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The International Journal
of Not-for-Profit Law

Volume 7, Issue 3, June 2005

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

Table of Contents

Letter from the Editor

Comparative Approaches to Civil Society

The Liaison Office as a Tool for Successful NGO-Government Cooperation: An Overview of the Central and Eastern European and Baltic Countries’ Experiences
Maria Gerasimova

Public Benefit Status: A Comparative Overview
David Moore

How Freedom Is Won: From Civic Resistance to Durable Democracy
Adrian Karatnycky and Peter Ackerman


The Potential for an Independent Regulatory Authority for NGOs in South Africa
Yvonne Morgan

Restrictive Proposals in Kazakhstan
Stephen Larrabee

Women at the Forefront of the Democracy Movement in Iran
Nayereh Tohidi

Economic Constraints, Political Motives: Contemporary Russian Nonprofit Tax Law
Leslie Lutz

Failing to Govern?: The Disconnect Between Theory and Reality in Nonprofit Boards, and How to Fix It
Michael Klausner and Jonathan Small

Imagining Philanthropy
Richard Gunderman


Conversations on Philanthropy
Edited by Lenore Ealy
Reviewed by Michael Bisesi

Europe and Civil Society: Movement Coalitions and European Governance
By Carlo Ruzza
Reviewed by Joseph Proietti

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Download this issue (PDF) | Editorial Board

Economic Constraints, Political Motives: Contemporary Russian Nonprofit Tax Law

By Leslie Lutz*

I. Introduction

            In his 2004 State of the Union Address, President Vladimir Putin actively recognized the ability of nonprofit organizations to contribute to Russian society. "It is necessary," he said, "to gradually transfer functions to the nongovernmental sector which the state should not do or is unable to perform effectively."[1] At the same time, he cautioned that "not all organizations are orientated toward standing up for the real interests of the people. The priority for some is to receive financing from influential foreign organizations. Others serve dubious group and commercial interests."[2]

The dichotomous tone of Putin's speech represents the Russian government's broader feelings toward the nonprofit sector. While Putin expects Russian nonprofits to respond to national social and economic problems, his distrust of the sector leaves him unwilling to give these organizations the power to act efficiently. As a result, the laws governing nonprofits in Russia are confusing. Worse yet, current Russian tax law prevents nonprofits from developing financial autonomy or stability. If the government chose, it could significantly strengthen nonprofit organizations by giving them a more favorable tax status. Because the state itself fails to effectively address issues such as AIDS, poverty, and domestic violence, the very lives of citizens are at stake. Nonprofits are potentially poised to alleviate some of those problems. However, Russian tax law fails to stimulate growth in the nonprofit sector. Current laws inhibit the growth of the sector, and reforms are desperately needed for nonprofits to meet the growing demands of a society in transition.

Primary Claims

This article is built upon three primary claims. First, not only do tax laws inhibit the nonprofit sector, they inhibit it unnecessarily. The majority of the laws in question could be repealed without creating economic hardship for the Russian Federation or the government. The current laws were heavily influenced by the financial crisis of 1998, in an attempt to end noncompliance of major taxpayers and remove "unjustified tax privileges" in the form of exemptions and deductions.[3] However, few Russian nonprofits are "major taxpayers." More importantly, their exemptions were not unjustified because the organizations provide valuable aid to society and should therefore be supported.

Other forms of non-tax benefits could potentially be chosen, such as financial support for advertising costs or direct government grants. I advocate specifically for benefits through the federal tax laws, because they can be administered uniformly at the federal level, do not require spending on the part of the government, and provide assistance for nonprofits on a steady rather than sporadic basis. Furthermore, as Paul Bater explains, tax relief is more flexible than other forms of aid, because it increases as an organization’s income increases, and because tax benefits are not usually subjected to the same level of public comment and constraint as direct grants or other public expenditures.[4]

Second, the government allows this detrimental situation to continue, be it actively or passively, because relations between the state and nonprofits are strained. As seen in Putin's State of the Union Address in 2004, the government is distrustful of the nation's civic sector. Putin's administration has both the legal authority and the economic ability to reform nonprofit tax law. After showing that the current nonprofit tax laws are not economic necessities, I will then argue that the laws exist for political reasons.

Third, it would be to the government's advantage to have the full support of the nonprofit sector in dealing with the social and economic challenges facing Russia today. As a nation in transition, Russia faces a wide array of serious issues, such as AIDS, poverty, unemployment, and crime. The government currently treats the nonprofit sector as an enemy, not an ally. Yet the government cannot solve societal problems single-handedly, as Putin himself acknowledged in his State of the Union Address. By reforming current nonprofit tax law, the government stands to gain a powerful partner in social and economic reform: a strong and efficient civic sector, reportedly including approximately 60,000 registered charities as of 2002.[5]

II. Background

 Definition of Terms

I am concerned with all civic and charitable organizations, including human rights organizations, cultural institutions, and health, housing, and welfare groups. In the United States, all such groups would be eligible for tax-exempt status and considered "nonprofit organizations." In Russia, however, these organizations are categorized at three main levels. At the simplest level, the preferred Russian term is "noncommercial," as defined by the Federal Law on Noncommercial Organizations, adopted by the Duma in December 1995.[6] When the popular label of “nongovernmental organization,” or NGO, is applied, it generally refers to the largest of organizations, or to foreign nonprofits working in Russia.

Noncommercial organizations in Russia do not have profit as their primary goal and do not distribute profits among members. They can be created for "the attainment of social, charitable, cultural, educational, scientific, and administrative goals; in defense of citizens' health; for the development of physical training and sport; for the satisfaction of citizens' spiritual and other nonmaterial needs; for the defense of rights and the legal interests of citizens and organizations; the resolution of arguments and conflicts; for giving legal help; and for other goals directed toward the attainment of societal good."[7] They can be social or religious organizations, noncommercial partnerships, institutions, autonomous noncommercial organizations, social or charitable foundations, and "other forms, as stipulated by federal law."[8] At this broadest level of registration, organizations can pursue a wide array of interests as long as profit is not their primary goal.

A noncommercial organization gains recognition as a legal entity by registering with the local branch of the Ministry of Taxation. Tax-exempt status is not automatic. Some organizations might receive exemptions from profit taxes on certain income sources, but there are no “blanket exemptions” for any organizations.[9]

At the next level of classification, some of these noncommercial organizations are recognized as charities under the Federal Law on Charitable Activity and Charitable Organizations.[10] Article 1 defines charity as the voluntary action of citizens or groups to provide money, services, or other support to those in need. The law restricts charitable goals to a narrow list, including support of impoverished citizens, response to natural disasters, and protection of the environment, culture, public health, and historical objects.[11] Not all noncommercial organizations are considered charities: partnerships, unions, and foundations, for example, do not qualify. Social organizations, as described above, are most likely to be considered charitable.

