Bridging philanthropy and finance: An ANBI's guide to impact investing following the new policy

In this period of transitions, philanthropy is increasingly needed to meet the challenges of our time. A new policy, introduced on April 3rd, 2024, may mark the start of a new focus for Public Benefit Organizations, known in the Netherlands as ANBIs. The policy clarifies the conditions under which ANBIs can engage in "impact investment," providing guidance for ANBIs seeking to invest. This guide is designed to assist you in navigating the policy.

By Friso van Orden

Expertise: Tax Law


In this period of transitions, philanthropy is increasingly needed to meet the challenges of our time. A new policy, introduced on April 3rd, 2024, (Policy) may mark the start of a new focus for Public Benefit Organizations, known in the Netherlands as ANBIs (Algemeen Nut Beogende Instellingen). The Policy clarifies the conditions under which ANBIs can engage in "impact investment," providing guidance for ANBIs seeking to invest.

For ANBIs, the Policy provides an opportunity to innovate their strategies towards investing activities without endangering their ANBI-status. By embracing debt financing, equity investments, or the provision of goods within the parameters of the Policy, ANBIs are poised to explore new avenues for societal impact. Especially in the areas of sustainability and innovation there are unexplored opportunities for ANBIs to facilitate projects or activities that would otherwise not be feasible.

However, ANBIs seeking to progress into impact investment need to engage in these activities while ensuring full compliance with the conditions of the Policy, emphasizing the necessity for active involvement and transparency.

This guide is designed to assist you in navigating the Policy. We will tackle frequently asked questions and highlight key requirements from the Policy, setting you up to explore its opportunities with confidence.

What is an ANBI?
ANBI-status can be obtained pursuant to a successful request with the Dutch tax authorities and offers notable tax benefits and legitimacy as a purpose-driven organisation in the market, making it a distinctive classification within the Netherlands.

To qualify as an ANBI, an organization must (continue to) meet the following conditions:
ANBI-status grants several tax benefits, with the most notable ones being:

What is the scope of the Policy?

This Policy applies to all ANBI organizations engaged in providing financial resources or goods, whether to external entities or entities within their network, such as a "Charitable Foundation" in the United States. The Policy provides for a broad definition of "investment," which translates as:

"The allocation of money and/or goods, with or without an exchange for shares or profit certificates, where the (counter)value is retained as an asset by the investing ANBI.

The allocation of financial resources includes the issuance of loans, as explicitly clarified by the Policy. The rationale for adopting such an expansive definition of investments is not explicitly stated, yet the chosen approach is notable. Specifically, the phrase "with or without" has the effect that an investment within the meaning of this Policy effectively requires (i) that financial resources or goods are provided to the recipient and (ii) this allocation results in an asset for the ANBI. This definition broadly covers various forms of debt financing or equity participation, including lease agreements or "token issues."

It would have been a welcome addition, if the Policy would include a minimum threshold for the amount or duration of investments to be covered by the Policy. It is debatable if sporadic allocations of funds (or goods), especially those with a short duration of a few months or of a minimal value, should adhere to the same stringent conditions as more significant, long-term investments.

What is the legal status of the Policy?
Published policies, such as the Policy, allow taxpayers, in this case ANBIs, to place their trust in its contents. This trust is founded on the principle of reliability (vertrouwensbeginsel) and the overarching principle of proper administration (algemene beginselen van behoorlijk bestuur). Consequently, ANBIs that comply with the Policy's conditions mitigate the risk of forfeiting their ANBI-status. While the Policy itself does not legally bind ANBIs, it represents the government's position and suggests that failing to meet its conditions is likely to jeopardize ANBI-status.

Key requirements
1. Document agreements with the recipient
Ensure all agreements regarding the use of the funds are documented. These agreements must align with the statutorily determined public benefit aims that your organization advocates.

2. Include resolutive conditions
Report to the Tax Authority if you fail to meet the Policy's conditions, which may necessitate disinvestment. To safeguard against such scenarios, it's wise to incorporate conditions or arrangements that allow for the reversal of investments.

3. Earmark your investment
Make sure the funds are designated for use in projects or activities that promote public benefit aims, as per your ANBI's goals. This usually requires binding agreements or a position on the recipient's board. Clearly outline the possibility of reversing the investment if terms are violated.

4. Actively monitor the investment
Regularly review the investment's impact on your institution’s public benefit aims. This ensures ongoing alignment with your goals.

