According to the law of January 12, 1996 No. 7-FZ (as amended on December 23, 2003), a non-profit organization is one that does not have profit as the main goal of its activities and does not distribute the profits received among participants.
At the same time, non-profit organizations have the right to carry out entrepreneurial activities to achieve their statutory goals and have a number of tax benefits.
Non-profit organizations can be created to achieve social, charitable, cultural, educational, scientific and managerial goals, to protect the health of citizens, develop physical culture and sports, satisfy the spiritual and other non-material needs of citizens, protect the rights and legitimate interests of citizens and organizations, resolve disputes and conflicts, providing legal assistance, as well as for other purposes aimed at achieving public benefits.
The Civil Code of the Russian Federation and the Law “On Non-Profit Organizations” define the following organizational and legal forms of non-profit organizations:
- Consumer cooperatives
- Funds
- Institutions
- Nonprofit partnerships
- State corporations
Public and religious organizations (associations)
A common feature of public and religious organizations (associations) is the purpose of their creation - they are created to satisfy spiritual or other non-material needs. Another sign is the commonality of interests of the uniting citizens.Read more about public organizations and their registration in the section Public organizations.
Consumer cooperatives.
A consumer cooperative is recognized as a voluntary association of citizens and legal entities on the basis of membership in order to satisfy the material and other needs of the participants, carried out through the pooling of property share contributions by its members. Unlike other forms of non-profit organizations, income from the business activities of a cooperative is distributed among its members.Funds
The characteristics of the foundation as a non-profit organization are: lack of membership, property base created through voluntary property contributions. The Foundation is a kind of non-profit “bank”, where funds are first accumulated through donations, and then distributed for the statutory purposes of the Foundation - social, cultural, educational and other socially beneficial purposes. The Foundation is required to publish annual reports on the use of its assets.Institutions
An institution is an organization created by the owner to carry out managerial, socio-cultural and other functions of a non-profit nature and financed partially or fully by this owner. At the same time, the property is assigned to the institution on the right of operational management, and not ownership. If the institution's funds are insufficient, the owner bears subsidiary liability for its obligations.Nonprofit partnerships
A non-profit partnership is a membership-based non-profit organization established by citizens and (or) legal entities to assist its members in carrying out activities aimed at achieving socially beneficial goals. A distinctive feature of a non-profit partnership is the right of its members to a part of the property in the event of liquidation of the partnership or withdrawal from it. A non-profit partnership is convenient as an association of free professions (lawyers, doctors, writers, etc.)Autonomous non-profit organizations
An autonomous non-profit organization is a non-profit organization that does not have membership, established by citizens and (or) legal entities on the basis of voluntary property contributions for the purpose of providing services in the field of education, healthcare, culture, science, law, physical culture, etc. Property transferred by the founders of the organization, belongs to her by right of ownership.This form of non-profit organizations is most convenient for activities in the service sector.
Associations of legal entities (associations and unions)
Commercial and non-profit organizations can voluntarily unite into associations (unions) in order to coordinate their activities, as well as represent and protect common property interests. Members of the association (union) retain their independence and rights as a legal entity.State Corporation
A new form of non-profit organizations introduced by Federal Law No. 140-FZ of July 8, 1999.A state corporation is a non-profit organization that does not have membership, established by the Russian Federation on the basis of a property contribution and created to carry out social, managerial or other socially useful functions. It is created on the basis of a law that establishes the specifics of its legal status.
A non-profit organization is considered created as a legal entity from the moment of its state registration. Currently, state registration of non-profit organizations (with the exception of public organizations) is carried out in the Tax Inspectorate.
The founders of a non-profit organization, depending on its organizational and legal forms, can be citizens and (or) legal entities.
The number of founders of a non-profit organization is not limited, unless otherwise established by federal law.
A non-profit organization can be founded by one person, with the exception of cases of establishing non-profit partnerships, associations (unions) and other cases provided for by federal law.