Certain Russian charities receive a more favorable tax status than other noncommercial organizations. They do not have to pay income tax on noncommercial revenue. In turn, they are not allowed to spend more than 20 percent of annual revenues on administrative and managerial support services.[12]

Not all charitable organizations receive equally favorable tax-exempt status under current Russian law, which creates a third and more complex level of classification. In general, charities receive the most favorable treatment of all non-commercial organizations, but not all charities can reap the full benefits. Only educational, cultural, environmental, and research organizations qualify to receive tax-exempt program-based grants from foreign or domestic foundations. Legislation under consideration by the Duma could expand this category, but the bill has not yet been adopted. Although they might be considered charities, social service organizations, healthcare institutions, and human rights groups do not receive grant exemptions at this time. As one expert from the International Center for Not-for-Profit Law explains, the concept of charitable status in Russia is not inherently linked to tax benefits.[13] For some smaller organizations, particularly grassroots human rights groups, the complexities of the registration process can preclude receiving any level of benefits.

In this article, I will discuss a wide range of public-benefit voluntary civic groups, particularly those engaged in charitable activity. I will refer to them all as nonprofit organizations, both because profit is not their primary goal and because this terminology is familiar. It is important to remember, however, that this category includes a mixture of charities and non-charities, and that not all groups qualify for tax exemptions. Such inconsistency in current Russian tax law is one of the major problems discussed throughout this article.

Historical Framework

Although formal associations not directed by the Soviet Communist Party were forbidden, human rights activists and ecologists began to mobilize toward the end of the Soviet era. Unregistered “informal groups” spread rapidly during perestroika, and by some estimates, approximately 60,000 informal political and social organizations had sprung up across the Soviet republics by 1990.[14] Russia thus has a longer experience of associational life than many people realize. However, the history of registered, institutionalized Russian nonprofits is relatively brief. While voluntary civic activity was encouraged after the dissolution of communism, laws governing nonprofit organizations did not begin to develop until 1993. The Constitution of the Russian Federation, adopted in 1993, not only gave citizens the right to form associations, but went so far as to state that “voluntary social insurance, development of additional forms of social security, and charity are encouraged.”[15]

Until the Civil Code became effective on 1 January 1995, the actions of nonprofits were not carefully monitored. The Yeltsin administration had given charities extensive exemptions and tax credits as early as 1991, allowing them to import and export goods duty-free to raise revenue. In the economic chaos following the collapse of the Soviet Union, this was necessary to ensure the continued provision of public goods and social services, encouraging the nonprofit sector to step in at a time of state weakness. But it was only a matter of time before the Russian Mafia became involved. A particularly high-profile case in the early 1990s involved the Russian Fund for Invalids of the Afghanistan War, which earned $200 million by importing duty-free cigarettes and alcohol; the Mafia claimed an estimated 80 percent of that profit.[16] The Civil Code set sharp limits to such business ventures, restricting nonprofits to ventures that correspond with the organizations’ purposes. All other “entrepreneurial activity” became taxable.[17]

The Civil Code was soon followed by two more specific laws: the Federal Law on Charities and the Federal Law on Noncommercial Organizations, both adopted in late 1995. These laws established the finer points of nonprofits' obligations, particularly the registration and liquidation procedures. Under Article 3 of the Charities Law and Article 2(3) of the Noncommercial Law, organizations can take a wide variety of legal forms, as determined by the founder. All such organizations are legal entities; for official status and benefits, they must take the further step of registering with the local branch of the Russian Ministry of Taxation. Charitable organizations are required to submit an annual report of financial activity and membership details; this information is supposed to be available to the public, but bureaucratic obstacles often make it difficult to access.

Background on Tax Policy

Post-Soviet Russian tax legislation was first enacted in 1992, and the elementary version of the federal tax code was adopted in 1995. Many rounds of amendments have been adopted since then. In the earliest versions of the Tax Code of the Russian Federation, corporations received deductions for charitable gifts up to 3 percent of their taxable income, and individuals could deduct 100 percent of their charitable gifts. In-kind gifts and monetary gifts were tax-exempt for both the donor and the recipient.[18] Charities, for their part, paid taxes on very few activities, leading to Mafia scandals such as that described above.

However, charities were not the only legal entities with loosely enforced tax obligations. In the early post-Soviet years, rates of tax collection were abysmal. The government could not enforce tax obligations, and many taxpayers, big and small, simply refused to pay. By August 1997, according to the International Monetary Fund, tax arrears had reached 34 percent of total collection.[19] Meanwhile, much of the foreign money lent to the government was allegedly stolen or squandered.[20] State revenues continued to fall. On 17 August 1998, the government announced a suspension of debt payment and devaluation of the ruble. In a major economic crisis, banks closed and millions of citizens lost their jobs and their savings. [21]

The government was forced to act quickly. One of the most obvious strategies for increasing federal revenues was to strengthen the tax system, particularly its enforcement. Dialogue about reform began immediately. The first part of a two-part revised tax code was adopted in January 1999; the second part followed in January 2001. Reforms were made with four main goals in mind: (1) horizontal equity, treating all taxpayers equally; (2) simplicity, reducing the large number of small taxes that represented a bureaucratic burden; (3) stability; and (4) improvement of collection rates.[22] Part I of the tax code set forth basic procedural laws and definitions of tax terms, as well as the responsibilities of tax authorities, in an attempt to curb governmental abuse of power. Part II significantly changed the main taxes imposed on all legal persons, including charitable organizations.

The second part of the Tax Code of the Russian Federation contains four major chapters, each explaining a different type of tax: the personal income tax, the value-added tax (VAT), excises, and social taxes. Most drastically, individual income tax was established at a flat rate of 13 percent, rather than the previous progressive rates of 12, 20, and 30 percent. Corporate income tax was reduced from 35 percent to 24 percent. As the tax rates were lowered, deductions and exemptions were also reduced dramatically, to ensure that overall tax revenues would not decrease too greatly. While significant changes occurred in the other forms of taxes, they had less impact on the nonprofit sector. The alterations to personal and corporate income tax calculation and the eradication of exemptions carried many negative implications for Russia’s charitable organizations.[23]

III. Main Impacts of the Tax Code on the Nonprofit Sector

Five main problem areas exist in Russian nonprofit tax law. I selected these issues primarily based upon two unpublished memoranda from representatives of the Institute for Urban Economics and other Russian nonprofit organizations, with further analysis provided by Milton Cerny.[24] Cerny’s articles are an excellent English-language resource for more information on individual laws. These issues are ranked in what I believe to be an escalating order of importance.

To understand why these laws are problematic, and to show that the existence of these laws inhibits the growth of the nonprofit sector, I will compare Russian laws to a “reasonable alternative.” For the standard of comparison, I chose the International Center for Not-for-Profit Law’s guidelines for laws affecting civic organizations. ICNL standards are designed to benefit nonprofit organizations by strengthening their legal and financial stability. With offices in Washington, D.C., Budapest, Kiev, and five Central Asian nations, the organization has a global view of nonprofit law. A common argument against such transnational comparisons is that Russia, a country in transition, cannot be productively compared to Western nations such as the United States. The ICNL reports, however, are based on studies of more than 100 countries with varying economic and political systems, from which the common international practices are extrapolated. Because these standards were not tailored to the legal and economic conditions of wealthier Western nations, they represent an excellent standard of comparison for the Russian nonprofit sector.

