The International Journal
of Not-for-Profit Law

Volume 2, Issue 4, June 2000

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Articles

Scottish Charity Law: Proposals for Reform
By Dr. Christine R. Barker

Volunteering-- The Long Arm of the Law
By Debra Morris

Do Czechs Need a New Law on Associations?
By Dr. Petr Pajas

The Freedom to Join an Association: A Principle in Question
By Barbara Rigaud

Structural and Systematic Issues Surrounding the Establishment and Management of Endowments in the Czech and Slovak Republics
By Robert N. Thomas

Report on the Violations Committed in the Course of Registration and Re-Registration of Public Associations in the Russian Federation in 1999
Prepared by the Information Center of the Human Rights Movement and the Center for the Development of Democracy and Human Rights

Reviews

An Introduction to the Not-for-Profit Sector in China
By Nick Young and Anthony Woo
Reviewed by Georgina McCaughan

Las Organizaciones de la Sociedad Civil en el Ordenamiento Legal Argentino
By GADIS and Foro del Sector Social
Reviewed by Fernando Latorre

Hacia un Desarrollo con Ciudadania
By La Sociedad Internacional de Investigación del Tercer Sector
Reviewed by Antonio Itriago

Entidades Sin Ánimo De Lucro - Regimen Tributario Especial
By Juan Carlos Jaramillio Diaz, Vargas Ballen, Jenny & Fabio Andres Duran Acosta
Reviewed by Antonio Itriago

Case Notes

North America:
the United States

South Asia:
India

Country Reports

Asia Pacific:
Australia

Central and Eastern Europe:
Regional
| Bulgaria | Croatia | Czech Republic | Estonia | Kosovo | Macedonia | Montenegro | Romania | Slovak Republic | Yugoslavia

Latin America:
Belize
| Chile | Colombia | Nicaragua | Venezuela

Middle East and North Africa:
Egypt

Newly Independent States:
Armenia
| Moldova | Russia

North America:
Canada | Mexico | the United States

South Asia:
India

Sub-Saharan Africa:
Ghana
| South Africa | Tanzania | Uganda

Western Europe:
France
| Germany | the United Kingdom

International:
CIVICUS Diamond Project | G4+1 Accounting Standards

International Grantmaking

Determining Whether to Make an Equivalency Determination or to Excercise Expenditure Responsibility
By Derek J. Aitken

Supporting Microfinance Abroad: Introductory Legal Issues for U.S. Grantmakers
By Timothy R. Lyman

United States International Grantmaking (USIG) Project Unveils New Web Site
By Derek J. Aitken

Community and Corporate Philanthropy

The Enabling Environment for Community Philanthropy

Changemakers.net

German Publication

Partnerships

Survey of the Current Legislative Framework for NPOs to Perform Social Services in Bulgaria

- - - - - - - - - -

Editorial Board

Subscription Information

Previous Issues

ICNL Homepage

Country Reports: Newly Independent States

Armenia

The National Assembly of the Republic of Armenia Adopts Act based on an Initiative of an NGO

In Issue # 25 of April 3, 2000, the Armenian NGO News in Brief, an electronic journal issued bi-weekly by the Armenian NGO Training and Resource Center, reports the following:

On March 7, 2000 the National Assembly of the Republic of Armenia adopted the Act on "Fauna". The Draft Law was developed on the initiative of the Animal Kingdom Protection Union by the Interdepartmental Committee of the Armenian Government attached to the Ministry of Environment. Over the course of two years, representatives of the two prominent NGOs, the Animal Kingdom Protection Union and the Environmental Public Advocacy Center, have actively participated in the Committee sessions. After undergoing an evaluation by international experts, the Draft Law was approved by the Government of Armenia and presented during the hearings of the National Assembly Committee on Environmental, Health and Social Issues. Representatives of the above-mentioned NGOs came up with further amendments to the draft during the committee hearings. The Act creates favorable legislative support for NGOs dealing with fauna protection issues. It includes provisions enabling financial grants by foreign persons and also regulates the registration of endangered animal species.

Contact: Zarmair Benkliants, Animal Kingdom Protection Union, 26 Khachatrian St., apt. 1; Jerevan, Armenia, tel.: (3742) 265370, 221881

Moldova

The Moldovan Law on Foundations

By Natalia Bourjaily and Caroline Newman
ICNL

In 1999 the Moldovan Parliament adopted a new Law on Foundations which is the first law regulating non-membership organizations separately from other legal forms in the Newly Independent States (NIS). This law complies with international good practices of NGO regulation and provides a good example to other NIS and Central and Eastern European (CEE) countries. <![endif]>

Currently, Moldovan legislation allows the establishment of membership and non-membership not-for-profit organizations under the 1999 Law on Foundations and the 1996 Law on Public Associations. Having legislation that regulates both membership and non-membership not-for-profit organizations is fundamental to the development of a strong sector, which provides essential services to benefit a given society. The Moldovan Law on Foundations enables the development of philanthropy in Moldova by permitting the establishment and activities of foundations. The new law also establishes mechanisms for allocating and supervising the use of assets designated for philanthropic purposes.

Because the new law plays such an important role, it is vital that state agencies supervising foundations and implementing the law, as well as state agencies in charge of social services, have a clear understanding of the role foundations usually play in a society. The purpose of this article is to assist in developing a better understanding of the provisions of the new Moldovan Law on Foundations through review of its main provisions and comparison to international good practices. The structure and operations provided in the Moldovan law will be analyzed and compared with laws of other countries and principles established in the World Bank Handbook on NGO laws (WBH).[1] We are hopeful that this article provides a basis for supportive implementation of the law. 

1. Role of foundations

1.1. Associations and Foundations

While public associations are well known in the NIS, non-membership organizations, such as foundations, are new to the region. Their role in society and the way in which they differ from associations are not always well understood. While associations are often dependant on membership fees, donations and grants from foundations or the state, foundations have the means to run their own programs. Further, they enable associations to be less dependent on the state budget for their support since they can turn to grant-making foundations to receive grants. In addition, foundations allow individual and corporate philanthropists to establish mechanisms through which they can allocate funds and carry out activities by their own means.

1.2. The Role Played by Foundations in Europe

Unlike in NIS countries, foundations are a well-established and widespread form in all Western European countries and regulated in national legislation. In some countries, the right to create a foundation is even a constitutional right. It is protected by article 34 of the Spanish constitution and article 109 of the Greek constitution.

The legal form of foundations and associations was already found under Roman law; an association was called a universitas personarum and a foundation was called universitas bonorum. Foundations on the European continent became essential actors of social life in the Middle Ages when the Church was linked with entities providing health care, education, and charity. In Europe foundations appeared in their modern form at the time of the industrial revolution, with the rise of the bourgeoisie and the development of urbanization.[2] Foundations were used as a tool to provide stability to the society by satisfying the emerging social needs, such as supporting the needy, and helping to involve new rich to integrate into the community. In the past decades, the crisis of the welfare state all over Western Europe has resulted in the withdrawal of state involvement in the area of social services and in delegation to all not-for-profit entities, including foundations, the provision of such services. The existence of foundations has proven to be one of the key factors in social development. In Declaration 23 annexed to the Maastricht Treaty establishing the European Union, foundations are described as “institutions responsible for social welfare establishments and services” with which states should cooperate in the pursuit of social objectives.

