Bodo Schmidt-Schmiedebach examines whether the transfer and embedding of the Comply-or-Explain mechanism from the German Corporate Governance Code (DCGK) into German foundation law is a suitable regulatory option to compensate for the protection deficit of foundations. Based on a comparison with the regulatory regime of publicly listed corporations, the author critically engages with the mechanism outlined in Section 161 of the German Stock Corporation Act (AktG) and develops approaches for its comprehensive optimization. In the course of adapting to the legal and factual peculiarities of both foundations and the nonprofit sector, he designs a Foundation Governance Code mechanism and thoroughly explores the distribution of roles between the state and the foundation sector, as well as the necessary enforcement mechanisms.