Lack of Corporate Deductions

In the 2002 tax reforms, corporations lost all deductions for charitable gifts. By removing corporate deductions, the Russian government significantly decreased the likelihood of corporate giving. Many Western scholars have described the linkages between tax incentives and charitable giving. Clotfelter and Steinberg, for example, both identified tax deductions as an incentive for increased charitable giving for both American corporations and individuals.[25] While the exact price elasticity of charitable giving is debatable, some scholars argue that the larger deduction an individual or corporation can claim, the more likely a charitable donation will occur. Others disagree with this point. Stronger evidence shows that the larger the available deduction, the larger the donation.[26] In other words, tax deductions alone may not encourage new donors to give, but do seem to encourage existing donors to make larger gifts. Preliminary research has found charitable giving to be even more price elastic in Russia: the less it costs to make a charitable donation, the more likely Russians are to give, especially businesses and the upper class.[27]

More than any of the other tax recent reforms, the eradication of corporate deductions is clearly linked to concerns over corruption in post-Soviet Russia. Both tax avoidance by major corporations and Mafia involvement with private businesses and nonprofit organizations have been key issues throughout the past decade. Such conflicts reached epic proportions in 2004, as Putin and the Ministry of Taxation accused Yukos Oil Company of illegally withholding billions of dollars in taxes. To prevent such abuses, corporate tax law has been simplified, and most deductions, including those for charitable gifts, have been removed. While some argue that this is the necessary cost of reforming corporate corruption, such changes have come at the expense of the nonprofit sector.

The ICNL guidelines recognize “reasonably generous income tax benefits” for businesses as a necessary tool to “encourage philanthropy and good citizenship.”[28] While the definition of “generous” can be debated, it is clear that a complete lack of corporate deductions does not meet this standard. As described above, ICNL argues that “the ability to claim a tax deduction for charitable contributions plays a major role in donor decisions – at every income level – regarding how much to give.”[29]

Surprisingly, support for corporate giving is common through the post-Soviet bloc. In Eastern Europe and the former Soviet Union, only Azerbaijan, Belarus, Georgia, and Russia lack tax incentives for corporate giving.[30] Deductions for donors are most common, ranging from 5 percent of pre-tax profits in Kyrgyzstan to 20 percent in Hungary.

A more innovative approach to corporate giving might sidestep concerns of corporate corruption. First introduced in Hungary in 1996, the “1% Law” allows corporations to designate one percent of their total tax liability to a nonprofit organization and one percent to a church.[31] Corporations may choose to divide that 1 percent among several different nonprofits (or several different churches). Companies are not exempt from tax liability, but simply choose to pay 1 percent to organizations of their choice rather than to the government. This limits the risk of questionable deductions while still providing important revenue to the nonprofit sector. In 2001, the 1% Law raised $15.76 million for Hungarian nonprofits and churches. Similar laws have been adopted in Slovakia, Lithuania, and Poland. If corruption is a major concern for the Russian government, the success of the 1% Law in Eastern Europe is an example of an alternative path to encourage corporate giving.

Low Rates of Individual Deductions

The current status of individual tax deductions is quite similar to the situation with corporate deductions. I rank this issue as more important than corporate giving, because gifts from individual donors make up a higher percentage of overall sector revenue than corporate giving in most countries. Unfortunately, this situation is also much more difficult to remedy in Russia.

A major victory of the 2002 tax reforms was the establishment of a flat tax rate of 13 percent. Earlier, perceived inequalities in the tax structure and high rates, including the social tax, were considered important factors behind the high rate of tax avoidance.[32] Though the personal income tax rate was lowered for two income ranges (pre-reform tax brackets had been 12, 20, and 30 percent), the simplified system increased the overall revenue from personal income tax by 26 percent in the first year and inspired imitation in neighboring countries, leading some scholars to call this “arguably the most important tax reform of the last decade.”[33] Unfortunately, inevitable consequences have hurt the nonprofit sector.

After the reforms of 2002, deduction rates for individuals decreased. Whereas individuals could once deduct 100 percent of their charitable gifts in any amount, they are now limited to deducting 25 percent of their taxable income. Although this change alone has lowered deduction rates, the change in personal income tax probably has had an even greater impact, because the cost of charitable giving is dependent upon such rates. [34] When the marginal tax rate for the Russian upper class was 30 percent, it only cost seventy cents to give the equivalent of one dollar ($1-0.30=.70), because the resulting deductions effectively “balanced out” a portion of the cost of the gift. With the new flat rate in effect, charitable giving has become more expensive: it now costs 87 cents to give the equivalent of a dollar ($1-0.13=0.87). Other factors affect charitable giving, as well, and income is a critical factor in one’s willingness to give, among both corporations and individuals.[35] However, as discussed above, keeping the cost of charitable giving low is a key way to stimulate philanthropy, by encouraging donors to make larger gifts.

It is impractical to suggest an increase in the personal income tax rate. Nevertheless, philanthropy in Russia should be encouraged. Personal charitable giving rates have remained low.[36] The government should find ways to work around the nation’s low income tax rate, so as to produce what ICNL calls “reasonably generous income tax benefits” for both businesses and individuals.

While tax deductions encourage larger gifts from wealthy donors, ICNL suggests tax credits as a more equitable approach. Canada and Hungary are among the few nations providing tax credits for donors, instead of donations. Furthermore, tax credits can be provided independently of a state’s tax rate, thereby avoiding the impact of the lowered personal income tax rate.

It could be argued that increased tax deductions or credits for donors would diminish the revenue that the government has worked so diligently to raise. However, significant deduction rates are common in developing nations. For example, ICNL identifies India as a nation with a particularly generous policy, in which charitable donations are 50 percent tax deductible up to 10 percent of one’s gross income. It is estimated that without such incentives, contributions in India would have been 64 percent lower.[37]

Conflicting Laws on Use of Tax-Exempt Gifts

The bureaucratic complexities of the Soviet Union were infamous during their time, and some current Russian laws seem to be holdovers from that era. In particular, the federal laws governing the use of tax-exempt gifts are uniquely contradictory. Once an organization has received a tax-exempt gift, Article 16 of the Charities Law requires that 80 percent of the gift must be spent within one year of receipt. Meanwhile, Article 251(2) of the Russian Tax Code requires the same tax-exempt gift to be spent in its entirety within the organization’s current fiscal year. After the end of either the calendar year or the fiscal year in question, the organization must pay a profit tax of 24 percent on any remaining charitable gifts.

Either of the laws could help prevent the misuse of charitable donations. Accountability is particularly important in the Russian context, in light of the past nonprofit and Mafia scandals described above. However, the conflicts between the two laws significantly complicate the system of bureaucratic reporting and nonprofit accounting. Further, these laws undermine organizations’ abilities to build financial reserves and to conduct capital campaigns. For the sake of consistency, at least one of the two laws should be repealed.