Indeed, assets and expenditures of the foundations in Western Europe are rather significant. The assets of the top 30 European foundations are estimated at EURO 40 billion and their annual expenditures on their statutory purposes are estimated at EURO 1.5 billion.[3] For example, Germany has about 7,780 foundations; the Netherlands had about 101,000 foundations in 1995 and the expenditure of the foundations which did not receive funding from the government was estimated at EURO 900 million;[4] Finland, whose population is only 5.1 million inhabitants, has about 3000 foundations.[5]

1.3. Different Types of Foundations

In civil law countries foundations are the basic form of non-membership organization. Laws governing non-membership organizations allow non-membership organizations to be created by one or more physical and/or legal entities, often by will or other testamentary act. Virtually all endowed and grant-making organizations are established as non-membership organizations and many of them come into existence by testamentary act (WBH p. 23-25). The essential element of a foundation is its endowment, which enables the organization to carry out its purposes. The highest governing body in a non-membership organization is often a board of directors or a similar collegial body with appointed members.

1.3.1. Grant Making or Operating Foundations

Foundations can be grant-making organizations and/or operate their own program. Foundations operating their own program often provide public benefit services. Grant-making foundations represent a source of income for associations and therefore an alternative to government funding. Further, the existence of foundations in a country allow international organizations to grant funds to local foundations rather than to other international NGOs for management and distribution of funds.

1.3.2. Public Benefit or Private Purposes

Foundations can be established for public benefit or private purposes. Public benefit foundations are, as described by the Commission of the European Union, “bodies with their own source of funds which they spend according to their own judgment on projects or activities of public benefit. They are entirely independent from public authorities and are run by independent management boards or trustees.”[6] While some countries such as the Czech Republic, France or Spain allow only the existence of foundations whose purposes are of public benefit, other countries also allow for the existence of private foundations such as foundations with a private purpose in Germany[7] or family foundations in Switzerland.

1.3.3. More Recent Trends in Types of Foundations

A developing trend in Western Europe is the creation of foundations established by businesses, also known as “corporate citizenship”. This type of corporate citizenship has become a marketing tool for businesses in recent years. Companies that demonstrate that they are environmentally aware, respect their communities and are involved in the betterment of society are more likely to do well than others. For instance, France adopted a Law on Company Foundations in 1990 and companies are encouraged to engage in philanthropic activities.

Community foundations, which are developing significantly in Latin American and Central European countries, address problems encountered at the local level. They also help to create partnerships between citizens, businesses, NGOs, and governments[8] that are essential for social development.

1.3.4. Foundations and Funds

Foundations should not be confused with funds. This is often the case in Russian speaking countries, where the same word is used for both “fund” and “foundation”, which adds to the confusion. In general terms, “fund” means “a sum of money or other liquid assets set apart for a specific purpose, or available for the payment of debts or claims.”[9] Funds include employment benefit funds, pension funds which are often set up by the government within or outside of the state budget. A pension fund for example “is a fund from which fixed amounts of money are periodically paid to individuals in consideration of their past services.”[10]

How to Best Regulate Foundations: a Comparative Study of the Moldovan Law and International Practice

2.1. General Provisions

Similar to laws on foundations in other countries, the Moldovan Law on Foundations establishes that foundations are non-membership organizations, which are established by the allocation of property for the achievement of purposes established in the charter of the organization. The assets allocated in the form of an endowment are to be used for noncommercial purposes established in the charter of the foundation. The law further describes the activities that can be carried out by a public benefit foundation. The activities described are in fact public benefit activities such as educational, scientific, environmental, cultural activities. The Moldovan law allows the existence of public benefit foundations and other foundations. However, some provisions of the law address only public benefit foundations, and the regulation on private foundations will need to be further developed.

The Moldovan Law on Foundations provides that beneficiaries of foundations can be legal or natural persons. However, a public benefit foundation can allocate funds only to individuals or not-for-profit entities carrying public benefit activities described in the tax code (article 52-1)[11] which do not “support or use part of the income or property for the financing of a political party, electoral block or candidates for the local and central governments” (article 52-2-d). Such provisions therefore do not allow public benefit foundations to finance business entities, trade unions, and political parties. Further in the law, in article 9 (6) it is stipulated that “foundation property cannot be used for the benefit of its founders, members of governing bodies or foundation staff,” thus limiting the possible individuals that can be beneficiaries. This provision prevents from misuse of the funds and fiscal fraud.

2.2. Establishment

The founders of a foundation in Moldova, as is the case of most Western European countries, can be one or more legal or physical persons. Moldovan foundations can be established through a donation (inter vivos) or through a will (post mortem). For example, through the establishment of foundations, corporations allocate some of their profits in the communities in which they operate. Allowing founders to establish a foundation through a testamentary act is also essential. It encourages private property to be left for public purposes. Interestingly, the major foundations established by private persons, like the Ford Foundation, or Gulbenkian Foundation with endowments of millions of dollars, have been set up post mortem. In most countries private persons and corporations are encouraged to establish and contribute to foundations through tax benefits. By setting up their own foundation they can better ensure that contributions will be spent for the assigned purposes, and can better formulate these purposes without the necessity to comply with somebody else’s statutory goals and objectives. In addition, unlike when donating to an existing entity, private persons and corporations setting their own foundations have control over structuring the implementation and can prevent abuse in drafting the statute of their own foundation. In addition to tax benefits this proves to be critical to encourage philanthropic activities of wealthy individuals and corporations.

2.2.1. Endowment

Minimum Endowment

The Moldovan law requires that the endowment be valued at least 200 times the minimum wage. Some countries require a minimum endowment as proof that the foundation has the financial capacity to accomplish its stated purposes and guaranty that it will remain independent from its founders and the state. France, Denmark and Finland, for example have such requirements. As discussed earlier, foundations are different from associations and based on property rather than membership. Therefore, property is important in order for foundations to function. However, when a minimum endowment is required it should not be too high and should reflect local traditions and economic circumstances.[12]

Not all national legislation requires a minimum endowment for the establishment of a foundation. Indeed, this precaution is not necessary because if the financial capacity of a foundation is not sufficient it will fail and will need to be liquidated. Further, some argue that requiring a minimum amount for the endowment makes foundations less accessible to potential founders and can limit the establishment of foundations as well as freedom of association.

Protection of the Endowment

The law requires that the original endowment be perpetually maintained intact. This enables the sustainability of established foundations. It is the income generated from the endowment that enables a foundation to carry out its statutory purposes and not the endowment itself.

Further, the wording of article 13 of the Law is found in the legislation of most European countries (Germany, Italy, Greece…). It states that “the founder as well as its successor cannot withdraw property from a foundation after its registration.” It is common that property allocated to the endowment of the foundation be tax exempt and that founders enjoy certain tax benefits. By prohibiting founders from withdrawing property from the endowment, the laws limits possibilities for abuse.

