Sihtasutuse

Sihtasutus is a legal form used in Estonia for a non-profit organization created to pursue a defined public-benefit purpose. It is typically funded by a dedicated endowment or contributed assets whose use is restricted to the stated aims. A sihtasutus operates independently from its founders and is not intended to distribute profits to individuals.

The legal framework for sihtasutus is established by the Sihtasutuste Seadus (Foundation Act) and related civil-law provisions. A foundation is formed by a deed of foundation, usually prepared with notarial oversight, and gains legal personality upon registration in the Estonian Commercial Register. The foundation’s assets become endowment and must be used exclusively for the purposes specified in the foundation deed. The governance structure generally includes a juhatus (management board) responsible for day-to-day operations and, in many cases, a nõukogu (supervisory council) that oversees the board. The foundation is required to maintain accounting records and prepare annual reports, and it may be subject to external audits depending on size and activity.

Funding and activities are directed toward the chosen public-benefit aims, such as culture, education, science, humanitarian aid, or social services. While sihtasutus can generate income, its profits must be reinvested in its purposes. The foundation may own assets and enter contracts to advance its goals, but it cannot distribute profits to founders or private individuals.

Dissolution typically requires an orderly wind-up, with any remaining assets transferred to another public-benefit organization with similar purposes, in accordance with law. Sihtasutus differs from mittetulundusühingud (non-profit associations) by its endowment-based structure and usually lack of member-based governance.