Profit Tax

As touched upon above, charitable organizations still pay the 24 percent corporate profit tax on much of their revenue. Monetary gifts are taxed when not used within the required time frame. Gifts from unapproved foreign or Russian foundations are also taxed, as described at greater length in the next section. The Charities Law requires that business ventures be limited to those required for the achievement of charitable goals; charities cannot join business associations with other organizations, be they for-profit or nonprofit.[38] As Cerny observes, this might potentially guard against businesses or organized crime groups disguising themselves as charities. However, “given the comparably poor health of the Russian charity sector, this provision effectively prevents small charities from pulling their profit-producing resources together without potentially losing their charitable status.”[39] While membership dues, government grants, and other individual contributions (excluding in-kind contributions) are exempt from the profit tax, this obviously applies only to organizations that have received official status as a charity. For most cultural organizations, private schools, and smaller grassroots organizations, such donations are taxed to the full extent of corporate law. Other basic revenues, such as interest and fees for services, are taxable as well.[40]

By preventing nonprofit organizations from raising their own money through economic activity, the Russian government ensures, intentionally or not, that the sector cannot develop lasting economic autonomy. Restrictions on business activities are simultaneously too narrow and too vague. They are too narrow because they prevent organizations from raising money through commercial ventures, and too vague because in many cases they blur the distinctions between charitable and commercial ventures. Healthcare organizations and cultural institutions perform work that could be considered charitable, yet because of the revenues they regularly earn, their work is considered commercial. For Russian nonprofits, the confusion and inconsistency surrounding the profit tax is sometimes as big a problem as the profit tax itself.

Tax systems generally treat net profit that a nonprofit actively earns and gift income differently. ICNL identifies four approaches to net profit, ranging along a spectrum from complete tax exemption to complete taxation. In developing nations, ICNL encourages the most lenient approach. “NGOs in such countries are often desperate for money simply to survive, and the profits from economic activities may make the difference between their continued existence and termination.” ICNL goes on to note that in many developing market economies, it is important to encourage all economic activity independent from the state, whether it is undertaken by a nonprofit or a for-profit organization.[41]

Grant Registration Restrictions

Article 251(14) of the tax code differentiates grants from all other contributions. It defines them as financing for a specified purpose, and requires a written agreement between the donor and the organization. In an unpublished memo, Liborakina and Tolmasova argue that the taxation of grants is the most critical issue facing the Russian nonprofit sector.[42]

I too consider this to be the most important problem, because it spills over into all other areas of tax treatment. When a nonprofit is forced to pay the 24 percent profit tax on gift income, for example, the reason is often that the organization cannot register for the appropriate tax status (or, as discussed below, that the grant giver cannot register). When an individual receives no tax deduction for a charitable gift, likewise, the reason is often that the recipient organization cannot register. This complex problem thus affects nonprofit organizations and, in many cases, their donors as well.

Grants are tax-exempt only when given to a small range of approved organizations in the fields of education, culture, research, and environmental protection. In addition, each grant must be “registered” with the Ministry of Taxation, which takes at least two months.[43]

The process of giving tax-exempt, program-based grants is even more complicated than the process of receiving them, especially for foreign donors. A grant from a foreign organization cannot qualify as tax exempt unless the organization appears on a list of approved foreign donors maintained by the government of the Russian Federation. The list is updated infrequently, and, in a Kafkaesque twist, the process of gaining admission to it has never been published. Foreign organizations that cannot successfully register with the Commission, or that choose to avoid the months of delay involved in applying for registration, must give grants that are not tax-exempt: a quarter of each grant will be spent on the recipient’s tax obligations. Liborakina reports that grant-making organizations rarely if ever include profit tax payments in their budgets, so recipient nonprofits must raise additional funds.[44]

Domestic grant-making organizations, primarily community foundations, share many of the same restrictions. To be tax-exempt, their grants must also be made to educational, cultural, environmental, or research organizations. Like foreign grant-making organizations, domestic ones must register each tax exempt grant with the government. While domestic organizations are not yet required to appear on a list of authorized grant-makers, their individual grants are subjected to a similarly lengthy process of verification.

Liborakina and Tolmasova are blunt in their assessment of this legal situation: “It is impossible to discover any economic sense in this approach to taxation of grants.”[45] The government recognizes, at least theoretically, that nonprofits in certain fields of service deserve financial support that is exempt from income taxation. It should not matter, then, who gives the support. Echoing Cerny’s call for more “user-friendly” laws, Liborakina and Tolmasova characterize this situation as “excessive formalism.” No other country in Europe requires donors to register grants with the government or to seek inclusion on a list of approved donors. Within the former Soviet Union, only Kazakhstan requires foreign donors to register with the state.[46]

As suggested by President Putin’s State of the Union remarks, quoted in the opening section, the government is suspicious of many foreign donors. A lingering Cold War mentality creates a fear that wealthy foreign donors may try to impose their Western political agendas on Russian organizations. A second large concern involves grant money for anti-war and pro-Chechnya organizations, which often comes from the Middle East and may be funding separatist movements and terrorism.

The government's paranoia may or may not be justified. What is certain, however, is that the “excessive formalism” is unnecessary. Months-long processing delays are not acceptable. If the state relies on a list of approved foreign donors, it should make public the guidelines for gaining entry and update the list regularly. The process of approving individual grants for tax-exempt status, whether from foreign or domestic donors, should be made clearer and more accessible.

The structure of the Russian law, and its vagueness in particular, allows the government to abuse its regulatory power by discriminating against organizations at will. This facet of Russian tax law serves as a powerful tool for monitoring and restricting independent civic organizations, particularly those that might not fully support the current regime.

As discussed in the previous section, ICNL’s best practices call for complete exemption from income taxation for all nonprofit receipts of grant money from donors. Distinctions are not made based on the status of the donor. More important, clear and accessible nonprofit law is considered a "fundamental freedom" by ICNL. Such laws should be “written and administered so that it is relatively quick, easy, and inexpensive for all persons to register or incorporate [a nonprofit organization] as a legal person.”[47] By contrast, the laws governing Russian organizations today are so complex that it is virtually impossible for many nonprofits to qualify for the full extent of tax exemptions allowed by the law.  