Nonetheless, this provision might not be appropriate for private foundations, which do not enjoy tax benefits. Foundations should be required to comply with obligations imposed by the state only when the state grants them benefits such as tax benefits.

2.2.2. Special Provisions for Public Benefit Foundations

The Moldovan Law allows for the existence of both public benefit and private foundations. However, it stipulates that only public benefit foundations that have been certified by the certification commission can benefit from State funds. This is a normal requirement because it should not be acceptable that the state fund a private foundation or any other organization that is not a public benefit organization.

The Law also provides that foundations be certified by the certification commission in order to be granted tax-exempt status. This is consistent with Moldovan legislation regulating certification of public benefit organizations.

Public associations and public benefit foundations shall be eligible to receive tax benefits only if they satisfy public benefit criteria, and provide the appropriate structure to prevent abuse of tax benefits which is required by the Law.

2.2.3. Charter

The requirements for the charter are the standard requirements found in most legislation. The provisions serve as a guideline for the drafters of the charter and leave enough room for independent regulation of internal issues by the founders. The most common requirements such as the name of the organization, its location, purposes, organizational structure, designation of members of the board, use and management of property, are included in the Moldovan Law. Procedures to modify the charter can be incorporated in the charter. The law also envisages situations when the founders do not establish procedures for amending the charter. Indeed, special circumstances might arise to make it impossible for a foundation to operate under the circumstances established by the charter. This often happens when foundations are set up post mortem by testament and the original statutory purposes are no longer legal or possible to pursue. In this case, if the charter does not allow for such procedures or the authorized bodies of foundations cannot proceed with necessary changes for other reasons, the Law “devolves to judicial institutions the right to adopt these changes at the request of the foundation bodies or the Ministry of Justice.” This procedure is similar to the one provided, for example, in the Netherlands, Greece, and Italy. It is usual to require that changes to the charter be approved by the public authority or government.

2.2.4. Registration

Under the Moldovan Law the registering office is the Ministry of Justice. The list of documents to be provided to the Ministry of Justice is provided for in the Law. It is important that the requirements be exclusive and not allow for much interpretation. This makes life easier to founders and to registration authorities as well, allowing the latter to take a formal approach towards registration of foundations. The Ministry must decide whether to register the foundation within one month after the entity applied, which is a reasonable time limit.

The grounds stipulated for refusal are common and reasonable such as carrying out illegal activities, threatening the state morals and public order, the existence of a foundation already registered under the same name, or the entity’s incomplete file has not been completed within 3 months of application. It is important that the list of reasons for refusal to register be exclusive. Registration should not be refused for legalistic or technical reasons. Regarding the activity of a foundation, the registering authority’s only concern should be whether the activity is not prohibited and not primarily intended to make profits. The Law provides the founders with the right to appeal such refusal in court, which helps to protect the rights of the founders.

However, the Moldovan law does not include provisions allowing automatic registration if the agency fails to respond within the required period of time. Such procedure would prevent the establishment agency to deny the establishment of an organization it does not favor in using delays in registration (WBH p. 9). Laws in many countries include provisions on default registration and it is desirable that such procedure be permitted in Moldova.

2.3. Rights, Duties and Conditions of Activity

2.3.1. Economic Activities

This section of the Law stipulates the rights of foundations. Among other rights the Law allows foundations to carry out economic activities that are important for their sustainability. The Law establishes a distinction between related and unrelated economic activities, which is a common division in many countries. While taxation issues are addressed in tax laws, this helps to impose different tax regime for these activities. According to the Moldovan Law, a foundation can engage directly in related economic activities and must create a subsidiary in order to carry out unrelated economic activities. The requirement to create a subsidiary in order to carry out unrelated activity significantly simplifies the accounting for related and unrelated activities subject to different tax regimes.

In practice it is often difficult to distinguish between related and related activities. In developing follow-up regulations, ICNL recommends consulting in particular regulations from the UK and the US which ICNL would be glad to provide.

2.3.2. Reporting Requirements

The Law also provides that foundations must submit reports on an annual basis to the Ministry of Justice. When a foundation does not provide its annual reports for a period of two years, it will then be struck out from the register and will be dissolved. Reporting to the supervising authority is essential to ensure accountability and transparency of foundations, in particular of public benefit foundations that receive benefits from the tax authorities. However, the reporting requirement should remain simple and not distract foundations from carrying out their activities.

When a foundation fails to provide reports, it is recommended that the foundation be permitted to correct the violation. It should receive warnings before the sanctions are imposed.

2.4. Management Bodies

2.4.1. Board of Directors

The managerial body of a foundation is the board of directors established in accordance with the charter. A board of directors may be elected or appointed. It sets the policies of an organization and exercises oversight and supervision of the organization’s finances, operations and activities. In membership organizations, the board is elected by the general assembly. However, associations are not always required to include a board of directors in their governing bodies. Such is the case in Paraguay or Ecuador where officers report directly to the general assembly (WBH p.29). On the other hand, the sole governing body of a foundation is an appointed board of directors. The founders of a foundation appoint the first board of directors.

2.4.2. Conflict of Interest

The Moldovan law includes several provisions that help to solve the issue of conflict of interest. First the law stipulates that “members of the government and public servants whose functions include the conduct of the State policy in areas which are of top priority for the foundation according to its statute must not be members of the Board and other bodies of the foundation.” Second, “in the event that the Foundation Board discusses a matter related to property or other interests of a Board member or his/her first through third degree relations at its meeting, this Board member shall not participate in the voting.” Laws from Denmark, Greece and Finland also include such provisions.

Often, the conflict of interest provisions are the same for businesses and non-profits and are spelled out in the civil code or commercial code. It is especially important to address issues concerning conflict of interest with respect to foundations since they do not have an assembly of members to supervise the officials of the organization, as is the case for associations. Further, officials have the power to manage and distribute the assets of the organization. Provisions on conflict of interest help to prevent and resolve not only cases of conflict of interest, but also prevent fraud and abuse of power.

2.4.3. Compensation of Officers

Directors of Moldovan foundations cannot receive compensation except for justified expenses related to their responsibilities to the foundations. Indeed, the common practice is that members of boards of directors serve on a voluntary basis. Directors must not see foundations as a source of private benefits. They cannot derive salaries or other compensation for themselves, apart from compensation for necessary and justified expenses. Being members of the board is often not a primary activity for directors. It is common that in addition to his/her regular paid job, a person serves on boards of several foundations. This provision also helps to attract people who are genuinely interested in pursuing the statutory purposes of the foundation. In the laws of some countries only symbolic compensation is authorized for members of a board. For example, in France directors can be compensated for no more than ¾ of the official minimum wage. In Denmark, the maximum compensation possible is established by the public authority.

2.5. Accounting Supervision, and Transparency by the Government Bodies

2.5.1. Supervision by Supervising Authority

Moldovan foundations are supervised by government bodies. The Ministry of Justice verifies that the foundation’s activities comply with its statutes, whereas the tax authorities verify the fiscal affairs of the foundation. It is a common practice that foundations shall comply with more strict regulation than associations. Indeed, even if it is often argued in civil law countries that membership organizations are adequately monitored by the members and therefore they need not file reports (WBH p. 72), supervision by the highest governing body is necessary and particularly when referring to a foundation.

