Foundation in Indonesia

Foundation, also known as Yayasan in Indonesia, is one form of non-profit organizations that is
allowed to operate in three main fields:

1. Social
2. Religious
3. Humanity mission

The activities of the foundation must also relate to their statutory purposes. Being established based
on the separation of assets, the law defines a foundation as a non-membership legal entity.

Regulation Reference

1. Law Number 16 Year 2001 Concerning Foundation;

2. Law Number 28 Year 2004 Concerning the Amendment To Law Number 16 Year 2001
Concerning Foundation;
3. Law Number 17 Year 2013 Concerning Community Organization;
4. Law Number 16 Year 2017 Concerning the Amendment To Law Number 17 Year 2013
Concerning Community Organization;
5. Government Regulation Number 63 Year 2008 Concerning Implementation of the
Foundation Law;
6. Government Regulation Number 2 Year 2013 Concerning the Amendment to Government
Regulation Number 63 Year 2008 Concerning Implementation of the Foundation Law;
7. Government Regulation Number 59 Year 2016 Concerning Community Organization
Established by Foreigners.

Setting Up a Foundation in Indonesia

According to the Law on Foundations, a foundation can be founded by one or several legal persons.
The stages to follow when setting up a foundation in Indonesia are as follows:

2. Draft and sign

1. Process and 3. Get the Ministry 4. Confirm the
Deed of
approval of the of Law and Human residential address
Establishment in
Foundation's name Right Approval with a domicile letter
Indonesia

8. Obtain Operation 5. Obtain Business

Permit from the 7. Obtain Principle Identification
6. Obtain
Minister/head of the License from the Number and OSS
Foundation's Tax ID
non-ministerial Minister Business License
government from OSS
The Foundation will obtain the status of a legal entity after the Deed of Establishment of the
Foundation is approved by the Ministry of Law and Human Right.

Structure of a Foundation

There must be at least one founder in the Foundation. A foundation in Indonesia with foreign
founders must have at least one Indonesian citizen as a board member. The board of foundation
should include at least one of each:

1. Patrons (Pembina)
The patrons must have a minimum of 1 member, and their powers are not able to be
delegated to the executives and supervisors by the prevailing laws or the articles of
association of the foundation, including the right to amend of the articles of association,
appoint and dismiss executives and supervisors, determine the general policy of the
foundation based on articles of association, ratify work programs and the proposed annual
budget, and merge or dissolve the foundation.

2. Executives (Pengurus)
The executives of a yayasan include a (i) chairman; (ii) secretary; and (iii) treasurer, but it can
have more functions as per the Articles of Associations. The executives are responsible for
the day-to-day operation of the yayasan. Further, the executives may represent the yayasan
in and outside of court, which means an executive may legally bind the yayasan.

In addition to the above, a Foundation established by Foreign Party, or Foreign Party and
Indonesian Party, at least one of its executives who holds the positions of Chairman, or
Secretary, or Treasurer, must be held by an Indonesian Citizen. All executives of a Foundation
established by Foreign Party, or Foreign Party and Indonesian Party must also reside in
Indonesia (including having a KITAS).

3. Supervisors (Pengawas)
A Foundation must have at least one supervisor. The supervisor is responsible for supervising
and advising the executives

Paid up capital of a Foundation in Indonesia

1. The amount of the initial paid up capital of the Foundation established by Indonesians,
originating from the separation of the founder's personal assets, was at least Rp 10,000,000
(ten million rupiah).
2. The amount of the initial paid up capital of the Foundation which was established by foreign
nationals or foreign nationals together with Indonesian citizens, originating from the
separation of the founder's personal assets, was at least Rp 100,000,000.00 (one hundred
million rupiah).
Foundations that Established by Foreigners

Foundation is the only type of not-for-profit organization which can be founded or established by
foreigners. There are 3 types of said foundation:

1. Foreign legal entity foundation or other designation;

There are two types of foreign legal entity foundation:
1) Foreign legal entity foundation or other designation that manage funds independently;
2) Foreign legal entity foundation or other designation that implementing activity
programs from foreign donor institutions.

Foreign legal entity foundation must have an effective management domicile and head office in
a country that has diplomatic relations with Indonesia.

They also required to have Government permits: principle license and operational permit.

A. Principle License
The Principle License will be given by the Ministry after receiving Licensing Team’s
consideration. The principle license will applied for a maximum of 3 years, and can be
extended at least 3 months before the expiry date.

In order to obtain the principle license, there are some requirements:

a. foreign legal entity foundations or other designations from countries that have
diplomatic relations with Indonesia;
b. have the principles, goals, and activities of a non-profit organization.

