The Role of Private Foundations in Hungary
In 2025 and beyond, private foundations will continue to play a major role in Hungary. These foundations have and will contribute to several sectors in the country. These sectors typically include healthcare, education, social services, and the arts.
Private foundation influence is also already strong going into the first quarter of 2025. This is despite several challenges they may face because of recent changes in legislation.
Legal Structure and Establishment of Private Foundations
Hungary lawmakers consider private foundations to be legal entities. This is mainly because they manage and protect assets according to specific instructions. These assets usually benefit the public, or they are meant for private interests.
As such, the Private Foundation Act was established in March 2019. This act outlines the structure that private foundations need to follow while active.
One of the most important requirements of the act is a minimum capital investment of HUF 600 million. This amount equals around EUR 1,502,000 in 2025. The reason for these monetary minimums is to ensure a private foundation can manage assets effectively because they are financially stable.
Who Governs and Oversees Private Foundations?
According to law, private foundations must have a board of directors. The board must have at least five members who oversee all activities. Foundations are also required to set up a supervisory board. This board should include auditors as well.
The goal of these requirements is to ensure the foundation is run transparently at all times. If something goes wrong, the board may be held accountable.
Furthermore, it is the board’s job to create detailed investment policies. Additionally, they detail the foundation’s portfolio structures. It is also part of the board’s tasks to set risk management strategies in place. All strategies and activities must stay in line with the original founder’s plans, however.
Public Benefit and Private Interest Foundations
As mentioned, there are two types of foundations, including public benefit and private interest. When a foundation is created for the benefit of the public, it has to serve its community. This means being involved in research, healthcare, sports, education, and more.
If a foundation is set up for private interest, it will only benefit certain individuals. This is why private foundations usually focus on preserving family wealth.
Recent Challenges Faced By Private Foundations
In recent years, private foundations have had to overcome several challenges. Most of these challenges stem from changes in laws and politics.
For instance, the Hungarian government has voiced its concerns about foreign influence through NGOs. It also spoke out against media outlets receiving international funding.
In February 2025, Prime Minister Viktor Orbán announced his intention to legally eliminate NGOs and media entities in Hungary. His focus is on entities that get funding from the U.S. and other international sources. Orbán cited national sovereignty concerns as one of the driving factors for this decision.
His current stance also matches his earlier actions. These include establishing the Sovereignty Protection Office in 2023. This office investigates organizations believed to have foreign influence.
It also has similar powers to Russia’s controversial ‘foreign agent’ law. As a result of these powers, those who break the rules may face severe legal penalties.
The Impact on International Foundations
Pressure on private foundations is not a new thing in Hungary. In response to government restrictions, OSF (Open Society Foundations) provided a €1.1 million grant back in 2019.
The grant was meant to support Hungary’s independent arts and culture scene. Budapest-based Summa Artium oversees this grant.
Contributions to Social Causes
Despite ongoing challenges, private foundations still make a difference when it comes to social issues. For example, the Citi Foundation made a much-needed $250,000 investment in the European Disability Forum’s Ascent Program in 2023. This money continues to help empower the disabled in Central Europe.
Private Foundations Must Continue to Adapt
Private foundations continue to operate under challenging circumstances. Some regulations and political inspections remain ‘harsh.’ Still, if these foundations adapt well enough, they can keep contributing to Hungarian society.
Sources
https://ceelegalmatters.com/briefings/13658-hungary-s-private-foundation-act
https://apnews.com/article/orban-hungary-eliminate-ngos-usaid-aff22b9f9003f4c6c3115a9798c18af6
https://www.citi.com/icg/sa/emea/hungary/english/newsroom/2023/2023-05-17.html
https://www.reuters.com/world/hungarian-pm-orban-defends-minister-sanctioned-by-us-2025-01-17/
https://cof.org/country-notes/nonprofit-law-hungary
https://www.ebrd.com/documents/ogc/hungary.pdf?blobnocache=true
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