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The International Journal
of Not-for-Profit Law

Volume 7, Issue 2, February 2005

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

Table of Contents

Letter from the Editor

Latin America

The Promise and Peril of Democracy (Full Text of Speech)
Jimmy Carter

The Promise and Peril of Democracy (Summary)
Joseph Proietti

Threat Resurges for Venezuelan NGOs [Spanish Translation]
Antonio L. Itriago and Miguel Ángel Itriago

Transparency Versus Government Supervision in Peru [Spanish Translation]
Beatriz Parodi Luna

Federal Law for the Promotion of Civil Society Organizations in Mexico
Consuelo Castro

Active Without Recognition: Obstacles to Development of the Colombian Third Sector
Adriana Ruiz-Restrepo

The Role of the Media in the Consolidation of Democracy in Latin America
The Latin American Program of the Woodrow Wilson Center for International Scholars


Philanthropy and Law in South Asia: Key Themes and Key Choices
Mark Sidel and Iftekhar Zaman

The Role of a National Donor Association: A U.S. Perspective
Robert Buchanan

California’s Nonprofit Integrity Act of 2004
Thomas Silk and Rosemary Fei

Progress on Civil Society Legislation in Turkey
Filiz Bikmen

Taxation of Grants in Russia
Yulia Checkmaryova


Civil Society
By Michael Edwards
Reviewed by Stephan Klingelhofer

The Law of Charities
By Peter Luxton
Reviewed by Richard Fries

Does Civil Society Matter?: Governance in Contemporary India
Edited by Rajesh Tandon & Ranjita Mohanty
Reviewed by Bindu Sharma

Governing Nonprofit Organizations: Federal and State Law and Regulation
By Marion R. Fremont-Smith
Reviewed by Michael Bisesi

Balkan Identities: Nation and Memory
Edited by Maria Todorova
Reviewed by Gerald M. Easter

Something to Believe In: Politics, Professionalism and Cause Lawyering
By Stuart A. Scheingold and Austin Sarat
Reviewed by Patricia Lyons

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Taxation of Grants in Russia

By Yulia Checkmaryova*

Amendments proposed this year by the Russian government to the Tax Code threaten to make matters worse for the civil society sector. In response, Russian NGOs have mobilized to bring about changes in the draft amendments. 

Tax Changes of 2002 

In January 2002, a new form of grant taxation took effect in Russia. Now, according to the Tax Code, a grant is property earmarked only for cultural, art, environmental, educational, and scientific projects. NGOs may receive tax-exempt grants from individuals or other NGOs, and from foreign or international NGOs included on a special list approved by the Russian government. Unfortunately, such a definition of grant infringes upon interests of NGOs implementing projects in other fields, e.g. social welfare services, health care, and protection of human rights. Russian NGOs made every effort to improve this unfair situation but in vain. 

Government Amendments 

In July 2004, the Russian government submitted proposed amendments to the Tax Code to the State Duma. The amendments to subsections 5 and 6 of Article 251, if enacted into law, would directly affect NGOs. On the one hand, the amendments expand the definition of the activities for which grants can be given. These include social welfare services, health care, and protection of human rights. On the other hand, the changes would place additional burdens on both foreign and domestic grantmakers. Specifically, the proposed amendments threaten to (1) prevent foreign citizens from making tax-exempt grants; (2) require Russian donors to be included on a government-approved list of grantmakers in order in order for their grants to be tax-exempt for the recipients; and (3) require foreign donors to satisfy stricter requirements in order for their grants to qualify as tax-exempt.  

Public Outcry 

Such amendments will not merely eliminate the anticipated effect of the widened scope of activities; they will make grantgiving impossible. That is why the government’s proposal has triggered a public outcry. This problem has been discussed at the National Assembly (an informal grouping of NGO leaders) and at numerous meetings. A series of amendments to the government draft are being prepared now. A number of independent experts are involved in this public campaign. The main idea behind the public drive is to save the current grant taxation system by adding only three more fields. The second reading of the draft was originally scheduled for late October or early November but has been postponed. We can only hope that joint efforts will ultimately produce good results. 

Tax Reform Project 

CAF Russia (the branch office of Charities Aid Foundation in Russia) is also taking part in the protection of NGOs’ tax interests; moreover, it is implementing the project “Civil Society Unites for a Strategic Public Policy Campaign: NGO Tax Reform in Russia,” financed by USAID. Its well-known partners are the Centre for the Development of Democracy and Human Rights, the Agency for Social Information, the Institute of Urban Economics, and the U.S.-based International Center for Not-for-Profit Law (ICNL). The project’s goal is to develop legislative changes that will improve the legal framework affecting civil society organizations (CSOs), to increase public support for proposed legislative changes, and to increase the capacity of CSOs to influence public policies. The partners are coordinating the current public drive against the government amendments to the Tax Code.  


* Yulia Checkmaryova, ycheckmaryova@cafrussia.ru, is a lawyer at the Charities Aid Foundation (CAF) – Russia. This article originally appeared in the Winter 2004-2005 issue of the Social Economy and Law (SEAL) Journal, published by the European Foundation Centre. We are grateful to SEAL for permission to reprint it. 


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