It is important to establish a reasonable control over foundations and ensure that the endowment and other property of the foundation are used for the designated purposes. Nevertheless, this control shall not interfere with the everyday activities of a foundation. Unnecessary control is not only burdensome to foundations, but also costly and burdensome for government bodies carrying out this control. Reporting requirements should be simplified for those foundations which do not have significant public interest activities and therefore enjoy less tax benefits. The taxing authority should limit its examination to those aspects which are directly related to the taxation of the foundation.

2.5.2. Supervision by the Public

The public is another important source of supervision over foundations. It is, in fact, the most effective type of supervision. For example, in the US, the Internal Revenue Service often conducts audits based on appeals from the public and information published in the mass media. It is a good practice that organizations make their reports available to the public. In accordance with the Law, Moldovan foundations must grant access to their reports to any person interested in consulting them.

The appropriate regulation shall be established by the foundation which on one hand enhances free access by the public, and, on the other hand, allows does not interfere with the day-to-day work of the foundation.

2.5.3. Audit

The law also provides that a supervisory body either a revisor commission or auditors be appointed by the board of directors. This body would supervise the accounts and financial reports of the foundation. Conducting an independent audit is a good practice.

While this requirement might be too burdensome for small foundations, such audits are often required in large foundations. For example, in Denmark foundations whose assets for their previous exercise are over Kr 3 millions are required to carry out audits. It is therefore recommended that such internal audit not be required for the smallest foundations in Moldova.

2.6. Liquidation, Dissolution, and Termination

2.6.1. Liquidation

The Moldovan Law envisages two ways for a foundation to liquidate its activities: either voluntarily or compulsorily. The law stipulates that a voluntary liquidation can be carried by the founder as provided for in the charter, for example, when a foundation is established for a defined period of time or when the purposes of the foundation are impossible or unreasonable to pursue. A compulsory dissolution must be the result of a judicial decision by court at the request of the Ministry of Justice. Such action should only be considered in exceptional cases when the foundation has committed serious violations of the law. This principle is respected in the Moldovan Law with the exclusive list of reasons provided for compulsory liquidation of the foundation.

The liquidation commission appointed takes all measures to ensure reimbursement of the creditors. This is a good provision since no transfer of assets should take place before the creditors are compensated.

Creditors rights are effectively secured by the Moldovan Law on Foundations. However, these provisions are similar to all legal entities subject to liquidation. Therefore, this issue ought to be addressed in the civil code.

2.6.2. Distribution of Assets in the Process of Liquidation

Finally, it is common in most national legislation to find provisions stating that the assets of a public benefit foundation be transferred only to an organization carrying out similar purposes or to the state if such entity does not exist. This is important in order to pursue the will of the founders and to avoid that the assets be reverted to the founders, officers, or directors of the foundation- notably assets of public benefit foundations which are entitled to receive funds from the state. The Moldovan Law provides for such a guaranty in requiring that the assets be transferred according to the charter or, if the charter does not provide relevant clauses, to a foundation with similar purposes.

Such required transfer is not appropriate in the case of private foundations. And further legislation will be necessary to provide appropriate liquidation mechanisms of private foundations.

Conclusion and Recommendations

As this article demonstrates, the Moldovan Law on Foundations complies with international practice. All the essential provisions to protect the rights of foundations, as well as provisions ensuring that abuse will be prevented are included in the Law. Its adoption enables the development of philanthropy in the country and will therefore contribute to the social development of Moldova. However, in order for this law to provide Moldova with such an opportunity, further regulations need to be adopted. For instance, the different types of foundations that can be established will need to be determined. The civil code, which is being drafted, will have to comply with the existing legislation. Finally, tax treatment of NGOs will have to be revised in order to comply with international good practices.

Regulating Public Benefit and Other Foundations

Even though the Law allows for the existence of foundations other than those carrying out public benefit purposes, most provisions to the Law are appropriate to public benefit foundations only. As has been demonstrated throughout the comments, further legislation regarding private foundations in particular will need to be adopted.

Compliance with the Civil Code

In the process of adoption of the civil code, provisions which should be included in the civil code regarding legal entities, such as provision on registration of legal entities, prohibition of conflict of interest, compensation to creditors upon dissolution, the legislature should verify that it does not contradict existing legislation. Such eventuality will bring confusion for the implementation of the law and will need to be corrected with amendments to the law.

Taxation

Finally, with regard to tax legislation, gradual benefits ought to be granted to NGOs in general. It is appropriate that private foundations for example be entitled some tax exemptions. This is particularly true if special requirements are expected from them such as reporting, or not-distributing assets. Obligations required from NGOs are acceptable when they are related to privileges granted to them by the state, such as tax exemptions. In addition, organizations carrying public benefit activities should always be entitled tax benefits whether they are certified or not. Certified organizations should of course be granted further benefits. In order to comply with these standards, the tax treatment of NGOs should be revised in the Tax Code. Provisions in the Law on Foundations and the legislation regulating certification procedure for public benefit organizations shall then be revised in order to comply with the amended in the Tax Code.

Notes

[1] ICNL, Handbook on Good Practices for Laws Relating to Non-Governmental Organizations, Discussion Draft), prepared for the World Bank, May 1997.

[2] European Foundation Centre, European Foundation Fundamentals, a Portrait of the Independent Funding Community in Europe, EFC, Brussels, 1999.

[3] European Foundation Centre, op. cit. p 15.

[4] European Foundation Centre, op. cit. p. 123.

[5] French Ministry of Foreign Affairs, La liberté associative dans le monde, le droit applicable aux organizations non-gouvernementales dans 125 pays, September 1999, p. 39 of section on European Union.

[6] European Commission, Promoting the Role of Voluntary Organizations and Foundations in Europe, EC, 1997, p.7.

[7] European Foundation Centre, op.cit. , pp 96 and 153.

[8] Suzanne L. Feurt, “The Roots of Sustainability, Community Foundations”, NGO News, N° 5, December 1996, pp 1-2.

[9] Definition of ‘Fund’ in Black’s Law Dictionary.

[10] Bruce Hopkins, Nonprofit Law Dictionary, John Wiley and Sons, Inc., New York, 1994, p. 226.

[11] Article 52 (1) of the Moldovan Tax Code describes the activities carried out by exempt organizations:

a) health care, educational, cultural, scientific organizations;

b) associations of blind, deaf and invalids and enterprises, established for the purpose of execution the statute requirements of these associations, public associations, religious, charitable organizations operating exclusively for the following purposes, such as:

[12] ICNL, “Regulating Not-for-Profit Organizations”, 1998.  