IV. Implications of the Current Russian Tax Legislation

Lack of Reliable Funding

Many sources of funding taken for granted in other nations are lacking within the Russian nonprofit sector. Government grants are extremely rare, as might be expected from the critically low levels of public revenue at the end of the 1990s. Having recently changed the law to increase tax revenue from nonprofit organizations, the state would be acting inconsistently if it proceeded to return some of the revenue to the nonprofit sector in the form of grants. In most developing nations, the state cannot afford to actively support the programs of charities, no matter how beneficial those programs might be.[48]

Donations from businesses are equally rare. Even before the Tax Code completely removed deductions for corporations, corporate philanthropy was uncommon. In addition to inadequate incentives for giving, the lack of a tradition of corporate giving is viewed as an obstacle by some Russian observers.[49] Although Zelikova and Fomin’s observations on the lack of corporate giving are from 1996, one must expect that giving has decreased even more sharply since the 2002 amendment of the tax code removed all corporate deductions. Lapina, meanwhile, observes that corporate philanthropy is usually a one-time, fairly random affair in Russia; businesses do not form working partnerships with nonprofits as is often seen in the United States.[50] As a result, organizations cannot plan for regular charitable gifts, and advance budgeting is a particular challenge.

Personal giving is similarly low. Again, a tradition of such charitable behavior has not been established. During the Soviet years, the state provided for citizens’ needs and nonprofit service organizations did not exist, so donating to nonprofit organizations was not institutionalized as a part of Russian culture. As always, data on this topic are hard to come by. Accurate statistics on tax behavior and the amount of deductions claimed are rarely accessible, in large part because of the frequent tax avoidance that plagued Russia throughout the 1990s. However, one analysis, based on data from the World Bank, found that approximately 25 percent of Russians donate annually to charity. For comparison, the same study found that 75 percent of Americans make yearly contributions.[51] While this disparity might result primarily from economic and income differences, there is a risk that the lack of tradition will continue to hold down giving even as Russian income levels increase.

Because domestic funding is hard to come by, grants from foreign organizations are all the more important. These have their drawbacks, however. Competition for a finite amount of foreign funding has led to a decreased level of cooperation among Russian nonprofits. As always, groups outside of Moscow have less access to the application process for such funds, which breeds additional resentment between groups with funding and those without.[52] In addition, foreign aid has been decreasing over the past few years, as international foundations such as the Open Society Institute reduce aid to the former Soviet Union and focus on other parts of the world.[53] The Russian government's suspicions of foreign foundations and NGOs exacerbate the problem. The expulsion of the Peace Corps from Russia in 2002, following allegations from Russia’s Federal Security Service that Peace Corps volunteers were engaged in intelligence activities, is an excellent example of this tension.[54] While the Peace Corps is run by a U.S. government agency, and is not an independent civic group, the situation demonstrates the government’s distrust of foreign activity within Russian borders.

As a result of these combined factors, the very existence of most Russian nonprofits is perilous. Lapina identified financial hardship as the single greatest weakness of the Russian nonprofit sector throughout the 1990s.[55] Some organizations have no choice but to rely on commercial activity to keep their programs running; nonprofits with property to rent out have been able to achieve greater stability than most other organizations, even when this income is taxed.[56] Still, imposition of the profit tax represents a significant burden for struggling nonprofit organizations. In the absence of other reliable funding, a supportive tax regime is critical for Russia’s nonprofit sector, both to stimulate domestic and foreign philanthropy and to avoid depleting the limited resources available to nonprofits today.

Recurrent Tensions between the Public and Nonprofit Sectors

Unfortunately, the Russian government does not seem to have the nonprofit sector’s best interests in mind. Although economic necessity motivated many of the changes to the tax code, such as the reduction of the personal income tax, a large part of nonprofit tax law serves primarily to control and inhibit the nonprofit sector. There is no rational economic explanation for the conflicting requirements for spending tax-exempt donations. Restrictions on grant-giving, similarly, allow the government to monitor and hinder the nonprofit sector with little rational purpose. The government’s suspicions of the independent sector are clear, both in President Putin’s State of the Union Address and in daily relations between the two sectors. If it so chose, the state could easily reform tax law by expanding the benefits available to charitable organizations, or at the very least by making the law more “user friendly.” However, this would empower such organizations, and much evidence indicates that the current political administration feels more comfortable with a weakened nonprofit sector.

Political observers have remarked that “President Putin’s reassertion of state control over more and more of the economy combined with his radical reversal of many of the country’s political reforms is ominous.”[57] The Putin administration has clearly sought to extend its control over private businesses, local governments, and the once-independent media; it is logical that the administration would seek to extend its control over the nonprofit sector as well. One Russian activist has described this process as a “strengthening of vertical power,” which subjects the civic sector to “attacks launched by the power structures” against its autonomy.[58] Furthermore, the government has a history of interfering with the more outspoken of Russia’s nonprofit organizations, particularly human rights groups, many of which had their registration denied or delayed in 1999. Registration applications have been rejected for such trivial deficiencies as font size.[59] It is impossible to read the minds of political officials, but these factors, taken together, make a strong case for the argument that the current nonprofit tax laws are being used to inhibit the civic sector.

It is useful to evaluate the current situation in Russia through the “three lenses” paradigm described by Dennis Young.[60] Young identified three main forms of relations between the public and nonprofit sectors, based on varying approaches to economic theory. Viewed through a “supplementary” lens, nonprofits provide public goods that the government cannot or will not supply. In the “complementary” view of the nonprofit sector, a partnership exists. The government funds the nonprofit sector’s provision of public goods because this is more efficient than for the government to provide the services itself. The “adversarial” approach, finally, posits a less cooperative relationship. Nonprofit organizations play an advocacy role, pushing governments to reform, change policy, or represent minority viewpoints, whereas the government assumes a supervisory role, regulating the behavior of nonprofit organizations. These three lenses are not necessarily mutually exclusive, and all three can apply to the same nation over time.

In his State of the Union Address, Putin was calling for a supplementary approach to nonprofit-government relations, at least to the extent that it would benefit the state by relieving the burden of providing certain public goods. In reality, current relations in Russia are more adversarial. Nonprofits lobby for minority viewpoints and for policy reforms. The government, as described by Young, reacts by defending the status quo and strictly regulating nonprofits. “In the guise of regulation, government can become the adversary of nonprofits in the policy arena.”[61] This has happened in Russia today.

While Young wrote about the three lenses in reference to the United States, the analysis is applicable to Russia. The adversarial lens might even be more apt in transitional states, in which the balance of power between the public, private, and nonprofit sectors has not yet been firmly established. The state feels threatened by perceived competition from the nonprofit sector. Interestingly, Young applies the adversarial lens to the earliest years of American history, to “the early republic, when public and private spheres of autonomy were first being sorted out.”[62] The Russian Federation is in a similar stage today. One hopes that, as occurred in the United States, relations in Russia will evolve into a more complementary balance.

Government Benefits of a Strong Nonprofit Sector

It would be to the government’s advantage to enable the nonprofit sector to work effectively and efficiently. As discussed above, few of the current problems of Russian nonprofit tax law stem from actual economic necessity. While increasing government revenues has been an important goal over the last decade, better treatment of the nonprofit sector is not a mutually exclusive action. The tax reforms were designed to end tax avoidance, particularly among wealthier individuals and legal entities, and to remove unnecessary exemptions and deductions.

