This document discusses the legal and governance issues related to establishing conservation trust funds. It outlines that the legal registration of a fund depends on the country's legal framework and may require statutes, articles of incorporation, board of directors, and recognition of public benefit or tax-exempt status. It also notes that common legal instruments for establishing funds include trust deeds, articles of incorporation, bylaws, and grant agreements. The document also provides guidance on governance best practices, such as having an independent board with diverse representation and expertise that oversees strategic planning, fundraising and operations through committees.

1. Legal and Governance Issues
Basic Training on Conservation Trust Funds
Cape Town, South Africa March 31 – April 2, 2009

2. Legal Establishment
• Legal registration depends on the legal framework in the
country where the fund is created
Registration of fund
• Legal statutes, articles of incorporation or deed
• Creation of board of directors or trustees
• Deposit of initial capital of fund
• Recognition of “public benefit” and/or tax exempt status of
fund
All of this depends on active government support for the creation of an
independent fund

3. Legal Framework
• Common Law vs. Civil Law
• CTFs can be established
through:
Foundation or Trust Law
Special Law
Offshore
Bilateral or International
Agreement

4. Definition of Trust Fund
A trust (fund) is an entity managed by one
person or group (trustee) for the identified
goals or benefit of a sector person or group
(beneficiary).

5. Legal Instruments
• Trust Deed or Articles of Incorporation
• By-laws
• Grant Agreements – based on donor
requirements (e.g., dissolution, no changes to
statutes without approval, reporting)

6. Tax Exemption
• Based on national laws for not-for-profit
organizations or funds
• May require special exemption prior to
establishment of fund, if not provided by law
• Exemptions include: donations, investment
income, procurement

7. Offshore “Twinning”
• “Friends of”
• U.S. 501(c) 3

8. Governance
• By-laws Build on legal statutes
– Set Board rules for selection
and rotation of members,
meetings, committees, voting,
conflict of interest
– Duties of Board
– Define relationship with
Secretariat
– Requirements for operational
manuals and reporting
Mexican Nature Conservation Fund
www.fmcn.org

9. Successful Boards
• Independent with majority non-governmental
• Balance of stakeholder interests represented
• Board members serve in individual capacity
• Board member commitment to mission
• Leadership in strategic planning and
fundraising
• Measures to strengthen Board capacity

10. Criteria for Selection of Board Members
• Expertise
(conservation, legal,
finance, other)
• Regional
representation
• Gender
• Stakeholders Madagascar Biodiversity Fund
Board, 2006

11. Board Committees
• Boards function more
effectively when they
• Finance/Investment
delegate certain topics
to expert committees • Technical
that make • Local or regional
recommendations to advisory
the full board