Russia

Report on the Violations Committed in the Course of Registration and Re-Registration of Public Associations in the Russian Federation in 1999

Prepared by the Information Center of the Human Rights Movement and the Center for the Development of Democracy and Human Rights in December 1999 – January 2000

Released on February 15, 2000

Summary of the Report

Under Russian law citizens are guaranteed the right to form associations, and non-governmental organizations are allowed to function freely. The law provides for different types of legal and institutional non-governmental organizations, including public associations which do not require registration as legal entities. These provisions are to be found in the 1990 Constitution, the Civil Code of the Russian Federation (RF), the Federal Law “On Public Associations,” and a number of other laws. The government registers a public association, depending on the territory and scope of its operation, either through the RF Ministry of Justice, or through regional and local departments and agencies. The law specifies the legal documents to be submitted for registration purposes.

The 1995 Federal Law “On Public Associations” requires that all public associations which had been registered under RSFSR laws, i.e. before 1995, should renew their registration with the state, i.e. file their legal papers for obligatory re-registration. The 1995 law set June 30, 1999, as the deadline for re-registration. In early 1999 tens of thousands non-governmental organizations in Russia were expected to go through the re-registration procedures. An organization failing to re-register faces liquidation by a court decision.

Based on information provided by many non-governmental organizations, justice departments, independent experts and mass media, a large number of non-governmental organizations had not passed the re-registration procedures within the time limit set by the law. As of late January 2000, the exact number of organizations across the country, which had not submitted documents for re-registration, or had submitted and been rejected and/or had filed suits against justice departments for the illegal denial of registration, is not known. A rough estimate puts the number at tens of thousands.

While most of these organizations, apparently, had ceased to exist by 1999, and for this reason did not apply for re-registration, a significant number of public associations were denied re-registration, either on illegal grounds, or on the basis of far-fetched and formal pretexts. Many organizations were pressured by justice departments to change the name of their organization or its statutory goals. Organizations were forced to comply, for fear of losing their legal status and endangering the well-being of the people they serve. There are good reasons to believe that regional and local authorities used the requirement for NGOs to re-register as an opportunity to get rid of “undesirable” organizations which criticize the authorities’ actions in certain areas or suggest alternative remedies. Among the most vulnerable were human rights and environmental organizations.

In November 1999, in response to many complaints by citizens and organizations of unbased refusals to re-register organizations, the State Duma considered and adopted an amendment to the Federal Law “On Public Associations.” According to this amendment, the deadline for re-registration was to be extended to June 30, 2000. However, two weeks later, the upper chamber of the Russian Parliament, the Council of the Federation, voted against this amendment.

The authors of this report, representatives of non-governmental associations, experts, and members of the State Duma recommend that the lower chamber of the Parliament outvote by a qualified majority the Council of the Federation decision and adopt the said amendment, and that the President sign the amendment. Judicial bodies should review and make decisions in favor of those public associations which have been illegally refused registration. The Government and the Ministry of Justice should, if the deadline for re-registration is extended, make it possible for NGOs to receive consultations and explanations concerning the legal requirements in order to avoid errors when submitting their papers.

1. Russian Legislation on the Right to Association, on NGO Registration Rules and Procedures

The Russian Constitution guarantees non-governmental associations the freedom to choose their activities. Each individual has the right to participate in an association, including the right to form trade unions in order to protect his/her interests (Article 30).

Non-governmental organizations, including one of their organizational forms, public associations, are allowed to carry out their activities without governmental control, in distinction to other types of organizations. This rule, however, does not apply to political associations (Article 21 of the Federal Law “On Public Associations.”). An association which has not been formally registered with the state does not acquire the rights of a legal entity, i.e., it can not possess, manage or operate property, it cannot, in its own name, acquire or execute property-related, or personal non-property rights, carry obligations, act as plaintiff or defendant in court.

Under the RF Civil Code Article 51, a legal entity must be registered with the department of justice (registering agencies) according to a procedure laid down in the law on the registration of legal entities. As of today, such a law does not yet exist, so the registration of public associations is implemented according to the rules stipulated in the Federal Law “On Public Associations.”

Official registration of national (all-Russian) and international public associations is carried out by the RF Ministry of Justice. Interregional public associations are registered by the state departments of justice in the locality where the permanent governing body of the non-governmental association is based. Official registration of regional and local public associations is carried out by departments of justice in the respective subjects of the Russian Federation.

An organization should submit its legal papers to the registering agency within three months of its founding assembly (conference), or the general meeting of its members. Amendments to the organization’s charters should be registered according to the same procedure and within the same timetable as the NGO registration itself; these amendments enter into force only after registration is completed.

Departments of justice must consider NGO applications within one month of submission, and adopt a decision either to register the public association and issue the state registration certificate to its founders, or to refuse registration, and supply the founders with a written document explaining the reasons for the refusal. Such a decision may be appealed in court.

A denial of registration is not the barrier to a resubmission of legal papers with the purpose of obtaining registration, once the appropriate corrections to the documents have been made.

Under Article 23 of the Federal Law, there are a number of reasons why registration may be denied to a public association. It may be denied if the organization’s charter is incompatible with the Constitution of the RF, constitutions of the subjects of the RF, provisions of Articles 16, 19, 20, 21 of the Federal Law “On Public Associations,” or laws concerning specific types of public associations; if the legal papers submitted for registration purposes are incomplete, or do not follow the required format; if there is already a public association of the same name registered in the same locality; if the registering agency determines that the legal papers submitted for registration contain untrue information; if the name of the public association is likely to offend public morals, ethnic or religious feelings.

Article 16 prohibits the establishment of public associations whose activities include the violent change of the constitutional order or violation of the integrity of the Russian Federation, damage to the security of the state, the creation of armed organizations, or the incitement of social, racial, ethnic or religious conflict.

Article 19 lists age and citizenship requirements for founders, members of and participants in public associations and prohibits organs of the state or local government to be founders, members of or participants in public associations. A public association can not be denied registration on the grounds that it serves no useful purpose.

If an association is not allowed to register, it must be informed in writing with the reference to the specific provisions of the laws of the Russian Federation that have been violated, and have resulted in the denial of registration.

A denial of registration of a public association, including a political association, and the refusal to provide confirmation of registration, may be appealed in court.

Charters of public associations established before the Federal Law “On Public Associations” came into force on May 25, 1995, must be amended to correspond to the new law, at the next assembly (conference) or general meeting of the association (Article 52.)

According to Article 52 of the Federal Law “On Public Associations,” official re-registration of public associations established before May 25, 1995 was to take place by July 1, 1999. The organizations were not required to pay a registration fee for re-registering. Upon expiration of the deadline, public associations which had failed to re-register were subject to liquidation, following a request of the registering agency.

On June 30, 1999, the process of re-registration was stopped, and the departments of justice ceased to accept re-registration applications from NGOs.

2. Cases of Denial of Registration to NGOs: Motives and Patterns of Denials

According to the RF Ministry of Justice, as of July 1, 1999, 770 international and national public associations had re-registered under Article 52 of the Federal Law “On Public Associations.” This accounts for 57.8 per cent of the total number of public associations registered before the said law entered into force. 562 public associations (42.2 per cent) had not re-registered and thus were to be liquidated by court order.[1]

As reported by departments of justice in the subjects of the Russian Federation, as of July 1, 1999, 18,741 public associations had not re-registered and were to be liquidated by court order. (1,348 liquidation suits were brought before the courts.)[2]

Before the adoption of the Federal Law “On Public Associations,” 4,606 public associations were registered with the Moscow City Head Department of Justice. 549 associations re-registered, 9 liquidated themselves, and 4,003 remain to be liquidated by court order.[3]

These figures provided by the Ministry of Justice are significant. They demonstrate a considerable decrease in the number of registered public associations. Little more than 50 per cent of national (all-Russian) and international associations re-registered on the federal level. In the city of Moscow only 12 per cent of organizations were able to re-register.

