exceeding a certain revenue size must keep books according to the Balance Sheet Basis (Journal, General Ledger, Inventory Book). The thresholds determined in accordance with the 2025 VUK General Communiqué are as follows:

Those exceeding Annual Purchase Amount: 2,000,000 TL,
Those exceeding Annual Sales Amount: 2,800,000 TL,
Those exceeding Gross Business Revenue: 990,000 TL must switch to the Balance Sheet basis.

Certification Time: Books must be certified by a notary or the Provincial Directorate of Civil Society before being used. The closing certification of the journal is mandatory every year.

7.2. Declaration and Audit Obligation

Association Declaration: Associations must submit a comprehensive declaration containing the activities, income-expenses, member numbers, and assets of the previous year via DERBIS until the end of April of each year. Failure to submit a declaration or submitting a false declaration is a cause for serious administrative fines and judicial investigation for managers.
Foundation Audit and Share: Foundations are audited by inspectors of the General Directorate of Foundations. Additionally, foundations are obliged to pay a certain rate of their annual gross revenues (Management and Representation Share) to VGM.

Although the establishment of foundations and associations seems like a seven-step technical process, it is essentially placing a social contract on a legal ground. The state raising the capital barrier in foundation establishments to 2,000,000 TL as of 2025 is an indication that it wants foundations to focus on permanent and large-scale projects with stronger capital structures. In contrast, associations will continue to be the dynamic, participatory, and grassroots face of civil society with their low-cost and flexible structures.

The biggest risk for founders is neglecting legal procedures as “formalities” with the excitement of establishment. A deficiency in the bylaws, a loss in the books, or an error in the declaration can confront managers years later with heavy criminal cases such as “abuse of trust” or “embezzlement.” Therefore, taking each of the seven steps pointed out in this report under the supervision of expert lawyers and financial advisors, in accordance with the letter and spirit of the legislation, is of vital importance for the sustainability of civil society.

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