To register a non-profit organization according to the law, the following constituent documents are required:
- Charter approved by the founders (participants) for a public organization (association), foundation, non-profit partnership and autonomous non-profit organization;
- The constituent agreement concluded by their members and the articles of association approved by them for the association or union;
- The owner's decision to create an institution and the charter approved by the owner for the institution.
Non-profit organizations (hereinafter referred to as NPOs) are one of two large groups of legal entities (the other group includes commercial organizations). The main distinguishing feature of non-profit organizations is that (and this follows from their very name) that they are not created for the purpose of carrying out commercial activities.
What is an NPO, goals of creation, independence
Non-profit organizations are understood as those created for educational, cultural and other purposes specified in their constituent documents, and:
- not having profit as their main goal;
- not distributing the profit received as a result of their activities among their participants (clause 1 of article 50 of the Civil Code of the Russian Federation).
An approximate list of purposes for creating NPOs is enshrined in clause 2 of Article 2 N 7-FZ “On Non-Profit Organizations” dated January 12, 1996 (hereinafter referred to as the Federal Law on NPOs). According to this law, NPOs can be created for:
- achieving social, charitable, spiritual, cultural, educational, scientific and management goals;
- development of physical culture and sports, protection of the rights and legitimate interests of citizens, etc.
This list is not exhaustive; this paragraph provides that NPOs can be created for other purposes aimed at achieving public benefits.
In addition, the goals of the creation and activities of NPOs are established by separate federal laws.
As you know, all organizations in Russia can be divided into three sectors: government, commercial and non-profit. And if everything is clear with the first two types, then the last one makes us think. What objects are classified as non-profit organizations? We invite you to reflect on this further.
Non-profit organizations include...
First the definition. NPO, non-profit organization is a structure that does not have as its main goal making a profit, and also does not distribute it among its participants.
The goals of creating an NPO are as follows:
- cultural;
- social;
- charitable;
- scientific;
- educational;
- managerial;
- political;
- protecting the health of citizens;
- development of sports, physical education;
- satisfaction of non-material (spiritual) needs;
- protection of the legitimate interests of individuals and legal entities;
- legal assistance;
- other useful things for society.
Objects that belong to non-profit organizations have the right to engage in entrepreneurial activities. But only if it is aimed at achieving a main social goal.
It is important to note that non-profit organizations that perform certain functions of self-government bodies, the state and at the same time do not resort to the help of them are called non-governmental.
Characteristics of NPOs
To get a clearer picture of the structures that belong to NPOs, we invite you to familiarize yourself with the following characteristics:
- Founder: any person.
- Personnel: recruited staff and involved persons.
- Monetary remuneration for participants: full-time employees - salary, volunteer work, volunteers are not paid, services of involved persons - service agreement.
- Main goals of activity: as a rule, socially significant.
- Sources of financing: state budget (but only if the founder of the organization is the state), borrowed capital, revenue from business activities (with a number of restrictions), investments and donations. There are also membership fees. Moreover, the overwhelming number of NPOs exist at their expense, without turning to the above sources. Grants are often used, including government ones. Also, many NGOs use them as their only source of funding.
Types of NPOs
Non-profit organizations include:
- Cooperatives: garage-construction, consumer (credit, housing, agricultural, marketing, horticultural, supply, livestock, gardening, processing).
- Unions.
- Associations.
- Universities.
- Autonomous non-profit associations.
- State corporations.
- Charity organisations.
- State companies.
- Cossack societies.
- Natural, national parks, reserves.
- Municipal and state budgetary, government and autonomous entities.
- Non-governmental associations.
- Non-commercial partnership.
- HOA, GK, LCD.
- Various types of social associations: political parties, public foundations, movements, organizations, trade unions, public initiative foundations.
- Associations of legal entities.
- Mutual insurance societies.
- Employers' unions.
- Communities of small indigenous peoples.
- Religious association, group, organization.
- Country, gardening, gardening non-profit association.
- Territorial public association.
- Chamber of Commerce and Industry.
