Foundation or Association in Indonesia: Differences and How to Establish One

A yayasan (foundation) is established by one or more people who set aside part of their assets as its initial assets, by a notarial deed in Indonesian, and is then approved by the Minister of Law. A perkumpulan (association) is established by a group of people who become its members, also by notarial deed and with the Minister's approval. Both are non-profit; the core difference is that a foundation rests on assets and has no members, while an association rests on its members.

Differences between a foundation and an association

The right form depends on who will control the organisation. Where activities are run from funds set aside by the founders and directed by a small group of patrons, a foundation is more usual. Where the organisation is owned jointly by members who elect its management, for example a professional association or a community, an association fits better. Where the aim is to seek and share profit, the right form is a business entity such as a PT (limited liability company); see requirements and steps to establish a PT.

Requirements for establishing a foundation

• Founders: one or more, individuals or legal entities, who set aside part of their assets (Article 9 of the Foundation Law). A foundation can also be established under a will; on wills, see making a will before a notary.
• A notarial deed in Indonesian.
• Initial assets of at least Rp10 million if established by Indonesians, or Rp100 million if established by foreigners or by foreigners together with Indonesians (Article 6 PP 63/2008), with a founders' statement on the lawfulness of those assets.
• Name: begins with the word "Yayasan" and is not already lawfully used by another foundation (Article 15). An approved name is valid for 60 days (Article 8 Permenkumham 2/2016).
• Organs: the pembina, the pengurus (at least a chair, a secretary and a treasurer, with a five-year term), and the pengawas (Articles 32 and 44). A member of one organ may not also sit on another organ (Articles 29, 31 and 40).
• Approval: the foundation becomes a legal entity once the Minister approves its deed of establishment. The notary must file the application no later than 10 days after the deed is signed (Article 11 of the Foundation Law as amended). Acts of the management in the foundation's name before approval are the joint and several responsibility of the management (Article 13A).

Requirements for establishing an association

• A notarial deed of establishment containing the articles of association.
• Name (Article 5 Permenkum 18/2025): Latin letters, at least three words, no punctuation or symbols, not the same as or similar to the name of a registered association, foundation or ormas, and not consisting only of its aims and objectives. Words such as "asosiasi", "ikatan", "persatuan" or "perhimpunan" (all meaning association or union) may be used, but not as the element that distinguishes the name from an existing one. An approved name is valid for 60 calendar days.
• Approval: the notary files for approval no later than 30 calendar days after the deed is signed, it is verified within 14 working days, and the Minister's decision is issued electronically (Articles 13 to 15).
• Organs: the members' meeting or equivalent, the board of management and the supervisory board, together with beneficial owner details, are stated in the establishment form.

Business activities and the ban on distributing proceeds

A foundation may set up a business entity consistent with its aims and objectives, and may invest up to 25 per cent of its total assets (Article 7). The pembina, pengurus and pengawas may not also serve as directors or commissioners of that business entity.

The foundation's assets may not be transferred or distributed to the pembina, pengurus and pengawas, including in the form of salaries or honoraria (Article 5). As an exception, the articles of association may provide that a member of the management receives a salary if they are not a founder, are not affiliated with a founder, the pembina or the pengawas, and carry out the management directly and full-time.

A foundation that receives aid of at least Rp500 million in one financial year, or has assets of Rp20 billion or more excluding waqf (religious endowment), must have its financial statements audited and publish a summary in a newspaper (Article 52).

An association is also non-profit and does not distribute profits to its members.

How to establish one

1. Decide the form, the aims and objectives, and the composition of the organs.
2. The notary reserves the name through the AHU system (Directorate General of General Legal Administration).
3. Sign the deed of establishment before a notary.
4. Apply for approval: a foundation within 10 days at the latest, an association within 30 calendar days at the latest from the deed.
5. The Minister's decision is issued; the approved deed of establishment of a foundation is announced in the Tambahan Berita Negara (Supplement to the State Gazette) (Article 24).
6. Obtain an NPWP (tax identification number), a bank account in the organisation's name, and activity licences for its field, for example education or social welfare.

Documents to prepare

Foundation (Article 13 Permenkumham 2/2016)

• identification of the founders and the proposed pembina, pengurus and pengawas (KTP-el, the electronic identity card, and NPWP; passport for foreign nationals)
• proof of deposit or a bank statement, or the founders' written statement of the value of the initial assets
• the founders' statement on the lawfulness of the initial assets
• a statement of domicile and address, signed by the management and acknowledged by the lurah or kepala desa (head of the urban ward or village)
• a statement that there is no dispute over the management and no pending case
• a statement of undertaking to obtain an NPWP
• if there is a foreign founder or a foreign legal entity: a letter of recommendation from the ministry of foreign affairs or the relevant authority

Association (Article 12 Permenkum 18/2025)

• identification of the founders and the members of the organs
• a certificate of domicile or a statement of domicile acknowledged by the lurah or kepala desa
• a list of members with voting rights
• sources of funding and a work programme
• minutes of the establishment meeting
• a statement that there is no dispute over the management and no pending case
• a statement of undertaking to obtain an NPWP

Frequently asked questions