Russian NGO Legislation – positive development trend 2006-2010

1. Russian NGO Legislation – positive development trend2006-2010 Daria Miloslavskaya Affiliate Office of International Center for Not-for-Profit Law, LLC in Russian Federation

2. LEGAL FRAMEWORK • Constitution of the Russian Federation  • Civil Code of the Russian Federation • Tax Code of the Russian Federation • Federal Law "On Not-for-Profit Organizations," • Federal Law "On Charitable Activities and Charitable Organizations," • Federal Law "On Public Associations," • Federal Law "On State Registration of Legal Entities," • Federal Law "On the Procedure of Formation and Use of Endowments of Non-Commercial Organizations," • Decree of the Government of the Russian Federation # 212, “On measures aimed at implementing certain provisions of the federal laws regulating activities of non-commercial organizations” ( reporting and registration forms) • Decree of the Ministry of Justice of the Russian Federation #222, "On the Procedure of State Control of NGO activity (including Spending of Resources),“ • and 25 different more…

3. Notorious “New NGO Law – 2006” All NGOs have to report on their activity once a year using special forms All NGOs have to report on all funds received from foreign sources and to detail how these funds are allocated or used. Foreign NGOs need not comply with these reporting requirements unless they have a registered subdivision (branch, representative office, or affiliate) in Russia State authorities have the right to control NGO activity every year and to stop it or liquidate an NGO if there are more than 2 notices from MoJ

4. Notorious “New NGO Law – 2006” Certain persons may not become founders, members or participants, including: • Foreign nationals or stateless persons whose stay is deemed “undesirable”; • Persons appearing on a money laundering and anti-terrorist financing watch list maintained by the Russian government; • Organizations that have been suspended under the Law Countering Extremist Activities; • Persons found by court decision to show signs of participating in extremist activity; • Persons who are currently incarcerated as a result of conviction of a crime

5. New NGO Law - 2009 • Small non-commercial organizations that do not receive foreign funding and have no foreign founders will be exempt from formal reporting of annual revenue totaling less than 3 million rubles, or approximately US $100,000. • All NCOs may make required reports on their activities publicly available by either posting the reports on their website or publishing the report in selected media. • Mandatory government audits of NCOs will no longer take place annually, but rather every three years -- the same as commercial enterprises.

6. New NGO Law - 2009 • If an NCO does not submit all of the documents required for registration or if there are mistakes in the submitted documents, in lieu of an automatic denial of registration, the registration process may be suspended for up to three months, until the applicant completes or corrects the application. The registration body will proceed with registering an NCO once the application is complete. • In considering a registration application, the registration body may only request documents specified in the law. • Refusal to register a foreign NCO representative office may no longer be based on criteria such as “threats to unique character, cultural heritage, or national interests of the Russian Federation.” These criteria have been removed from the law

7. Positive signs • Amendments to the Law on Not-for-profit Organizations on establishing status of socially oriented organizations, which will be eligible for governmental support and preferential tax treatment (adopted) • Amendments to the Administrative Code related to access to information for NGOs (adopted) • Amendments to the Competition Law enabling NGOs to sign lease agreements of state-owned premises without tender (adopted)

8. On the way to the first reading in State Duma Amendments to the Law on Charitable Organizations It is proposed to widen the list of goals of charitable activities by the following: • “social rehabilitation of neglected children, orphans and children deprived of parental care; • provision of free of charge legal assistance to citizens and NGOs and legal education of the population; • contribution to volunteerism; • prevention of socially dangerous forms of social behavior; • contribution to development of scientific, technical and artistic creativity of children, etc

9. On the way to the first reading in State Duma • Amendments to the Tax Code expanding the list of individuals who may receive donations from charities and NGOs for the purpose of medical treatment and education

10. Under discussion Amendments to the on Not-for-profit Organizations related to volunteers (the cause is Sochi 2014, which needs 25 000 volunteers) on: • establishing the status of volunteer, • suggesting form of a volunteering contract • listing expenses for reimbursement.

11. Under discussion • Amendments to the Tax Code on tax exemption for donations in the form of property received by foundations and autonomous noncommercial organizations at the moment of their creation by the founders and for revenues obtained in the form of volunteer works, services and dividends or other investment income and used for NGO statutory activities • Amendments to the Tax Code concerning tax benefits for individual donors up to 25%

12. Presidential message • Russian President D.Medvedev in his Annual message to the Federal Assembly of the Russian Federation on November 12, 2009 confirmed that both the President and the Government will pay attention to NGO legislation improving process

13. Donations • Donations are tax exempt • Civil Code describes a donation as a gift of an item or a right for generally useful purposes. • Donations can be given to individuals; health, welfare, educational, and similar institutions; charitable, scientific, public, and religious organizations; and foundations, museums, other cultural institutions and NGOs in compliance with Russian legislation. • Saint Petersburg appeal court decision – all NGOs • To be amended – by “services” (Message to Federal assembly)

14. Government funding Through Russian NGOs - operators – subsidies for NGOs 1 500 000 000 rub – 2008 1 200 000 000 rub - 2009 1 000 000 000 rub – 2010 Still problematic • No rules of distribution • By the Tax and Budget Codes – taxable

15. Prime minister’s statement Putin, 2008: “I object categorically to foreign funding of political activity in the Russian Federation. I object to it categorically. Not a single self-respecting country allows that and neither will we.”

16. Foreign funding • By a decree from June 28, 2008 #485, the Russian Government approved a new version of the “Regulation on the List of Foreign and International Organizations Whose Grants are Not Included into Taxable Income of Russian Organizations - Recipients of Grants”. The regulation cut from January 2009 the list of foreign organizations that are approved by the Government of the RF to provide tax exempt grants to Russian NGOsfrom 106 to 12 international organizations. • Grants given to Russian NGOs by foreign organizations that are not on government’s pre-approved list are considered taxable income to Russian NGOs.

17. Real situation • The trend is positive until there is a political will • It is possible to follow the law • It is possible to comply with reporting and other requirements • It is possible to find a way of receiving funding from different sources (as donations) • It is possible to be a good public benefit or socially oriented organization

18. Thank you for attention! Affiliate Office of ICNL, LLC in the Russian Federation miloslavskaya@icnlalliance.org