Non-profit organizations: concept, types, rights and activities of NPOs in 2022

An NPO is a legal entity that can be created and exist in different organizational and legal forms (OLF).

Important! The key legislative acts defining these forms for NPOs are Art. 50 Civil Code of the Russian Federation and Federal Law of the Russian Federation No. 7 dated January 12, 1996 (as amended on December 2, 2019).

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The main part of the OPF for non-profit organizations is shown in the table below.

Types of NPOs: corporate and unitary

NPOs are subject to division into corporate and unitary (in relation to the Federal Law of the Russian Federation No. 99 of 05/05/2014). The features of these structures are as follows:

1. Corporate non-profit organizations: the founders participate in them and form the supreme body in accordance with clause 1 of Art. 65.3 of the Civil Code of the Russian Federation. These are, for example, TSN, consumer cooperatives, Cossack societies.
2. Unitary NPOs: the founders are not their participants and do not have membership rights. These include, for example, autonomous non-profit organizations, foundations, and religious organizations.

These norms are contained in Art. 65.1 Civil Code of the Russian Federation.

The concept and essence of NPOs

An NPO is a non-profit organization. That is, it is an economic entity that was not created to make a profit from carrying out its main activities (clause 1 of Article 123.1 of the Civil Code of the Russian Federation). The key goal of creating a non-profit enterprise is to carry out socially significant tasks or other issues. Typically, NPO activities are carried out in the following areas:

• education;
• culture;
• medicine;
• social services;
• charity;
• resolving conflicts and disputes;
• legal advice and support for citizens;
• sport;
• spiritual development;
• and so on.

Please note that NPOs have the right to receive income from certain types of activities. But it is impossible to distribute profits between participants. Funds can be used for the economic needs of the organization.

Types of NPOs

Note! According to Art. 65.1 of the Civil Code, all organizations are divided into corporate and unitary. Therefore, there are the following types of non-profit organizations:

• non-profit corporate organizations (hereinafter - NCCO);
• non-profit unitary organizations (hereinafter - NKUO).

The difference between corporate and unitary NPOs is that:

• The founders of the NPO are classified as participants (members), are members of the supreme body, acquire certain powers in organizing the management of the NPO, pay annual fees, etc.
• There is no membership of founders or participants in NKUO. They cannot influence the activities of NPOs.

Read more about membership fees in NKPO in the article “Membership fees in a non-profit organization.”

Types and forms of NPOs

The initial stage of the instructions on what is needed to open an NPO is to determine the type of organization to be created. The current legislation provides for the following organizational and legal forms of non-profit structures:

• Cossack societies;
• communities of indigenous peoples of the Russian Federation;
• state corporations and companies;
• associations (unions), for example, associations of disabled people or veterans;
• consumer cooperatives;
• public and religious organizations (associations);
• notary chambers;
• HOA;
• funds;
• non-profit partnerships;
• state, budgetary and private institutions;
• autonomous non-profit organizations.

Legal regulation of the activities of non-profit structures is defined in several categories of regulations; they indicate what is necessary to open an NPO. The main documents are:

1. Civil Code of the Russian Federation.
2. Federal Law No. 7-FZ of January 12, 1996 “On NPOs”.

These standards are required to be applied by all NPOs without exception. But for certain types of organizations and enterprises, additional regulatory acts are provided:

1. Federal Law of July 11, 2001 No. 95-FZ.
2. Federal Law of May 19, 1995 No. 82-FZ.
3. Federal Law of December 5, 2005 No. 154-FZ.
4. Federal Law of December 30, 2004 No. 215-FZ.

Paragraph 28 of Order No. 455 of the Ministry of Justice of Russia dated December 30, 2011 (as amended on November 21, 2017) lists all the documents for opening a non-profit organization.

Features of non-profit organizations in Russia

A non-profit organization (abbreviated as NPO) is created for purposes aimed at achieving public benefits. For example, social or charitable. Making a profit is not its main goal, and the profit itself will not be divided, especially among the participants . This definition contains Art. 2 Federal Law of the Russian Federation No. 7 dated January 12, 1996 (actual edition dated December 2, 2019).