From a nonprofit perspective, that statement should raise two red flags. First, the vast majority of nonprofit organizations can hardly be considered major taxpayers. The sector as a whole generates only 1 percent of the nation’s GDP, and individual organizations function in an environment of perpetual financial hardship. In fact, throughout the 1990s, a majority of Russian charities experienced such severe financial shortages that they had to suspend their program services for limited periods.[63] These struggling organizations were clearly not a rational target of the 2002 reforms.

Second, the government eliminated many so-called gratuitous tax exemptions and deductions in order to further increase revenues. The state must ask itself, however, whether the exemptions and deductions given to nonprofits were gratuitous. The exemptions given to charities and the deductions given to donors are far from unnecessary. The nonprofit sector depends on these financial benefits for survival.

By implementing more supportive nonprofit tax laws, the government would lose some small amount of tax revenue, particularly if fewer nonprofits were to pay the 24 percent profit tax on grants and other income. However, the strengthened nonprofit sector would be able to devote increased resources to the critical challenges facing Russia today – poverty, AIDS, crime, and so on – thereby lessening the state’s burden. This would make possible a more supplementary relationship between the two sectors, as described by Young and suggested in Putin’s State of the Union Address. It is logical to assume that the drop in tax revenue would be offset, if not surpassed, by the increase in social services provided. It is thus in the state’s interest to support the nonprofit sector. ICNL concurs: while any government incurs a cost by giving tax benefits to nonprofit organizations, “the state is likely to recover a significant part of that tax cost to the extent that the donations are used by the PBO [public benefit organization] to deliver public benefit services.”[64]

The lack of supporting empirical evidence is an obvious weakness in this argument. There is simply no way to accurately estimate the potential monetary value of nonprofit output under a reformed tax code, and no way to calculate the taxes the average nonprofit organization would be paying under a uniform and consistent tax code. Because it is so difficult to penetrate the layers of Russian bureaucracy, even current figures on annual taxes paid by nonprofit organizations are elusive. In keeping with the relative youth of the Russian nonprofit sector, there has not yet been a systematic collection of data on it, such as that available in the United States through Guidestar or the Center on Philanthropy. However, it is logical that nonprofit performance would increase with nonprofit revenue, and that increased performance would in turn produce increased public benefit.

Future Legislation

This is an important time to turn public attention toward the issue, because the Russian government is considering additional reforms to Article 251 of the Tax Code.[65] The proposed amendments would broaden the category of the organizations able to receive tax-exempt grants, extending that right to healthcare and social services organizations and human rights groups. Bill No. 58666-4 was submitted to the Duma in July 2004 and passed a second reading on 22 April 2005. (The original bill also would have further complicated the registration requirements for foreign and domestic donors.[66] With encouragement from ICNL, the Institute for Urban Economics, and USAID, the Duma removed these points in the second reading.) It is currently awaiting a third reading, which it is expected to pass without significant change, after which it would need to pass through the Federal Assembly.

If enacted, the bill would greatly expand the range of organizations eligible for grants, a definite improvement in Russian nonprofit tax law. The right to receive tax-exempt grants, however, carries little weight if tax-exempt grants are not given. While it is a step in the right direction, this bill would not remove the antiquated restrictions on tax-exempt grants from domestic and foreign donors, as described above. More organizations will qualify for grants, but grants will remain as hard to come by as ever. The government must reform this aspect of tax law as well in order to create a more economically and political viable atmosphere for Russian nonprofits.

V. Suggested Reforms and Conclusions

ICNL Recommended Practices

The ideal reform would create a simplified tax code, in which nonprofit organizations are clearly and consistently defined. All public benefit organizations that choose to register with the state and conform to standard reporting requirements would then receive blanket exemption from profit tax, including on income from program-based grants. This would resolve the confusion surrounding the definitions of noncommercial organizations, charities, and tax-exempt groups, and remove the resulting inconsistencies. Such broad reform is unlikely, however, because it would require many federal laws to be completely rewritten.

After examining current Russian tax law and its root causes, I believe that the most practical recommendation is a simple one: Russia should conform its laws to the previously described ICNL standards. These guidelines have been developed with a wide array of nations in mind; they are designed to transcend political and economic differences and help build a more stable nonprofit sector.

It must also be shown that any plan of reform would be economically feasible in the Russian context, such that the only real constraints are political: the government's desire not to give the sector a preferential status. Again, the dearth of economic data on the Russian nonprofit sector makes it difficult to prove that the reforms would be cost effective. But by looking at the reasons behind the existing laws, and by considering the range of other nations that have implemented ICNL’s guidelines, one concludes with considerable confidence that these policies could succeed in Russia as well. A well-functioning nonprofit sector does not have to be expensive, and, in many senses, a well-functioning nonprofit sector pays for itself.

The first problem within Russian nonprofit tax law discussed here is the lack of deductions for corporate giving. Such deductions were removed in an attempt to reduce corporate corruption. Implementing a 1% Law, such as that found in Hungary, Slovakia, and Lithuania, would prevent corporations from claiming excessive deductions for their own benefit while still funneling critical support into the nonprofit sector. The success of this strategy in other post-communist nations bodes well for its potential in Russia.

The main challenge for individual giving is the significantly reduced personal income tax rate. With a flat tax rate of 13 percent, deductions for charitable gifts have less impact on one’s tax returns than would be seen at higher tax rates. The nonprofit sector was not a target of this reform, which has had many positive macroeconomic results, but it has suffered as a consequence. Although the state cannot and probably should not change the personal income tax rate, it could remove the upper limit (25 percent of taxable income) on the deductibility of charitable contributions, returning to pre-reform allowances of up to 100 percent of charitable giving. For greater impact, the government could implement new tax credits, which would offer a greater reward to donors regardless of the personal income tax rate. Encouragement of charitable giving is recognized as an international norm by ICNL, with nations as diverse as India, Poland, and Australia allowing for generous deductions. While such incentives will not motivate everyone to give, they are likely to encourage current donors and wealthier individuals to give more. Incentives, particularly tax credits, might also encourage citizens to continue donating even in times of economic hardship.

This decrease in tax deductions for donors has largely resulted from helpful reforms to the tax code at large. There is no such rational explanation, however, for the conflicting calendar restrictions on the use of tax-exempt gifts. At best, the discrepancies between the tax code and the Charities Law are legislative oversight. At worst, they are an intentional obstacle to the nonprofit sector’s attempts to achieve financial stability. Either way, the laws needlessly complicate reporting and accounting procedures and endanger the tax-exempt status of many grants.

It is also important for the government to decrease the level of nonprofit income subject to profit tax. To be sure, the Russian economy has struggled over the last decade; in need of revenues, the government cannot afford to gratuitously exempt all organizations from taxes. However, exemptions for the nonprofit sector are not gratuitous. Rather, as Cerny argued, the “poor health” of the sector might be relieved by an increase of untaxed, small-scale commercial activity.[67]

Recognizing the financial difficulties of governments in transition, ICNL calls for partial exemption from the profit tax in developing states. Money from commercial ventures should be tax-exempt as long as it is used to support the primary goals of the organization. In Russia, this would include interest, fees, and sales of goods and services, which are currently taxed. This approach strikes a reasonable balance: nonprofits receive exemptions to support their programs and services, while governments maintain some power of taxation over the nonprofit realm. Corruption is less likely than if all nonprofit income were untaxed, regardless of how it was used.

