Non-profit organization (NPO)
Profit-making cannot be the main purpose of activity for non-profit organizations, and it is furthermore prohibited to distribute profits among participants. The main purposes of activity may include the provision of services in the fields of science, education, healthcare, culture, mass media, social protection, employment, physical culture, and sports.
Income-generating and entrepreneurial activities are permitted if the following conditions are met: the types of such activities must be explicitly spelled out in the statute; income-generating activities must serve to achieve the goals for which the non-profit organization was created, and must be consistent with such goals; and the distribution of profit from such activities is not stipulated, although income may be directed to the remuneration of employees and other expenses in accordance with the purpose of activities.
Even in the absence of employees, accounting and reporting are required. Registration takes place through a more complex procedure in the territorial bodies of the Ministry of Justice of Russia, and any form of non-commercial organization requires the development of constituent documents.
In order to access additional support measures, organizations may obtain the following statuses: socially oriented non-profit organization, and non-profit organization — performer of socially useful services. Socially oriented non-profit organizations are defined as non-profit organizations which carry out activities aimed at solving social problems and developing civil society in the Russian Federation, as well as activities provided for in Article 31.1 of Federal Law No. 7-FZ of January 12, 1996 on Non-Profit Organizations.
The legal basis is provided by Part 1 of the Civil Code of the Russian Federation, Federal Law No. 209-FZ of July 24, 2007 on the Development of Small and Medium Enterprises in the Russian Federation, Federal Law No. 7-FZ of January 12, 1996 on Non-Commercial Organizations, special federal laws for various forms of non-profit organizations — including Federal Law No. 135-FZ of August 11, 1995 on Charitable Activity and Volunteering for organizations engaged in charitable activities — Decree of the Government of the Russian Federation No. 1290 of July 30, 2021 on the Register of Socially Oriented Non-Commercial Organizations, and Federal Law No. 14-FZ of February 8, 1998 on Limited Liability Companies.
Financial Support
A wide range of financial and property support measures are available to non-profit organizations. These include grants from the President of the Russian Federation through the Presidential Grants Fund, subsidies and grants under programs implemented by federal executive authorities, executive authorities of the constituent entities of the Russian Federation, and local authorities, with support provided at all levels of government, as well as property support from authorities in the form of provision of property free of charge or on preferential lease terms.
Tax Relief
The general procedure for paying taxes applies, with the possibility of applying the Simplified Taxation System (STS). Under the STS, if the object of taxation is “income”, the rate is 6%. If the object of taxation is “income minus expenses”, the rate is 15%.
Social Security Contributions
Insurance premiums are paid in accordance with the general procedure. Mandatory payments are provided for all employees of a non-profit organization, including when the director’s salary is accrued. The applicable rates are: Russian Pension Fund (PFR) — 22%; Social Insurance Fund (SIF) — 2.9%; Federal Compulsory Medical Insurance Fund — 5.1%; and non-casualty insurance — from 0.2% to 8.5%, depending on the occupational risk class.
Public Procurement
The general procedure for participation in public procurement under Federal Laws No. 223-FZ and No. 44-FZ applies. Preferences may be applied when participating in government procurement, provided the organization holds the status of a socially oriented non-profit organization, with a mandatory share of the order allocated to such organizations.
Educational and Informational Support
Educational and informational support is provided at all levels of government, as well as through the activities of major grant operators such as the Presidential Grants Fund (presidentialgrants.rf). State information support measures are available at nko.economy.gov.ru/info-support. A dedicated portal for attracting volunteers to the activities of non-profit organizations, including educational support, is available at dobro.ru.
Other Types of Support
Additional support is available through the infrastructure of state and private resource centers for NPOs. Information about support measures is available on the official portal nko.economy.gov.ru, as well as on the website of the Ministry of Economic Development of the Russian Federation at economy.gov.ru.