Important! An NPO can engage in activities that generate income. But provided that it is provided for by the charter and contributes to the achievement of the goals for which the NPO was created.

The list of activities that an NPO can carry out is limited. All of them are socially oriented and are indicated in Art. 31.1 Federal Law of the Russian Federation No. 7.

Who can establish an NPO

The founders, that is, the creators of an economic entity, must meet several mandatory requirements at once. Only legally capable and adult citizens can act as creators. Legal entities already registered in the Russian Federation have the authority to establish an NPO. The right to create is reserved to public legal entities. This is the Russian Federation, the constituent entities and municipalities of our country.

The number of founders is not limited by the current legislation. Consequently, any number of founders can participate when registering a new entity. But the requirements for the number of participants of an NPO are established depending on the organizational and legal form. Please note the following regulations:

1. When creating a public organization, there must be at least 3 participants (Article 123.5 of the Civil Code of the Russian Federation).
2. When establishing a union, 2 or more participants are assigned (Article 123.9 of the Civil Code of the Russian Federation).

The creation of a non-profit organization is possible only in three cases (Article 13 of Law No. 7-FZ):

Differences in the main forms of NPOs

The table shows the differences between the main forms of NPOs.

Purposes of creating different forms

• Funds - the formation of property through voluntary contributions and its use for public needs. They have no members. They can engage in entrepreneurship to achieve goals.
• Associations - protection of the interests of participants on the basis of an agreement. They are created by commercial structures to organize business management.
• Public organizations - working together to achieve their goals. They are created by an initiative group of 10 people who share common interests.
• Religious associations - professing and introducing citizens to faith, worship, rituals, teaching religion.
• Consumer cooperative - improving the property status of members, providing them with goods and services through the pooling of contributions. When leaving membership, a person receives his share.
• Institutions - performing cultural, social, managerial, and other non-profit tasks. The funds are contributed by the founder.
• ANO - provision of educational, medical, sports and other services.
• NP - achieving social well-being in all spheres of life: healthcare, culture, art, sports. This form is suitable for providing various types of services.
• Communities of small peoples are created by citizens voluntarily. They must consist of at least three members. People unite on the basis of common interests, territory of residence, traditions, crafts in order to preserve their way of life, culture, and economic principles. These NPOs can engage in commercial activities to fulfill their assigned tasks. When leaving the community, a citizen has property rights.

Stages of creating a non-profit organization

The procedure for establishing an NPO differs from registering a commercial company or individual entrepreneur. There are many differences. It is necessary to comply with legal procedures, prepare draft documents, and hold meetings. But essentially, the step-by-step instructions for starting a non-profit organization 2022 consists of only four steps.

Stage No. 1. Preparation.

At the preparatory stage, the founders of a non-profit organization will have to perform the following actions:

1. Agree with all participants, creators and founders on the procedure for creating a new economic entity.
2. Determine the order of operation of the enterprise.
3. Designate the location of the institution and obtain official assurance that the NPO being created has the right to conduct activities and be located at this address.
4. Prepare draft documents required for registration of an economic entity.

Stage No. 2. Discussions.

The second stage involves an organized meeting of the participants, creators and founders of the future legal entity. A meeting or session of participants is held to resolve the following issues:

• make a collegial decision on the establishment of an NPO;
• approve the charter and other constituent documentation;
• consolidate the management bodies (directorate) of the company;
• approve the order for registration of a legal entity;
• draw up the minutes of the meeting in the prescribed manner.

Stage No. 3. Registration.

At the third stage, step-by-step instructions for opening an NPO provide for registration of a legal entity with government departments. To do this you need:

• fill out an application according to the established form (form P11001);
• pay the state duty (Article 333.33 of the Tax Code of the Russian Federation);
• submit an application to the Ministry of Justice of the Russian Federation at the location of the legal entity being created.

Then you will have to wait for the official decision of the government department.

Stage No. 4. Start of activity.