As was stated by the Minister of Justice Pavel Krasheninnikov, the NGO re-registration campaign was, in fact, aimed at reducing the number of organizations with a strong political focus and aspirations to get on the ballot before the State Duma election, and at isolating radical and extremist political groups.

However, this argument does not stand up to criticism. According to the law on elections, public political associations planning to take part in the 1999 Duma elections were to be registered or re-registered at least a year before the ballot. Rather than target those whom it was, allegedly, supposed to control for the sake of the public good, the government’s re-registration policy affected those who, in reality, promote public interests, such as human rights, environmental and other organizations.

In many Russian regions, local authorities, in alliance with departments of justice, used the procedure of re-registration to get rid of “undesirable” associations, which work to protect human rights, and to monitor the conduct of law enforcement agencies and other governmental institutions.

Many reports testify to the fact that registering agencies made unreasonable requirements of applicant organizations, especially those with a human rights or environmental focus. The situation varied from region to region; however, the available facts testify to a pattern of pressure targeted by departments of justice at organizations disliked by the authorities.

The re-registration procedure in many Russian regions was purposely arranged in such a way as to deny public associations the possibility of obtaining reasonable explanations and clarifications on the drafting of legal documents. Representatives of non-governmental organizations were not able to consult with the registering agencies on these issues; moreover, they were often denied registration without explicit reasons, and only in rare cases were they supplied with written explanation of the grounds for such denial.

This finding can be corroborated by the statement made by the deputy head of the Moscow City Department of Justice, Mr. V.N.Zhbankov. In October 1999, at a seminar of the NGO Coordination Council with the State Duma Committee on International Affairs that he said “in order to fight corruption”, he prohibited his staff from providing any consultations or engaging in conversations with the people who submit papers for re-registration.[4]

In many cases such actions by departments of justice meant that non-governmental organizations learned about deficiencies in their papers shortly before the deadline for re-registration, and did not have enough time to correct these deficiencies.

A large number of organizations faced serious difficulties in their attempts to re-register with the departments of justice. According to independent experts, registering agencies very often made illegitimate demands which contradicted existing legislation. These demands related, in particular, to the organization’s name, structure, statutory goals and activities, and other aspects.

The need to re-register in 1999 and to introduce amendments in their statutory goals caused many non-governmental organizations to analyze their previous history of activities during the four years or more since their establishment, and to assess the changes that had taken place. As a result, some of them decided not only to re-register their original organization, but also to legalize a new entity which had emerged and gained autonomy within their structure.

The following are specific cases of the denial of registration and re-registration to human rights groups and other types of organizations, grouped according to the type of reason given by the registering agencies.

A very common requirement was the deletion of the phrase “protection of citizens’ rights” from the organization’s name, statutory goals and objectives. This requirement was made to many well-known Moscow-based human rights organizations when they applied for re-registration. They include the Environment and Human Rights Coalition, the Glasnost Defense Foundation, Public Foundation “Glasnost,” Memorial Human Rights Center, Moscow Research Center for Human Rights, Committee for International Assistance, Union of Soldiers’ Mothers Committees of Russia, Civil Assistance NGO, Hotline NGO, and many others.

Officials justified the requirement to remove the phrase “protection of citizens’ rights”, and other similar demands by reference to Articles 45, 46 and 72 of the Russian Constitution which, in their interpretation, prohibit non-governmental organizations from protecting the rights of citizens and allow them only to assist in protecting rights. According to this argument, non-governmental organizations, including human right groups, are not supposed to protect the rights of citizens, and are limited to assisting the state and professional lawyers in protecting human rights in Russia. However, this interpretation of the Russian Constitution does not accord with either the expressed intention of the above-mentioned Articles of the Constitution, nor the legislation based on the Constitution.

The said norms guarantee citizens the protection of their rights and freedoms by the government, but do not exclude the possibility for these rights to be protected by non-governmental bodies. Article 45(2) of the Russian Constitution states: “Everyone can protect his rights by all means that are not prohibited by law.” Further, Article 46 of the RF Criminal Procedure Code, Article 42 of the RF Civil Procedure Code and Article 27 of the Federal Law “On Public Associations” directly state the right of public associations to protect the rights of citizens. Article 47 of the Criminal Procedure Code states: “Defence may be provided by a defence lawyer upon production of a certificate issued by a legal consultants office; by a representative of a trade union or other public association, upon presentation of a document, authorizing him to act as advocate, and of his identification papers.” According to Article 51 of the Criminal Procedure Code, “a defence advocate must employ all means and methods of defence provided by law.”

In civil procedure, the issue is treated in a similar way: Article 42 of Civil Procedure Code is entitled “Participation in the procedure by organs of state government, trade unions, enterprises, institutions, organizations and individual citizens defending the rights of other persons.” According to this article, “in cases, specified by law, organs of state government, trade unions, enterprises, institutions, organizations and individual citizens may apply to court with a statement in defence of the rights and legitimate interests of other persons.”

Article 27 of the Federal Law “On Public Associations” stipulates that, “in order to implement its statutory goals a public association has the right to … represent and defend its rights, the legitimate interests of its members and participants, and of other citizens, before organs of state government, local governance bodies, and public associations.”

All the normative documents quoted above refer to protecting human rights, rather than “assisting in protection.”

Registering bodies also used other far-fetched reasons as a pretext to deny re-registration. The Moscow-based Human Rights Foundation “For Civil Society” was told to remove the term “human rights” (literally in Russian, “rights-protecting”) from the name of the foundation, otherwise re-registration would be denied. The foundation’s leaders, unwilling to risk liquidation and thus deprive their numerous grant recipients and seminar participants of much-needed assistance, were obliged to submit to the demands of the justice department staff, although they had had the phrase “human rights” (“rights-protecting”) in their name for years and are known by this name to many organizations both in and outside Russia. Similarly, when St.Petersburg Crisis Center for Women applied to register a new organization which had evolved on the basis of the Center’s activities, the registering agency strongly recommended that they remove the words “human rights” (“rights-protecting”) from the new organization’s name.

An interregional non-governmental organization, Environment and Human Rights Coalition, was denied registration by the Moscow Department of Justice for the following reason: the justice department staff found that the organization’s objective of “protecting individuals persecuted for activities relating to the implementation of other (not merely environmental) rights,” is in contradiction with its name, which implies environmental rights. However, the name of this organization includes the words “and human rights.” Therefore, it is natural that its goals and objectives are broader than just environmental rights. “Rights-protecting” activity, in common Russian usage, is understood as any activity aimed at protecting individual rights and freedoms in a broader sense.

