Establishment and Activities of Charitable Organizations
Establishment and activities of charitable organizations in the Russian Federation are regulated by the Constitution of RF, the Civil Code of RF, the Law On Nonprofit Organizations, the Law On Charity and Charitable Organizations and federal laws and laws of the subjects of RF adopted in compliance therewith.
Article 1 of the Federal Law On Charity and Charitable Organizations (hereinafter - "the Law") establishes that charity is defined as voluntary activities of individuals and legal entities connected with gratuitous (without compensation or on preferential terms) delivery to individuals or legal entities of property, including monetary funds, disinterested (for free) performance of work, provision of services, or another support.
Subject to para 3, Art. 48 of the Civil Code of RF charity funds are legal entities whose founders (members) have no property interests therein.
Pursuant to the Law parties to charitable relations may be, on the one hand, individuals and legal entities who carry out charity, including by way of assisting the existing charitable organizations or establishing a new one, and individuals and legal entities who benefit from such charity, on the other hand.
Foreign and international organizations are also entitled to take part in charity on the territory of the Russian Federation.
A charitable organization is a non-governmental (neither state, nor municipal) nonprofit organization established to attain the objectives set forth by law and its constituent documents by engaging in charity in the interests of the society as a whole or certain categories of persons.
Charitable organizations may be set up in business forms provided for by Russian laws for nonprofit organizations with due regard for established restrictions, including:
- a charitable public organization which is a public organization of individuals who have united following the statutory procedure on the basis of community of their interests to carry out charitable activities jointly;
- a charitable religious organization (association) which is a religious organization (association) acting pursuant to the charter registered in a statutory manner and providing for charitable activities;
- a charitable foundation which is a charitable organization having no membership, established by individuals and (or) legal entities on the basis of voluntary property contributions and pursuing charitable objectives;
- a charitable institution which is a charitable organization created by a proprietor who completely or partly finances it and assigns thereto the property with the right of operative control over it, to solve particular tasks of charity. The Law establishes that a charitable organization may be set up in the form of an institution only in case its founder is a charitable organization (para. 2, Art. 7 of the Law);
- a charitable association (union) which is a voluntary integration of charitable organizations, foundations.
A charitable organization (including that established and existing pursuant to laws of a foreign country) is entitled to open branch and representative offices in the territory of the Russian Federation, provided the requirements of Russian law are met.
Heads of branch and representative offices are appointed by the highest governing body of the charitable organization and act pursuant to powers of attorney issued by the said organization.
The branch and representative offices carry our activities on behalf of the charitable organization that has created them. The charitable organization that has created the branch and representative offices is responsible for their activities.
A charitable organization is entitled to carry out charity to attain the objectives it has been set up for and the statutory objectives provided for by current laws of RF regulating charity.
A charitable organization is also entitled to attract funds and to carry out non-sale operations.
A charitable organization transacts business only to attain its objective, and such business should be in line with these objectives. Charitable foundations are entitled to set up business entities or participate in these for transaction of business.
The highest governing body of a charitable organization is collective body formed in a manner provided for by the charitable organization charter.
The competence of the highest governing body of a charitable organization comprises the following:
- amendment of the charter of the charitable organization;
- formation of executive, controlling and supervising bodies of the charitable organization,
- and early termination of their powers;
- approval of charity programs;
- approval of its annual plan, the budget and its annual report;
- decisions on establishment of profit-making and nonprofit organizations, on participation therein, on opening of branch and representative offices;
- decisions on reorganization and liquidation of the charitable organization (excluding a charitable foundation).
Members of the highest governing body of a charitable organization discharge their duties on a voluntary basis. The highest governing body of a charitable organization may consist of one executive only (with or without a casting vote).
Members of the highest governing body of a charitable organization and its officers have no right to take up positions in the administration of profit-making and nonprofit organizations, whose founder (member) is the charitable organization concerned.
Moreover, a charitable foundation establishes a board of trustees. Such board of trustees is a body of the foundation supervising its activities, effecting control over decisions and their implementation by other bodies of the foundation, as well as over utilization of funds and compliance with law.
The board of trustees of the foundation operates on a voluntary basis.
The procedure of formation and operation of the board of trustees is determined by the charter of the foundation approved by its founder(s).
The statutory registration of a charitable organization is effected by the Ministry of Taxes and Levies of the Russian Federation.