Freedom of association is ensured in the Swedish Constitution (The Instrument of Government 1974:152).

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In Sweden there exist three different kinds of NGOs; not-for-profit organizations (NPOs), economic associations and foundations.

No specific law is governing the existence of not-for-profit organizations, although the Act on Economic Associations many times can be used as guidance. Characteristic for NPOs is that they have a purpose that is charitable and that they are not aiming to promote their members’ economic interests. There is no formal requirement to register an NPO to become a legal entity in Sweden, although according to the Act on Identification Designation for Legal Entities (1974:174) organizations can be issued an organization number at the request of the organization itself or a governmental authority.An NPO gains legal capacity if it has a governing document stating the purpose of the organization and a board acting as the executive organ. The board should be elected at the yearly meeting, where also the external auditors are chosen. The external auditors will ensure that the general auditing standards are followed and that the board has carried out its duties according to the purpose stated in the governing document. The result of the external auditors is presented in a yearly audit report. Some NPOs are also obliged to maintain accounting records according to the Bookkeeping Act (1999:1078) if their assets exceed the amount that corresponds to 30 basic price amounts according to the Law on Common Insurance (1962:381).

If the NPO has gained legal capacity the organization’s assets are liable for its debts. Otherwise its members, board and external auditors are individually liable for the organization’s debts and obligations.

Voluntary termination of NPOs is usually regulated in the governing document and the most common way is that the decision is taken at the yearly meeting. An organization can also be terminated through bankruptcy at the request of the creditors or at the request of the organization itself.

The main legal instruments governing foundations are the Foundation Act (1994:1220) and the Regulation for Foundation (1995:1280). A foundation is defined in the Foundation Act as "assets that are managed independently to pursue a specific purpose according to the deed of the founder". To establish a foundation and gain legal capacity no state approval is needed. The founder or founders only need to specify the purpose of the foundation and transfer the property to a third party, which usually consists of the board of the foundation or its administrators. The supervision of a foundation is carried out by the county government where the foundation has its domicile. Foundations also need to have at least one external auditor to ensure that general auditing standards are followed. Foundations can receive tax benefits if they have a public benefit purpose, but donations are generally not tax deductible.

The establishment and existence of economic associations is regulated in the Act on Economic Associations (1987:667). An economic association is defined as an organization with the purpose to promote the economic interests of its members.

Analysis provided by: Maria Bideke, International lawyer and Director of Law Association Justice International.

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