The process of obtaining a principle permit are:

a. application submission;
The application submitted in writing and in Indonesian language by the patrons or the
executives of the Foundation. There are also some required documents that have to
be provided, which divided according to the type of the foreign legal entity foundation
below:
i. Required documents for foreign legal entity foundation or other designation that
manage funds independently:
 application letter to carry out activities in Indonesia;
 a statement letter regarding the plan to open a representative foundation in
Indonesia;
 a statement letter regarding the principles, goals and activities of a non-profit
organization;
 letter of appointment of head of representative in Indonesia from the head
office of the organization;
 letter of recommendation from the representative of the country where the
head office is located;
 a copy of the deed of establishment of the organization which is legalized by
the competent authority in the country of origin of the organization;
 Article of Association and bylaws;
  a profile that contains information about the vision, mission, organizational
structure, and staff;
 source and amount of available funds;
 financial management planning;
 a statement letter stating the source of funding does not come from activities
that are against the law and is not used for activities that are against the law,
and is not obtained from the results of fundraising in the territory of the
Republic of Indonesia;
 work plans and programs to be carried out in Indonesia;
 a plan of cooperation with the Central Government and community
organizations established by Indonesian citizens;
 plan for the domicile of the central representative foundation in the national
capital or provincial capital; and
 plan for operational office location.

ii. Required documents for foreign legal entity foundation or other designation that
implementing activity programs from foreign donor institutions:
 application letter to carry out activities in Indonesia;
 work order from the donor institution to the foreign legal entity foundation or
other designation;
 letter of recommendation from the representative of the country where the
head office is located;
 a copy of the deed of establishment of the organization which is legalized by
the competent authority in the country of origin of the organization;
 a profile that contains information about the vision, mission, organizational
structure, and staff;
 source and amount of funds to carry out activities;
 a statement letter stating the source of funding does not come from activities
that are against the law and is not used for activities that are against the law,
and is not obtained from the results of fundraising in the territory of the
Republic of Indonesia;
 work plans and programs to be carried out in Indonesia; and
 plan for operational office location in Indonesia.

b. documents verification;
The document verification conducted to check the truth and validity of the
requirements for submitting an application.
In case the document verification has been fulfilled, the applicant will present a
presentation of the vision, mission and planned activities in Indonesia in front of the
Licensing Team in order to to find out the applicant’s motivation, capacity, planned
activities, funding, readiness, and adjusting to the Central Government program.
 c. considerations from the Licensing Team;
After the applicant presented their presentation, the Licensing Team will give their
consideration for accepting or refusing principle permission to the Ministry.

d. Publishing
In the event that a principle permit is granted, the Minister grants permission to the
applicant to partner with 1 (one) relevant ministry/non-ministerial government
institution.

B. Operational License
The operational license can only be given after the Foundation has obtained the principle
license. In order to obtain the operational permit, they required to have:
a. written agreement with the ministry/non-ministerial government institution in
accordance with the field of its activities; and
b. annual work plan with the local Regional Government (this won’t be needed if foreign
legal entity foundation or other designations only carry out activities with
ministries/non-ministerial government institutions).

The submission of the application for operational license shall be submitted in writing in
Indonesian language by the patrons or the executives of the legal entity foreign foundation
or other designation to the minister/head of the partner non-ministerial government
institution, along with some required documents as follows:
a. written agreement with the ministry/non-ministerial government institution in
accordance with the field of its activities that contains:
 the purpose of cooperation;
 scope of cooperation;
 cooperation area;
 implementing agency;
 program directives;
 activity plan;
 the obligations of the parties;
 restrictions on the activities of organizations of legal entity foreign foundation
or other designations and their staff;
 status of equipment and supporting materials;
 the position of the parties;
 dispute resolution; and
 validity period.
b. bank account number that used for legal entity foreign foundation’s activites; and
c. legal entity foreign foundation’s Tax ID

The operational license application must be discussed in inter-ministerial meetings

coordinated by ministries/non-ministerial government institutions that are partners with
the legal entity foreign foundations or other designations and attended by relevant
ministries/non-ministerial government agencies. The minister/head of the non-ministerial
 government agency that is a partner and the relevant Regional Government will then
submit a decision regarding the granting or refusal of an operational permit to the legal
entity foreign foundation or other designation.

2. Legal entity foundation established by foreign nationals or foreign nationals together with
Indonesian citizens;
This foundation type has to meet the minimum requirements as follows:
a. the foreign foundation founder has lived in Indonesia for 5 (five) years in a row;
b. holders of permanent residence permit (KITAP);
c. the paid up capital of the foundation that established by foreign nationals or foreign
nationals together with Indonesian citizens, originating from the separation of the
founder's personal assets of at least Rp1,000,000,000.00 (one billion rupiah) as
evidenced by a statement from the management of a legal entity founder of the validity
of these assets;
d. one of the positions of chairman, secretary or treasurer is held by an Indonesian citizen;
and
e. a statement letter from the founder that the activities of a legal entity incorporated as a
foundation did not harm the community, nation and/or state of Indonesia.

3. Legal entity foundation established by a foreign legal entity.

a. the foreign legal entity that established the foundation has been operating in Indonesia
for 5 (five) years in a row;
b. the paid up capital of the foundation that established by foreign legal entity, originating
from the separation of the founder's assets which is used as the Foundation’s paid up
capital of at least Rp10,000,000,000.00 (ten billion rupiah) as evidenced by a statement
from the management of a legal entity founder of the validity of these assets;
c. one of the positions of chairman, secretary or treasurer is held by an Indonesian citizen;
and
d. a statement letter from the founder that the activities of a legal entity incorporated as a
foundation did not harm the community, nation and/or state of Indonesia.