Having received registration documents from the Ministry of Justice, you need to register with Rosstat, the Social Insurance Fund and the Pension Fund of the Russian Federation. Then you should open a current account with a banking organization. If necessary, make a seal or stamp. Now the organization can begin to carry out activities.

Stages of registration of NPOs in Russia

Before registering with the Ministry of Justice, you must select the name of the NPO, decide on its legal address and prepare at least:

• charter;
• protocol (decision);
• statement;
• confirmation of legal address;
• receipt for payment of state duty.

There is no state fee for electronic filing.

In what cases is it profitable to open an NPO?

The benefit becomes obvious when the activities from which the NPO receives income fully meet the goals for which the NPO was created. Therefore, profits should go to the development of the organization. By deriving income from certain activities, an NPO can enjoy tax and other benefits.

All that is required from the applicant when registering an NPO is to correctly formulate a package of documents. If mistakes or inaccuracies are made, the registration period may be delayed, and all the benefits may disappear.

What is the advantage of an NPO?

The main advantages of NPOs over commercial structures:

• often complete tax exemption (for budget revenues, donations);
• personal income tax deduction for individuals providing financial support;
• possibility of using “simplified”;
• participation in grants, receiving government support;
• obtaining space from the state to achieve its goals.

What difficulties may there be when opening an NPO?

Most of the nuances are related to the correct preparation and execution of documents. When opening an NPO, it is important to consider the following difficulties:

• different forms of non-profit organizations will require different documents;
• the income received cannot be distributed among participants;
• all documents are thoroughly checked by the Ministry of Justice;
• if there are errors, the documents are returned and the applicant is denied registration.

Important! All actions of an NPO must correspond to the goals initially stated to it.

When will the NPO be registered?

Registration of an NPO can take from 1.5 to 8 months. This period includes:

1. Submission of documents to the Ministry of Justice (day).
2. Conducting a legal examination of a registered NPO and making a decision on documents in the Ministry of Justice (up to 3 weeks).
3. Sending documents from the Ministry of Justice to the Federal Tax Service (about a week)
4. Checking them with the Federal Tax Service (about a week) and sending the documents back to the Ministry of Justice.
5. Registration of a certificate of registration of an NPO and issuance of completed documents to the applicant at the Ministry of Justice (up to 3 weeks).

After this, all that remains is: if necessary, make a stamp, be sure to obtain statistics codes and open a current account.

What documents are needed to open

To create a non-profit entity, you need to complete a whole package of documents. The table contains documents for opening an NPO 2020: forms and registration rules.

Foreign NPOs, NPOs with foreign agent status

The legislation specifically addresses the issue of the activities of foreign NPOs on the territory of the Russian Federation.

According to paragraph 4 of Art. 2 of the Federal Law on NPOs, organizations created outside the territory of the Russian Federation are recognized as foreign. At the same time, they must comply with the general principle of creating NPOs - the main purpose of creation and activity is not to make a profit, the profit received as a result of the activity is not distributed among the founders (participants).

In accordance with paragraph 5 of this article, the activities of a foreign organization can be carried out on the territory of the Russian Federation through the created structural units (depending on the specific form of the NPO and the provisions of its charter - branches, branches, representative offices).

Also, the current legislation specifically distinguishes this type of NPO as “foreign agents”, the procedure for the creation, organization and activities of which has its own characteristics.

An NPO recognized under Russian law as performing the functions of a “foreign agent”, in accordance with clause 6 of Art. 2 of the Federal Law on NPOs are understood as NPOs that meet the following criteria:

1. receive funds (property) from foreign sources, which mean foreign states, international organizations, foreign citizens, etc.;
2. participate in political activities on the territory of the Russian Federation in the interests of foreign sources.

The specified Federal Law provides a list of types of activities that are understood as political activity - rallies, demonstrations, participation in activities in elections, referendums, etc. (Part 3, Clause 6, Article 2 of the Federal Law on NPOs). Separately, this paragraph contains a list of types of activities that are not recognized as political activities - activities in the field of cultural education, charitable activities, etc. (Part 4, Clause 6, Article 2 of the Federal Law on NPOs).

