Private foundation purpose no longer achievable: adjustment and continuation

The purpose of a private foundation is determined by the foundation declaration and its context. A particular measure, business, asset or person may disappear without making the entire purpose extinct. The relevant questions are what role that element played in achieving the purpose and whether the remaining purpose can be pursued through a narrow adjustment.

The position is different where an overall assessment shows that the purpose can no longer be achieved over the longer term. Temporary difficulties, an internal conflict or an economically unattractive implementation do not automatically establish that result. The forecast must rest on concrete circumstances and address the possibility of future fulfilment.

The first file note should therefore separate two questions: Which specific rule no longer works? Which parts of the founder intention are to remain protected despite that change? Only this distinction shows whether interpretation, amendment or dissolution needs to be examined.

After formation, the founder may structure the foundation declaration only within a validly reserved amendment right. Where there are several founders, the exact document, rules on joint exercise and the current ability of each person to participate must be established. A wish expressed informally does not replace the required form.

If the founder route remains available, the foundation board may not use the subsidiary route under section 33(2) PSG instead. If the route is unavailable because a founder has ceased to exist, no reservation was made or another statutory obstacle applies, that fact must be documented in a traceable way.

Our article on court-approved amendment of a foundation declaration explains the general approval route. This topic adds a further question: the proposed adjustment must respond specifically to the part of the former purpose implementation that has disappeared.

An adjustment needs a concrete link between the change and the former implementation of the purpose. Examples may include the permanent loss of a person or structure intended to carry out the purpose, an objectively unworkable organisational process or a structural development that has made one provision ineffective. The file must show why that particular provision requires adjustment.

The proposed wording should preserve the original purpose as far as possible. The more it reorganises beneficiaries, asset dedication or powers between bodies, the more precisely the board must explain why it remains an adjustment rather than a new design.

A useful file contains a chronology from formation, the relevant versions of the foundation declaration, resolutions, register extracts, contracts, financial records and a comparison of the former and proposed wording. Each factual assertion should be linked to a document or a clearly identified development.

Founder intention is derived from the foundation declaration and its substantive context. An adjustment cannot therefore select merely the most convenient current solution. It must identify which founder priority continues to apply and how the new wording implements it under the changed circumstances.

Changes to beneficiary groups, ultimate beneficiaries, asset dedication and oversight rights require particular care. The disappearance of an element around the foundation does not automatically justify shifting the structure towards one family member, a board member or a current majority preference.

Where several solutions are possible, the file should show the alternatives. A narrower adjustment, an interpretation or an organisational measure may preserve the purpose more closely than a broad rewrite. The decision must be explained from the foundation’s perspective rather than from a personal interest.

Our article on interpreting a foundation declaration addresses several document versions. An open interpretation issue should not be labelled a lost purpose prematurely.

Before applying, the foundation board must present its authority, the purpose, the change and the precise amendment wording in one coherent file. The reasons should connect the original purpose, the lost implementation and the decision to preserve the purpose in a clear sequence.

An amendment under section 33(2) PSG requires approval from the commercial register court. An internal board resolution or a prepared document does not yet create the intended legal effect. The application must explain why the founder route is unavailable and why the proposed text preserves the purpose.

Under section 33(3) PSG, the amendment becomes effective only upon entry in the commercial register. Until then, the previous version remains authoritative. The file should therefore include the approval, the filing and the register position after entry.

The legislation does not provide one general processing period. Missing evidence, an overly broad draft or an unclear boundary with dissolution may require further submissions. Preparation based on the precise documents reduces these uncertainties.

Section 35 PSG includes the situation where the foundation purpose has been achieved or can no longer be achieved. A current difficulty is not enough. The assessment requires an overall view and a reliable forecast of whether fulfilment can still be expected over a longer development.

If the purpose restriction itself cannot continue to operate, section 33(2) PSG must not be used as a route to a new foundation concept. The ground for dissolution, the unanimous resolution or court proceedings, commercial register entry, creditor protection and winding up then require separate examination.

Our article on dissolving an Austrian private foundation explains the winding-up process. Adjustment and dissolution are connected by the purpose problem, but they remain different legal routes with different requirements.