Finally, and most important, the Russian government needs to lift its artificial restrictions upon tax exemption for grants. By requiring that grant-making organizations, both foreign and domestic, register themselves and their grants with the state, the government ensures that funding is delayed, many grants are heavily taxed, and the process of donating is overly bureaucratic and complicated. Tax exemption for such grants should depend on the grant’s purpose rather than its source. No other country in Europe or Central Asia has a similarly complex legal situation. Only Kazakhstan comes close, but the Kazakh registration requirement applies only to foreign grants. The Russian government should extend tax exemptions to all grants for charitable organizations. As both ICNL and analysts from the Institute for Urban Economics have noted, the current laws make no economic sense; they seem simply to reflect a desire to inhibit the activities of Russia’s charitable sector.

Advantageous reforms would be economically feasible. The real question is whether the state will allow such reforms to become politically feasible. If the Russian government continues to view nonprofits through a strictly adversarial lens, there is little hope for even the most rational of tax reforms.

Increased Accountability

In addition to the above recommendations, the government should seek to increase accountability on the part of nonprofit organizations. Many detrimental aspects of the tax code were based on a desire to reduce tax avoidance and corruption. By building a tradition of better and more public reporting, the government and media watchdogs could help ensure that more generous exemptions do not lead to corruption and that funds are not misused. Furthermore, charitable giving is more likely to grow if citizens trust nonprofit organizations. This is especially true in developing economies such as Russia’s, where citizens are apt to be wary of a young and unfamiliar nonprofit sector. Consequently, information about revenues and expenditures, which is already collected by the Ministry of Taxation, should be made readily and clearly available to Russian citizens.

Laws must ensure that conditioned gifts are used correctly and that financial data become accessible. ICNL advises that such reporting be simple and uniform, and be made public at least on an annual basis.[68] Cerny calls for the development of a “system of applications and certifications” to ensure nonprofit transparency and penalize those who attempt to use nonprofit revenues for personal benefit.[69]

Additional reporting requirements should be accompanied by simplified paperwork and a streamlined bureaucratic process. Such reforms merit further study. Ideally, the government would develop them in consultation with ICNL and an association or panel of Russian nonprofit organizations.


As in all developing nations, the nonprofit sector in Russia faces a wide range of challenges. The sector’s tax status is not the only obstacle to its growth. Increasing public trust and public participation in civic organizations are also critical. However, improving the tax status of these organizations is a critical first step. Future growth, such as membership outreach and increased provision of social services, will require appropriate financial resources, which in turn can be achieved through more favorable tax treatment for the nonprofit sector in general and charitable organizations in particular.

While the tax reforms of 2000 and 2002 increased tax revenues, that increase must be weighed against the future costs of providing social services. These costs are bound to rise for the government if the nonprofit sector is too weak to assist in housing aid, counseling, health awareness, job training, and other endeavors. In his State of the Union Address, Putin recognized that the government cannot single-handedly help Russian citizens through the political and economic transitions at hand. However, it is clear that the Russian government still views the nonprofit sector through an adversarial lens. This is self-sabotage: the Russian government cannot hope to keep nonprofits dependent upon the state while simultaneously expecting them to solve society’s problems. The government should now prove the truth of Putin’s words by adopting the ICNL standards, thereby creating a legal environment in which nonprofits can effectively and stably advance the well-being of the Russian people.


* Leslie Lutz is a 2005 graduate of Indiana University, where she received a Master of Arts in Russian studies and a Master of Public Affairs in nonprofit management. She would like to thank Professors Michael Alexeev, Leslie Lenkowsky, and Beth Gazley for serving as her M.A. essay advisors. This article is adapted from that essay, written for Indiana University's Russian and East European Institute, April 2005.  Copyright 2005 by Leslie Lutz.

[1] President Vladimir Putin, “Poslanie Federal’nomu Sobraniiu Rossiiskoi Federatsii,” Moscow, Russia, 26 May 2004, available at http://www.president.kremlin.ru/text/appears/2004/05/71501.shtml and accessed on 19 March 2005.

[2] Ibid.

[3] Raisa Fedotovna Zaharova, "Tax Law of the Russian Federation," in Legal Foundations of Russian Economy, ed. Juha Tolonen and Boris Topornin (Helsinki: Kikimora Publications, 2000), 134.

[4] Paul Bater, “Tax and Other Benefits for Public Benefit Organizations,” conference proceedings from European Civil Society in the 21st Century, sponsored by the International Center for Not-for-Profit Law, Budapest, 3 May – 6 May 1999.

[5] Arthur C. Brooks, “Charitable Giving in Transition Economies: Evidence from Russia,” National Tax Journal vol. 55, no. 4 (2002), 744.

[6] Federal’nyi zakon Rossiiskoi Federatsii No. 7-FZ, “O nekommercheskikh organizatsiiakh,” reprinted in Nekommercheskie organizatsii: Zakonodatel’nye i normativnye akty, kommentarii (Moscow: “Rossiiskaia gazeta,” 1997), 4-20.

[7] Ibid., Article 2.1, 4.

[8] Ibid., Article 2.2-3, 4.

[9] International Center for Not-for-Profit Law, “Survey of Tax Laws Affecting NGOs in the Newly Independent States,” available at http://www.icnl.org/tools/default.htm.

[10] Federal’nyi zakon Rossiiskoi Federatsii No. 135-FZ, “O blagotvoritel’noi deiatel’nosti i blagotvoritel’nykh organizatsiiakh,” reprinted in Nekommercheskie organizatsii, 73-83.

[11] Ibid., Article 2(1), 74.

[12] Ibid., Article 16(3), 79.

[13] David Moore, “The Fiscal Framework for Corporate Philanthropy in CEE and NIS,” International Journal of Not-for-Profit Law vol. 6, no. 2 (2004) [electronic journal], available at http://www.icnl.org.

[14] Geoffrey Hosking, The Awakening of the Soviet Union (Cambridge: Harvard University Press, 1990), 64.

[15] Article 39(3) of the Constitution of the Russian Federation, available at http://www.gov.ru/main/konst/konst12.html and accessed on 22 March 2005.

[16] Carol Matlock, “Helping the Russian Mafia Help Itself,” Business Week, 9 December 1996, 58.

[17] Grazhdanskii kodeks Rossiiskoi Federatsii, (St. Petersburg: Iuridicheskii tsentr Press, 2002) 111. 

[18] Milton Cerny, “Russia in Transition,” Exempt Organization Tax Review vol. 45, no. 2 (2004), 418.

[19] Dale Chua, “Tax Reform in Russia,” in Russia Rebounds, eds. David Owen and David O. Robinson (Washington, D.C.: International Monetary Fund, 2003), 79. By contrast, Chua reports that tax arrears in the United States, Canada, and Australia averaged from 4 to 6 percent in the same year.