Let us note that the compliance of these norms with the Constitution of the Russian Federation is confirmed, among other things, by the Resolution of the Constitutional Court of the Russian Federation dated April 8, 2014 No. 10-P.

Application for registration with the Ministry of Justice

One of the mandatory documents to be provided during registration is a standard application. Ordinary companies and firms are registered through the tax office. Non-profit organizations - through the Ministry of Justice of the Russian Federation.

The application form is the same for all legal entities. The form is fixed by Order of the Federal Tax Service of Russia dated January 25, 2012 No. ММВ-7-6/ [email protected] The structure of the document is quite complex. Please note important design requirements:

1. Please indicate in the form the full name of the legal entity registered with the Ministry of Justice. This detail must fully comply with the charter of the NPO.
2. If a company is created by several founders at once, then you will have to fill out information for each one separately.
3. The applicant must indicate a specific citizen during registration. This may be an individual - the founder, director of the organization that acted as the founder, or another authorized person. If there are several applicants, you will have to issue sheets separately for each.
4. The applicant's signature must be certified by a notary office. The completed form should be signed only in the presence of a notary.
5. The application will have to be accompanied by a full package of documents specified in clause 28 of Order of the Ministry of Justice of Russia dated December 30, 2011 No. 455 (as amended on November 21, 2017).

IMPORTANT!
The deadline for submitting documents for registration to the Ministry of Justice is three months from the date of approval of the protocol on the creation of an NPO.

But the period for consideration of the application depends on the category of the registered economic entity:

• 17 days - in general cases;
• 33 days - for public organizations;
• 30 days - for political parties;
• 33 days - for religious companies, or 6 months and 3 days - if it is necessary to conduct a state examination.

Sources of formation of property of non-profit organizations

All NPOs, as legal entities, have the most important feature - the presence of an independent balance sheet and separate property.

According to paragraph 1 of Art. 3 of the Federal Law on NPOs, property may belong to an NPO on the right of ownership or on the right of operational management.

The specific regime and sources of formation of property of NPOs are determined by their charters in accordance with the law, depending on the type of NPO (organizational and legal form).

Thus, NPOs created in the form of institutions are vested with the right of operational management, i.e. the owner remains the person who created them.

The formation of NPO property is carried out from various sources, including:

1. property transferred to NPOs by their founders when creating the organization;
2. property received by NPOs in the form of membership fees (for organizations based on the principle of membership);
3. property received by NPOs as a result of economic (entrepreneurial) activities;
4. property received by NPOs from other sources (voluntary donations, etc.).

If registration is refused

There are plenty of reasons for refusing to register an NPO. All grounds are enshrined in paragraph 1 of Art. 23.1 of Law No. 7-FZ. Let us outline the main problems:

1. An incomplete package of documents was provided.
2. Significant errors were discovered in the documentation.
3. The database already contains a registered organization with a similar name, OPF.
4. Incorrect information was provided during registration.
5. The founders are persons who do not have the authority to create legal entities.
6. Other reasons.

Refusal to register is not a reason to give up. If a negative decision is made without reason, it is permissible to challenge it in court. If there are justified reasons for the refusal, it is recommended to eliminate errors and shortcomings and resubmit the documents.

Advantages and disadvantages of different types of NPOs

Each of the OPF non-profit associations has its own advantages and disadvantages. They are reflected in the table.

Unitary NPOs, that is, those without members, have the advantage of quickly solving difficulties that arise. Disadvantages include the problem of making final decisions with a large number of founders.

Example. Disadvantage of a unitary NPO

Eight people created the charitable organization “Help”, headed by the Board of Founders. The NPO worked successfully, but some of the founders moved, some retired. There is only one manager left. There was a need to amend the Charter. It is impossible to make a decision without voting. It is impossible to gather the remaining founders.