5. Maintain appropriate records
Keep detailed records of all agreements and investment activities. These records should be kept separate and detailed enough for the Tax Authority to confirm compliance with the Policy. Also, include information about the investment in your policy plan.

6. Ensure investments serve the public benefit aims
Ensure investments directly serve the public benefit aims of the ANBI and relate to a predefined project or activity. You must be actively involved as an investor; merely passing funds passively is insufficient.

It remains unclear to what extent the ANBI's active involvement should stretch. Debt financing or other forms of participation (such as non-voting shares) typically lack a control mechanism, allowing recipients to use the funds at their discretion. Even with the acquisition of voting shares, significant interest is required to exert control over how the investment is spent.

To meet this requirement, ANBIs seem to need to rely on making contractual agreements or ensuring more control by having a member (or director) of the ANBI take a position on the board or supervisory body of the recipient. However, this often provides no guarantees. Contractual provisions do not affect the capacity to act of (representatives of) the recipient, meaning that, in many cases, only compensation for damages can be sought. And a seat on the board does not ensure that actions contrary to the Policy can be prevented. For these reasons, it seems reasonable to interpret this requirement as primarily demanding a commitment to effort.

Furthermore, you must actively ensure and verify that the funds are spent in accordance with the ANBI's (statutory) public benefit aims. This is a clear requirement, and diligent ANBIs typically ensure that recipients of funds handle them carefully and in accordance with agreements.

7. Manage profit-seeking activities appropriately
As an ANBI, your investment should primarily serve public benefit aims, not the pursuit of financial returns. It's crucial to invest in scenarios where commercial entities hesitate or demand different terms, ensuring your actions fill a gap not covered by the market.

When engaging with commercial parties, the Policy requires you to assess their willingness to invest. If you, as an ANBI, assume more risks or are involved in ventures that commercial parties are willing to join may hint at prioritizing private gains over public benefit aims. Your investment should be indispensable for the continuation of the proposed project or activity.

The Policy, however, leaves room for interpretation, especially regarding the assessment of commercial participation and its implications. It's important to remember that your willingness to take on risk can catalyse broader participation, leveraging your unique position to support projects that align with your public benefit aims. Yet, be aware that your commercial activities are regulated to prevent profit-driven motives from overshadowing your mission.

The flexibility given by the "under certain conditions" clause means future adjustments could be made to these guidelines, urging you to proceed with caution. This ambiguity may affect your institution’s operational effectiveness.

If your investments yield consistent returns that attract commercial interest, this could signal a deviation from your public benefit aims. The clarity on this matter is lacking, leaving unanswered questions about the relationship between returns, commercial interest, and project viability.

Should you find your investments deviating from the Policy's guidelines, you're required to notify the inspector for potential corrective measures. The challenge lies in adjusting without harming the project's outcomes, which necessitates careful planning and possibly, disinvestment.

We suggest implementing a return cap on your investments as a more feasible solution. This ensures that while you can generate returns, they do not surpass a threshold that might shift the focus from public benefit aims towards profit-making. The concept of "steward ownership," which limits investor returns to safeguard the institution’s mission, can serve as a model for structuring your investments to align with these principles.

8. Ensure proper use of funds
Your investment, as an ANBI, needs to be primarily spent on the intended project or activity closely aligned with your mission. It's encouraging that the rules allow for commercial entities to receive your investments, as long as these investments are funnelled into projects that serve the public benefit aims. Given the delicate balance between commercial gain (realised by private parties) and public benefit aims, it's advisable to approach such investments with caution.

Ensuring that your funds are used as intended involves drafting clear agreements with the recipients, focusing on how the funds will be allocated and the oversight measures in place to enforce these terms. It's critical that the financial support you provide does not end up disproportionately rewarding individuals rather than serving the broader cause. This reliance on contractual agreements underlines the need for a rigorous framework within which these investments operate.

However, the guidelines could benefit from clarifying how you, as an ANBI, can effectively monitor and confirm that your investment remains true to its purpose without inadvertently becoming a source of undue profit for individuals. This might involve questioning whether the recipient should keep a detailed account specifically for the investment or if a more general financial report would suffice for oversight purposes.

In practice, developing a mechanism or conditions for this oversight—whether through specialized accounting practices or regular financial reporting—could enhance transparency and ensure that the essence of your investment remains focused on public benefit aims.