[20] “Russia Devalued,” The Economist, 22 August 1998, 14.

[21] Evgenii Iasin, “Snova Avgust,” Moskovskie Vedomosti, 17 August 1999.

[22] Chua, "Tax Reform in Russia," 83.

[23] The current Russian Tax Code, in its entirety, is available through the Ministry of Taxation at www.nalog.ru.

[24] Liborakina and others, “Problemy nalogooblozheniia nekommercheskego sektora i napravleniia sovershenstvovaniia zakonodatel'stava,” unpublished memorandum, Institute for Urban Economics (Moscow, 2004) [Courtesy of Michael Alexeev]; M.I. Liborakina and A.K. Tolmasova, “O problemakh nalogooblozheniia nekommercheskikh organizatsii,” unpublished memorandum, Institute for Urban Economics (Moscow, 2004) [Courtesy of Michael Alexeev]; Cerny, “Russia in Transition,” 411-419.

[25] Charles T. Clotfelter, Federal Tax Policy and Charitable Giving (Chicago: University of Chicago Press, 1985); Richard Steinberg, “Taxes and Giving: New Findings,” Voluntas vol. 1, no. 2 (1990), 61-79.

[26] Lise Vesterlund, “Why People Give,” in The Nonprofit Sector: A Research Handbook. Eds. Walter W. Powell and Richard Steinberg (New Haven: Yale University Press, forthcoming). A preliminary version of Vesterlund’s chapter was provided by Professor Kirsten Grønbjerg of Indiana University.

[27] Brooks, “Charitable Giving,” 750.

[28] International Center for Not-for-Profit Law, "Checklist for NPO Laws," Standard 3.5, available at http://www.icnl.org/tools/checklist.htm

[29] Moore, “Corporate Philanthropy.”

[30] Ibid.

[31] Ibid.

[32] Chua, "Tax Reforms in Russia," 79.

[33] Anna Ivanova, Michael Keen, and Alexander Klemm, “The Russian Flat Tax Reform,” International Monetary Fund Working Paper 05/16 (January 2005), 4.

[34] Vesterlund, "Why People Give," 9.

[35] Clotfelter, Federal Tax Policy and Charitable Giving, 274.

[36] Brooks, "Charitable Giving," 745.

[37] International Center for Not-for-Profit Law, “The Tax Treatment of Nongovernmental Organizations: A Survey of Best Practices from Around the World,” endnote 14, available at http://www.icnl.org/tools/taxpaper.htm.

[38] Article 12(3). “O blagotvoritel’noi deiatel’nosti,” Nekommercheskie organizatsii, 77.

[39] Cerny, “Russia in Transition,” 417.

[40] G. Kuzmin, “Nalogooblozhenie nekommercheskikh organizatsii,” Ekonomika i zhizn’ vol. 50 (2003), 16-34.

[41] ICNL, 'Tax Treatment,' 4." .

[42] Liborakina and Tolmasova, “O problemakh nalogooblozheniia.”

[43] Natalia Bourjaily, “Proposed Russian Tax Code Amendments: Benefit or Burden?”, memorandum for the International Center for Not-for-Profit Law, August 2004. Available at http://www.icnl.org and accessed on 23 November 2004.

[44] Liborakina and others, “Problemy...i napravleniia,” 5.

[45] “V takom podkhode k nalogooblozheniiu grantov nevozmozhno vyiavit’ ekonomicheskogo smysla.” Liborakina and Tolmasova, “O problemakh nalogooblozhenie.”

[46] Bourjaily, “Benefit or Burden?”

[47] ICNL, “Checklist,” standard 1.2.

[48] G. Lapina, “Sotsial’noe izmerenie 'tret'ego sektora',” Rossiiskii ekonomicheskii zhurnal 7 (1999), 89.

[49] Iu. Zelikova and E. Fomin, Blagotvoritel’nye organizatsii Sankt-Peterburga: Spravochnoe izdanie (St. Petersburg: Sankt-Peterburgskii filial Instituta Sotsologii RAN, 1996), 97.

[50] Lapina, “Sotsial’noe izmerenie,” 89.

[51] Brooks, “Charitable Giving,” 745.

[52] V.G. Khoros and others, eds., Grazhdanskoe obshchestvo : Mirovoi opyt i problemy Rossii (Moscow: Editorial URSS, 1998), 190.

[53] Cerny, “Russia in Transition,” 412.

[54] Sharon LaFraniere, “Anti-Western Sentiment Grows in Russia,” Washington Post Foreign Service, 19 January 2003.

[55] Lapina, “Sotsial’noe izmerenie,” 89.

[56] Olga Alekseeva, Kto pomogaet detiam? O rabote blagotvoritel’nykh organizatsii (Moscow: CAF, Rossiiskoe Predstavitel’stvo, 1994), 43.

[57] Marshall I. Goldman, “Putin, the Oligarchs & the End of Political Liberalization,” The Economists’ Voice vol. 2, no. 2 (2005) [electronic journal]; produced by The Berkeley Electronic Press and available at http://www.bepress.com/ev. Accessed 27 January 2005.

[58] L.M. Alekseeva, “Tret’ii sektor i vlast’,” Obshchestvennye nauki i sovremennost’ vol. 6 (2002), 52-58.

[59] John Squier, “Civil Society and the Challenge of Russian Gosudarstvennost,” Demokratizatsiya vol. 10, no. 2 (2002), 171.

[60] Dennis Young, “Complementary, Supplementary, or Adversarial? A Theoretical and Historical Examination of Nonprofit-Government Relations in the United States,” in Nonprofits and Government: Collaboration and Conflict, eds. Elizabeth Boris and C. Eugene Steuerle (DC: The Urban Institute Press, 1998), 32-67.

[61] Young, “Complementary, Supplementary, or Adversarial?" 40.

[62] Ibid., 60.

[63] K.G. Kholodkovskii, ed., Grazhdanskoe obshchestvo v Rossii: Zapadnaia paradigma i rossiiskaia real’nost’ (Moscow: Institut Mirovoi Ekonomiki i Mezhdunarodnykh Otnoshenii, 1996), 144.

[64] Paul Bater, “Evaluating Tax Incentives for Donations to Public Benefit Organizations,” International Journal of Not-for-Profit Law vol. 3, no. 2 (2000) [electronic journal]; available at http://www.icnl.org/JOURNAL/vol3iss2/ar_baterprint.htm and accessed 1 March 2005.

[65] "ICNL Update," 22 April 2005, available at http://www.icnl.org/PRESS/Articles/2005/20050425.htm

[66] Bourjaily, “Benefit or Burden?”

[67] Cerny, “Russia in Transition,” 417.

[68] ICNL, “Checklist,” standards 4.1 and 4.6.

[69] Milton Cerny, “Russia – A ‘Virtual’ Democracy?” Exempt Organization Tax Review vol. 45, no. 2 (2004) 234.


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