Finland's State Centre for Public Benefit Supervision has issued a binding directive against a Jyväskylä-based care service association for violating public benefit regulations. The regulator found the association acted improperly when it invested 50,000 euros as foundation capital into the Central Finland Care Foundation it established. This transfer of assets outside the public benefit community contravenes Finnish nonprofit law. The association must now return the full amount and submit a compliance plan detailing corrective actions by early March next year.
The regulatory body determined the investment occurred in December 2022. The rules require associations to notify the relevant authorities when establishing and capitalizing a foundation, which the Jyväskylä association failed to do. The case highlights the strict oversight of Finland's nonprofit sector, where organizations enjoying tax-exempt status must demonstrate their activities serve clear public benefit purposes. The Central Finland Care Foundation later gained substantial assets when it sold a 51 percent stake in Jyvässeudun Hoivapalvelut Oy to Esperi Care in December 2023. That company had previously been owned by the nonprofit Jyväskylä care association.
This enforcement action reveals the ongoing tension in Finland's social and healthcare sector between nonprofit service provision and commercial operations. Many traditional Finnish care providers established by community associations now operate in a mixed economy with private equity involvement. Regulators must ensure that public benefit assets are not improperly diverted to create private wealth. The case in Jyväskylä serves as a cautionary example for hundreds of similar associations across Finland that manage elderly care services. These organizations face complex decisions about restructuring and partnerships in a rapidly changing care market.
The directive requires concrete proof that the capital has been returned. The association's leadership must now navigate both financial restitution and potential reputational damage within their local community. For international observers, this case demonstrates Finland's robust legal framework for nonprofit governance. The system aims to prevent mission drift and protect community assets, even as service providers adapt to new funding models. The outcome will be watched closely by municipal authorities and other nonprofit boards considering similar organizational changes. The regulator's firm stance signals that compliance with public benefit rules remains non-negotiable, regardless of evolving business arrangements in the care sector.