Structuring the not-for-profit sector: unlocking possibilities
29 Sep 2025
The Belgian not-for-profit sector has discovered a new world of structuring opportunities. Associations, foundations and related entities now have access to a broad range of legal tools to reshape their organisations, streamline group structures and better align with their missions. Whether you are a member, director, manager or adviser, understanding these options is essential to ensuring your organisation’s sustainability and impact.
Why consider restructuring?
Not-for-profit groups often face administrative complexities, evolving activities and the need for greater efficiency. Structuring operations, such as mergers, divisions, and transformations, can help you:
simplify governance and group structures,
optimise tax and compliance positions,
reduce and manage risk,
facilitate the transfer of assets and activities,
facilitate funding and financing,
ensure continuity and focus of mission.
What can not-for-profits do?
The legal framework for not-for-profits offers a range of structuring options, many of which mirror those available to companies, but with some important differences:
1. Mergers and divisions among not-for-profits
Associations (ASBL/AISBL) and foundations can be split or merge with one another, or with universities and certain public law entities. This allows the rationalisation of group structures, thus combining several entities into one, or splitting activities into new, focused organisations. The process involves (i) the automatic transfer of assets and liabilities to ensure continuity without disruption and (ii) the dissolution of the absorbed entity to avoid the administrative burden of “empty shells.”
2. Transformations: changing legal form
It is possible to transform an ASBL into an AISBL, or into a specific type of recognised cooperative company (SCES or SC agréée ES/Erkende CVSO or CV erkend also SO), and vice versa. This flexibility allows not-for-profits to adapt their legal form to their evolving activities, without losing their legal personality. However, direct conversion into a commercial company is not permitted, because the not-for-profit’s core mission has to be reflected.
Transformations are particularly useful for local ASBLs that expand their activities internationally and attract members from other countries. Additionally, transformations facilitate merger operations between entities that start as ASBLs and cooperative companies.
3. Asset transfers and group simplification
Not-for-profit organisations can transfer entire lines of business or universalities of assets for free. This allows the reorganisation of group structures without unnecessary administrative burden and ensures the automatic transfer of assets and liabilities. Unlike mergers or demergers, the transferring entity is not automatically dissolved and remains in existence, although it can be liquidated afterward if desired.
For example, consider a not-for-profit entity active in the healthcare sector that provides services such as medical care, mental health support and community health education. This entity might decide to transfer its mental health support programme to another not-for-profit entity that is specialised in mental health services. This transfer can help to streamline operations, enhance service delivery and leverage the expertise of the specialised entity in the mental health sector. Or, high risk activities can be carved out to a separate legal entity to protect the low risk activities.
How does this compare to companies?
Companies have long benefited from a wide array of structuring tools such as mergers, demergers, transformations, and asset transfers, that are supported by well-established procedures. The not-for-profit sector now enjoys similar possibilities, but with some key differences:
The procedures for not-for-profits are often more tailored to the preservation of their disinterested purpose and the protection of their assets.
Certain operations, such as mergers with commercial companies or partial demergers, are not permitted for not-for-profits. In addition, at this stage, it is not possible to proceed with a cross-border merger of not-for-profit vehicles whereas it is for companies.
There is no waiting period for operations of mergers and demergers between not-for-profit vehicles and there is no need to publish the merger/demerger proposal (except for the contribution of branches or universality).
In practice, restructuring a not-for-profit group can be more complex than for companies due to the need to safeguard the organisation’s purpose, manage specific governance requirements and address the expectations of stakeholders and regulators. Each operation, be it a merger, division, or transformation, comes with its own procedural steps, documentation and potential fiscal consequences. Nonetheless, it is a powerful tool for structuring your group!
What should you watch out for?
While the legal framework is flexible, it is also demanding. The tax neutrality of certain mergers or transformations may depend on the specific legal and fiscal status of the entities involved. The HR implications of such operations must also be carefully analysed.
The protection of creditors, the preservation of the not-for-profit mission and the correct handling of reserves and assets are all critical points of attention.
Directors should also be aware of their responsibilities as liability rules can be strict and are evolving. The recent reform of the Civil Code (effective 1 January 2025) introduces the possibility for third parties to bring direct claims against directors for extra-contractual liability. This makes it more important than ever for boards to be diligent, well-advised, and proactive in managing their restructuring processes.
Curious about what’s possible for your organisation?
The structuring tools available to the not-for-profit sector are powerful, but navigating them requires careful planning and expert guidance. Every organisation is unique and the right solution depends on your specific goals, activities and constraints.
If you are considering a restructuring, merger, or transformation, or simply want to understand your options, let’s talk. Our team combines deep expertise in corporate, tax, HR and not-for-profit law with a wealth of experience in the not-for-profit sector and a practical, hands-on approach. We are ready to help you unlock the full potential of your organisation.
Contact us to explore how you can future-proof your not-for-profit group.
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