The word “coalition” used in the name of the above-mentioned organization also brought objections on the grounds that it does not accord with the legal and institutional status of the organization. However, both in its title and structure the organization meets the requirements for an “interregional public association.” The law does not prohibit the use of the word coalition in quotation marks, when it is not referring to the legal and institutional status of an organization.

The registering authorities demanded that the non-governmental organization “Union for the Protection of Birds in Russia” remove the word “union”, although it was used in quotation marks and was not a description of the organization’s legal status.

In the city of Bryansk, a local environmental organization ”Viola” applied to register its affiliate in Novozybkov, a town in in Bryansk region, as an independent NGO, focusing on the problem of radioactive contamination. However, an official from the local justice department responded with a threat that in this case the department would close “Radimichi,” another NGO in the town of Novozybkov focusing on the same issue. In this official’s view, one NGO specializing in a particular field is sufficient for a small town. “Viola” chose not to register in the town, for fear of causing its fellow-organization to be closed.

A number of environmental organizations, such as The Green Don, The Don Green Party (Rostov Region) and others, were denied registration as a result of their opposition to the opening of the Rostov Atomic Power Plant. No reasons were provided for the refusals to register.

The Krasnodar Territorial Human Rights Association (KTHRA) was denied registration twice. In June 1998, the organization first applied to the Krasnodar Territorial Department of Justice and was denied registration with no reasons given. In early July 1999, KTHRA submitted papers for re-registration for the second time and was denied again, this time with a written explanation. The relevant papers were submitted to a group of legal experts for review. The group’s conclusions are as follows. One of the arguments used by the department of justice was that the organization’s charter contradicts Articles 12-1 and 28 of the Federal Law “On Public Associations.” The charter states that the organization can participate in election campaigns and support candidates for election to positions in the organs of state government and local self-governing bodies. Similarly, Article 12-1 of the Federal Law gives all public associations the right to participate in election campaigns (and, consequently, to support candidates). Article 28 defines NGOs’ rights and responsibilities in the use of their names and is not, in any way, related to participation in election campaigns. The requirement to remove the provision of the charter stating that the organization may promote its own candidates in elections was legitimate, and the provision was removed immediately. Hence this cannot, according to Article 23 of the Federal Law “On Public Associations”, be used as grounds for denying registration.

The argument that clause 2.3 of the charter contradicts Article 47 of the Criminal Procedure Code and the Decree of the Constitutional Court adopted on 28.01,1997 is unfounded, because the said clause states that representatives of KTHRA can act as defenders and representatives at the investigation stage and at court hearings, and as lay defenders or prosecutors – only at court hearings.

According to Article 23 of the Federal Law “On Public Associations,” a subjective and inadequate interpretation of the organization’s charter cannot be grounds for denying re-registration. The argument of the staff of the justice department that “they were unable to understand how the organization will check the actual occurrence of human rights violations when it receives reports of human rights violations,” cannot be used as grounds for refusing registration. Article 23 of the Federal Law “On Public Associations”, which provides an exhaustive list of reasons for refusal, does not mention difficulties of intellectual comprehension on the part of individual officials as sufficient grounds to deny registration to a public association.

Other examples of formal legal arguments used to deny registration include the following.

Many NGO applicants for re-registration were held up for extended periods of time, with no specific reasons provided for the denial or the delay in re-registration. Such NGOs include the Public Foundation “Glasnost” and the Union of Soldiers’ Mothers Committees of Russia, both attempting to re-register since December 1998, and a non-governmental charity for persons with disabilities, “ Disability Center for the Social Rehabilitation of Children,” which started re-registration procedures in 1997.

An interregional NGO, “ Education Center for Moslems,” was denied re-registration on the grounds that, according to Article 23 of the Federal Law “On Public Associations,” public associations “may conduct entrepreneurial activities only insofar as such operations serve the achievement of the charter goals for which the associations were established…” However, the organization’s charter which had been previously registered with the same registering agency contained the same provision.

The Justice Department of Kaluga Region denied registration to three organizations – the Obninsk Regional Human Rights Group, an NGO “Kaluga Regional Branch of Democratic Russia Movement,” and the Obninsk Youth Club for Role-plays “Aaz”, - on purely formal grounds, without giving the organizations the opportunity to correct, within the time limit, any inadequacies in their documents.

The Justice Department of Tambov Region put obstacles in the way of the local Green Movement’s attempts to register. The registering agency demanded that the organization remove the phrases “mass movement” and “public control” from its statute, and, quite unwarranted, requested the organization to submit all of its documentation since 1989, when it was originally formed.

NGOs frequently had their documents rejected, even after resubmitting them with all required corrections. The staff of registering agencies would find new defects in the papers, which required additional corrections. If, at the first submission, the registering agency staff had indicated all the required corrections, organizations would have had sufficient time to make them and to re-register.

The Russian Ministry of Justice refused for a long time to accept the application for re-registration from the “International Memorial Society”, an international educational charitable and human rights society. The reason given for the refusal was that, at the same time, the Russian “Memorial” society had filed its papers for re-registration, and that it was not allowed to re-register two organizations of the same kind at the same time, which delayed the “International Memorial Society” re-registration. This argument had no legal basis whatsoever. Both organizations had the right to complete their re-registration procedures simultaneously and independently.

The Society of Penza Region Kuznetsk Garrison Veterans and Their Families was denied registration, allegedly, because they were late in submitting their papers, although they submitted them at 10 a.m. on July 1, 1999, i.e. in the morning of the last day of submission, specified by the RF Ministry of Justice.

Many more examples of refusals, on similar and on other grounds, could be quoted.

Nonprofit NGOs in Tula were required by the Justice Department to submit letters of guarantee showing the legal address of the organization, as required by Article 21 of the Federal Law “On Public Associations.” However, when the organizations submitted the required documents, the registering agency further demanded that the letters be signed by the owner of the space where the organization had its legal address. In many cases, organizations occupied premises owned by the municipalities, and the municipality would not sign such documents.

In Kemerovo, a local NGO, “Union of Kuzbass Youth” reported that it was denied re-registration without adequate reasons. The Justice Department made minor comments on the format of the documents submitted, such as “the font is too small,” or “there are too many papers.”

In Moscow, a charity assisting young women and teenage mothers, “Goluba” was refused when it attempted to register as a non-governmental institution. The Moscow Department of Justice took the position that considered that the text of the Federal Law “On Public Associations” is juridically incorrect, because “an institution (учреждение ) cannot be a non-governmental institution.” This argument is illegitimate. Articles 7 and 11 of the Federal Law clearly mention the term “non-governmental institution” as an acceptable legal entity for an NGO.

A Moscow-based non-governmental organization, Non-Violence International–Newly Independent States, which focuses on resolving territorial and ethnic tension in areas of ethnic and armed conflicts, was refused on the grounds of a discrepancy between the organization’s name and its activities, and deficiencies in its founding documents, although no indication was given of the specific deficiencies.

Organizations which refused to make the required changes were denied registration. Others were pressured into modifying goals and objectives in their charters, contrary to what was originally specified by the organization’s founders. In addition to being unwarranted, such modifications were often incompatible with the ideology and history of the organizations. Further they may constitute barrier to the exercise of their rights by non-governmental organizations, and their ability to defend citizens who appeal to NGOs for protection in court. They do not reflect the realities of the everyday work of human rights activists.

