Activities of Charitable and Non-Governmental Associations during The Martial Law in Ukraine
Authors: Oleksandr Melnyk – Counsel, Attorney at Law at GOLAW, Oles Riabchuk – Junior Associate at GOLAW
In connection with the large-scale military conflict on the territory of Ukraine resulting from the actual declaration of war by the russian federation, there is an urgent and unprecedented need for financial and other material support for Ukraine to resist the aggressor.
As never before, there is an acute need for different humanitarian aid, which is essentially held by the charity, the activities of civil associations, and international non-governmental organizations, which have now become a kind of hubs that receive and transmit humanitarian and other aid.
Despite the war and certain restrictions on business registration, the incorporation of charitable or civil organizations and registration of separate subdivisions of a foreign non-governmental organization are available.
However, the question arises: what form of organization to choose?
- Charitable organization
This organization may be incorporated by one or more founders and is managed by members who are not obliged to transfer any assets to it to achieve the goals of the charitable organization. Mainly, such organizations are incorporated to raise funds from international and local donors and further donate charitable assistance, funds, property, or other benefits to those in need. Charitable foundations are the most appropriate type of charity organization to apply for international technical assistance and grant programs to receive free of charge donor resources to support the armed forces, volunteers, etc., during these challenging times and to rebuild the country in the future.
- Public organization
One should not ignore the functioning of public organizations that satisfy urgent public interests voluntarily. Public organizations are created with specific purposes and goals: from cooperation with international technical assistance projects in Ukraine or USAID Humanitarian Office to increase support and greater public participation in inclusive Ukrainian identity, or involve consultants and advisers in the reform process, legal, social, psychological assistance to hostilities victims, etc. In comparison to charitable foundations, the subject of the public organization’s activity is the satisfaction of public interests in certain areas while not aiming at the accumulation and further distribution of material goods. It is the primary difference between the functioning of a charitable foundation and a public organization.
- A separate subdivision of a foreign NGO
This option is appropriate for existing international organizations with well-established names and resources. A separate subdivision of a foreign non-governmental organization is not a legal entity and in fact, is a representative office. Registration of a separate subdivision in Ukraine enables public initiatives to operate fully and more effectively within several countries, including Ukraine. At the same time, non-governmental organizations are subject to additional requirements for openness and transparency. In particular, the reporting of NGOs shall consider the rights of donors, recipients, employees, and the right to protect confidential information permitted by law.
Thus, the legislation offers a variety of mechanisms for those interested in providing humanitarian aid to Ukraine and other goals under the challenges of the time. Additionally, important changes in tax legislation and VAT rules in the organizations’ activities were adopted due to the situation in the country.
For instance, the determination of the total amount for mandatory registration of VAT by charitable and public organizations does not include charitable assistance operations, in particular, free supply of goods/services to charitable organizations incorporated and registered under the law, as well as such assistance to charitable organizations (subjects) of charitable assistance under the legislation on charitable activities and charitable organizations.
How can GOLAW help?
- advising on the choosing a type of charitable or public organization and developing its corporate structure;
- incorporation and registration of charitable, public organizations and subdivisions of foreign non-governmental organizations;
- development of statutory documents and other internal documents for specific purposes and needs;
- making changes to the statutory documents;
- advising on taxation of charitable or civil organizations.