9. Avoid conflicts of interest
Ensure the integrity of your investments, by maintaining clear boundaries between your directors and the organizations you support financially. Specifically, your directors or their related entities cannot serve in roles such as founders, directors, shareholders, capital providers, or employees within these organizations. This rule is crucial for avoiding any conflict of interest that might compromise the investment's purpose or the ANBI's reputation.

However, an exception exists when post-investment, a director or board member from your ANBI joins the board or supervisory body of the organization you've invested in. This involvement is recognized as beneficial, fostering a deeper commitment to the project's success and aligning with the "Primary Interest" mandate. This not only brings your expertise directly to the table but also ensures your values and public benefit aims are actively represented in decision-making processes.

The primary aim here is to sidestep potential conflicts of interest, allowing for involvement that doesn't entail material compensation or lead to ethical quandaries. Your organization likely harbours a wealth of knowledge and experience in pursuing public benefit aims, and it's this expertise that, under the right conditions, should be leveraged to benefit the projects you choose to support.

It remains a bit of a grey area as to whether the Policy covers all possible forms of involvement that might be considered inappropriate. This calls for a thoughtful interpretation of the rules, ensuring that while you aim to use your influence positively, you do so in a manner that upholds the highest standards of transparency and ethical conduct.

10. Maintain proper administration
Your responsibility as an ANBI involves diligently recording each investment as an impact investment within your financial records. Moreover, this requires the inclusion of such investments in your policy plan, or any amendments thereto. Separate administration of such investments ensures transparency and alignment with your mission to contribute to your public benefit aims.

The Policy sets forth a directive to monitor the development of these investments meticulously, comparing their progression with the established conditions. This scrutiny mainly revolves around verifying that the primary aim of each investment is to advance public benefit aims, rather than to generate profit. This focus raises important questions about the level of detail needed in your records to demonstrate compliance with the Policy’s conditions.

Furthermore, the Policy acknowledges the relevance of standard accounting practices to ANBIs but appears to specifically demand that impact investments be itemized separately within your financial statements. The explicit recording of returns, whether they come in the form of interest or dividends, is mandated. Yet, it leaves room for interpretation regarding whether investments should also be appraised based on their market value.

In essence, your task is to ensure that your financial administration not only adheres to these guidelines by making your commitment to public benefit investments clear and measurable but also reflects a deeper level of engagement with the principles underpinning your ANBI-status. This involves a balanced approach to documenting both the financial and social impact aspects of your investments, ensuring they contribute meaningfully to your public benefit aims.

11. Report non-compliance
Given that the Policy has already come into effect, you must promptly ensure compliance. If your ANBI or any of its investments do not adhere to the Policy's conditions upon its effective date, you should notify the inspector within six months of the Policy's publication.

Notification to the inspector is necessary both when an investment initially does not meet the Policy's conditions and if it ceases to meet them at any point in time. The language of the Policy suggests that the inspector has the discretion to grant your organization a reasonable timeframe to amend the investment's conditions or to realign your capital with the intended public benefit aims. The use of "may" in the Policy implies that such a grace period is not automatically granted, but it is a possibility, especially in instances where non-compliance was not intentional.

The Policy's frequent use of open norms leaves a level of uncertainty regarding the boundaries of impact investments. Consequently, providing a period for adjustments should be seen as a fair approach, assuming there's no evident malintent involved.

Should corrections be necessary, they might entail disinvesting. It's noteworthy that the inspector can negotiate a reasonable timeframe for this process, considering each case's unique facts and circumstances. This flexibility allows for a thoughtful and tailored response to non-compliance, highlighting the importance of dialogue and individual assessment in ensuring that investments continue to align with the ANBI's public benefit aims. Bovenkant formulierOnderkant formulier

Next steps
It's evident that embracing impact investment as an ANBI requires careful navigation. The journey forward involves a thorough assessment of your current investment strategies against the backdrop of the Policy. Implementing the necessary adjustments and exploring innovative financial avenues should be done with the Policy’s conditions in mind, ensuring that their actions contribute positively to societal impact without compromising your ANBI-status.

For further assistance or inquiries regarding how to effectively leverage the Policy for impact investment, feel free to reach out to Friso ( He can offer valuable insights into compliance, strategic planning, and how to harness the Policy's opportunities to fulfil your institution’s mission more effectively.

Friso van Orden

Tax Law

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