The Federal Law provides that organizations which have been denied registration have the right to appeal before the courts. A number of NGOs, including the Public Foundation “Glasnost,” the Environment and Human Rights Coalition, the Krasnodar Territorial Human Rights Association, and three NGOs in Obninsk took their cases to court. However, none of these cases have resulted in a judicial decision in favor of the NGO.

The incidence of massive denials of NGO registration and re-registration, and the turning of some NGOs to court, resulted in a broad campaign of protest aimed at persuading the State Duma to extend the deadline for re-registration.

3. The Russian State Duma’s Decision to Extend Re-Registration Deadline; the Council of the Federation’s Refusal to Accept the Deadline Extension

On November 5, 1999, the Russian State Duma (lower chamber of the Russian parliament) considered a draft law prepared by the Duma Committee on Public Associations and Religious Organizations, which extended the deadline for NGO re-registration to July 1, 2000, and adopted the draft after three readings. However, the draft law, having passed the third reading in the Duma, met opposition in the upper chamber, the Council of the Federation. The draft law was voted down regardless of the fact that the upper chamber’s Committee on Constitutional Law and Judicial Questions advised the parliament to adopt the deadline extension, and the Ministry of Justice was willing to prolong the term for NGOs’ renewal of registration.

The President’s spokesman in the Council of the Federation, Mr. V. Khizhnyakov, played a crucial role in the rejection of the draft. During the debate on the draft law, Khizhnyakov strongly opposed to the deadline extension. There were other Council of the Federation members who also spoke against. The Governor of Ryazan Region, Mr. V.N.Lyubimov, said, “We must vote down this draft with dignity.” The Ryazan governor argued that the law, if adopted, would increase the number of political parties. Governor Lyubimov reminded his collegues that there used to be only one political party, and now “there are far too many.” Sh.D.Oorzhak, President of the Tuva Republic, spoke strongly against the draft.

In the lobbies, representatives of the LDPR (Zhirinovsky’s party) approached individual Council of the Federation members, trying to persuade them to vote against the draft law. In particular, N.V.Krivelskaya, an LDPR member, who had strongly opposed the law as spokesman for Zhirinovsky’s faction in the Duma sessions, approached many Council members just before the upper chamber session and tried to talk them into rejecting the law. She, as other opponents of the extension, referred to the need to limit the growing number of political parties.

V. Khizhnyakov drew the members’ attention to the fact that an extension of the NGO re-registration term would add to the workload of the Ministry of Justice staff and thus cause additional budgetary expenses in the form of extra salaries. However, the President’s spokesman did not take into account the fact that legal suits which will, undoubtedly, be brought by non-governmental associations against registering agencies, will cause even greater expenses for the Ministry of Justice, for the judiciary, and for the state budget.

The legal suits will, certainly, cost no loss in terms of additional financial and human resources. Among the reasons why extra judicial costs will be involved is the following. Liquidation (i.e. a ban on their activities) of organizations that have failed to renew their registration is contrary to the Federal Law «On Public Associations», which allows non-governmental associations to operate even without the status of a legal entity – i.e. without official registration with the authorities. The Federal Law further contains a limited list of circumstances which allow the liquidation of a non-governmental organization on legal grounds; being denied re-registration is not on this list. Consequently, require liquidation is not legitimate, and most organizations which were denied re-registration will file suits. Moreover, any action aimed at the liquidation of a non-registration public association violates citizens’ right of association protected by the Constitution.

4. Conclusion

Illegitimate, and sometimes insulting demands made by officials of justice departments to human right groups and other NGOs applying for re-registration, were so common that they suggest a conscious policy directed against non-governmental organizations. This threatens the development of civil society in Russia, and requires urgent public action.

The facts cited above show that the authorities are attempting to bring an end to or at least to curtail, significantly, the activity of non-governmental associations, in particular, those which monitor the authorities’ conduct and prevent violations and arbitrary actions by officials. And the government is doing this while declaring that these types of NGOs are crucial for building civil society in Russia.

This conclusion is based not only on the findings of this specific survey, however numerous they are; it is also supported by an increasing number of reports testifying to a consistent practice of gradually limiting civil rights and freedoms in Russia.

The situation described in this report, fits logically in the general picture of political regression in other spheres of public life. An illustration of this can be seen in, for example, the adoption in 1997 of the Law “On the Freedom of Conscience and Religious Associations”, some of whose provisions, in their limitations on the existence and activities of certain types of religious associations, are incompatible with international human rights law.

Recently there have been many incidents, which indicate that the authorities are attempting to limit citizens’ right to information. Examples include the high-profile cases of persecution of journalists and environmentalists – A.Nikitin, G. Pasko, V. Soifer, and others. Considerable concern was felt when, in late July 1999, V.Putin, then the head of FSB, said in his interview to the newspaper Komsomolskaya Pravda, in the context of searches and arrests of environmentalists that, “unfortunately, foreign security services, in addition to their diplomatic cover, very actively use various environmental and public organizations in their work…”

There has been a general crackdown on independent media, with known cases of persecution, harassment, and even murders of independent journalists.

Governmental and law enforcement agencies are passive in investigating high-profile political assassinations and assassination attempts targeted at popular political leaders and public figures.

Non-governmental organizations increasingly suffer from law enforcement and FSB (security services) pressure, which sometimes takes the forms of unwarranted tax inspections or summoning NGO activists for questioning by the FSB. Activist members of non-governmental organizations are more and more frequently detained during public events, which violates citizens’ right to association, and to participation in pickets, meetings and manifestations.

Another fact that supports the above conclusion is an increasingly strict migration and residence policy, which limits freedom of movement inside the country, and is often accompanied by overt ethnic discrimination by police, especially in Moscow, Krasnodar and Stavropol.

During the recent State Duma elections, there were numerous examples of citizens’ electoral rights being openly violated by local authorities.

These and other examples illustrate an alarming deterioration in the area of individual rights and freedoms in Russia.

Recommendations

Given the situation brought about by the requirement to all public associations to renew their official registration with the authorities, it seems appropriate:

Notes

This report is based on materials provided by the following organizations:

© Researcher, author and editor of the report: Yelena Grishina, Director of the Information Center of the Human Rights Movement.

Co-author and co-editor of the report: Yuri Dzhibladze, President of the Center for the Development of Democracy and Human Rights.

Contributor: Alla Tolmasova, lawyer of the Center for the Development of Democracy and Human Rights.

[1] Data from the Ministry of Justice letter dated 20.11.99 № 9849- ЕС

[2] Data from the Ministry of Justice letter dated 20.11.99 № 9849- ЕС

[3] Data from the Ministry of Justice letter dated 20.11.99 № 9849- ЕС

[4] According to information provided by Yuri Dzhibladze who attended the seminar of the NGO Coordination Council with the State Duma Council of the Federation Committee on International Affairs.

 

Copyright 2008 The International Center for Not-for-Profit Law (ICNL)
ISSN: 1556-5157