In this example, time is wasted and the organization itself may close. When choosing an OPF, you should be sure of the seriousness of your partners’ intentions. The disadvantages of all forms of NPOs are:

• Compliance of activities with the goals approved in the Charter;
• Complicated registration process;
• Specifics of registration of constituent papers, taking into account work tasks;
• Responsibility of the applicant for the information presented in the documents;
• Refusal to register at the slightest inaccuracy in the papers;
• Lengthy verification of documents by the Ministry of Justice;
• Inability to distribute profits.

Advantages:

• Doing business together with social work;
• May have no assets;
• Lack of liability of participants for obligations;
• Simplified reporting;
• Target amounts are not taxable;
• Inherited property is not subject to income tax.

Types of commercial legal entities 2022

Commercial entities in the Russian Federation are divided into corporate organizations and unitary enterprises. Corporate organizations are:

• business partnerships, which can be in the form of a general partnership, as well as a limited partnership;
• business companies: everything is simple here, everyone knows LLC and *JSC
• business partnerships
• peasant (farm) farms
• production cooperatives

Unitary enterprises are represented by state and municipal unitary enterprises.

Similarities between for-profit and non-profit organizations

1. Organizational unity of all legal entities

Organizational unity consists of a strict hierarchy and subordination of management bodies. The latter can be individual or collegial: director, manager, president, chairman, board, meeting, presidium, and so on. A legal entity (regardless of the area of ​​activity) must have at least some governing bodies. Otherwise, they simply will not be able to perform their functions.

Availability of separate property

As a subject of law, commercial and non-profit organizations have separate property or material base for carrying out their activities. These are real estate, equipment, means of production, intellectual rights, funds, grants, and so on. When all this is united within the framework of one legal entity, its property independence comes into being . It is characteristic of NPOs and COs equally.

3. Independent civil and legal liability

This principle is formulated in Art. 56 Civil Code of the Russian Federation. Its essence lies in the fact that the participants and founders of any legal entity are not responsible (except for cases specified by law!) for its obligations, and it, in turn, is not responsible for their obligations. By the way, this postulate stems from the property isolation of the organization: since it has property, it can itself be liable to creditors.

4. Speaking in civil proceedings on one’s own behalf

Another commonality between for-profit and non-profit organizations. Each legal entity must have a name and location. The title allows for individualization and is considered a necessary prerequisite for civil personality. Accordingly, any commercial and non-profit organization, on its own behalf, enters into and executes contracts, is liable for obligations, acts as a plaintiff or defendant in court, and bears civil or administrative liability.

5. Creation, operation and termination of activities

As a subject of civil legal relations, a legal entity is created by a decision of the participants (founders) and is subject to mandatory registration in the Unified State Register of Legal Entities. And let NPOs submit documents through the territorial department of the Ministry of Justice of the Russian Federation - it does not matter. Ultimately, information about him still ends up in the unified state register. In turn, the liquidation of an organization is accompanied by its exclusion from the Unified State Register of Legal Entities. Well, and finally, all legal entities (except for state corporations and business partnerships) act on the basis of their main internal document - the Charter.

Being in a certain tax regime

Without exception, all legal entities are subject to some kind of tax regime. In other words, they are taxpayers and are required to pay taxes and insurance premiums. This requirement also applies to non-profit organizations. Another question is that the state provides them with various kinds of preferences and even exempts them from a number of taxes. For example, the Tax Code of the Russian Federation exempts some types of non-profit organizations from paying land tax (Article 395 of the Tax Code of the Russian Federation) or from charging insurance premiums for payments to volunteers (Article 420 of the Tax Code of the Russian Federation). However, they (that is, NPOs) are still subject to the general taxation regime (OSNO), or to the simplified taxation system ( STS), like many other commercial firms.

7. Accounting

All for-profit and non-profit companies are required to maintain accounting records. True, unlike commercial companies, NPOs conduct it in a simplified form (Article 6 of the Accounting Law No. 402 - Federal Law of December 6, 2011). However, this exception does not apply to foreign agents, housing cooperatives, various parties, attorney and notary fees, as well as some types of cooperatives.