Hybrid forms of NPOs
Speaking about which organizations are classified as non-profit, it is important to note hybrid forms with commercial (private) structures. These include:
- Companies in the Public Interest (UK).
- Public Benefit Corporation (USA).
- Low-income limited liability company (USA).
- Public benefit corporation (Germany).
- Charitable limited liability company (Germany).
NPOs in Russia
In Russia, more than 30 types of NPOs are considered forms of non-profit organizations. Many of them have similar functions, and the differences are only in the names. All associations are regulated by the Civil Code of the Russian Federation (Chapter 4, paragraph 6), and the Federal Law “On Non-Profit Organizations”. The specific activities of individual NPOs are controlled by relevant legislative acts.
Let us list some features of the activities of these organizations in the Russian Federation:
- Foreign grants received are not subject to tax.
- Since 2008, special presidential grants have been allocated to support NPOs.
- In 2015, the so-called register of undesirable organizations was introduced. Any international or foreign NGO that poses a threat to the Russian state system can get there.
- In 2017, a decree was issued requiring the issuance of grants to those non-profit organizations that conduct socially significant, civic activities.
NPOs in our country are a fairly common type of association, numbering more than a dozen forms. They are united by common goals, a collective characteristic of NPOs. In relation to such organizations, both general regulatory norms and specific ones apply.
The entrepreneurial activity of non-profit organizations is one of the sources of cash income, allowing them to successfully solve problems aimed at achieving the goals of their functioning. In this article, the reader will find information about whether NPOs can carry out entrepreneurial activities, in which cases the legislator grants NPOs the right to conduct them, and also learn about how to obtain the legal right to perform certain types of work that generate income for the association.
Non-profit organizations as business entities
In accordance with paragraph 1 of Art. 50 of the Civil Code of the Russian Federation, a non-profit organization (NPO) is an association that does not pursue profit as a goal and does not distribute the funds received among its members. NPOs are created to solve socially significant social, economic, cultural, scientific problems, protect the health of citizens and their physical development, as well as satisfy their non-material needs (Clause 2, Article 2 of the Law “On Non-Profit Organizations” dated January 12, 1996 No. 7).
According to paragraph 2 of Art. 2 of the Civil Code of the Russian Federation, entrepreneurial activities of non-profit organizations (as well as commercial ones) are understood as activities aimed at regularly generating income and carried out by an entrepreneur (or legal entity) independently, at his own risk. Profit can be received from the use of property, sale of goods, provision of services or performance of work. The main feature that allows one to qualify an income-generating activity as entrepreneurial is the systematic nature of the receipt of funds. Thus, making a profit from one-time transactions cannot be the basis for recognizing the activities of an organization or individual as entrepreneurial.
NPOs do not have the right to set the goal of their functioning to generate income; accordingly, formally, as a general rule, they are not subjects of entrepreneurial activity. Meanwhile, individuals who establish NPOs often face the question of whether non-profit organizations can carry out business activities in addition to their main activities. We will answer it further.
Can non-profit organizations carry out activities that generate income?
In paragraph 2 of Art. 24 of Law No. 7 states that NPOs have the right to undertake income-generating activities while simultaneously meeting the following conditions:
- funds received in the course of carrying out income-generating activities are used to finance its statutory goals (money can be used to pay for the labor of persons with certain physical limitations, such as blindness, deafness, etc., to improve the material and technical base of the association and pay for utilities accounts, as well as for solving various socially significant problems);
- the possibility of performing such actions is recorded in the company’s constituent documents.
At the same time, according to clause 3 of Art. 24 of Law No. 7, an NPO is obliged to keep records of income and expenses arising as a result of its business and other profit-generating activities.
NPOs with the right to carry out entrepreneurial activities
The list of forms of NPOs is established by the provisions of Chapter II of Law No. 7, according to which the following have the right to independently engage in business:
- public and religious organizations (Article 6);
- communities of indigenous peoples of the Russian Federation (Article 6.1);
- Cossack societies (Article 6.2);
- funds (Article 7);
- state corporations (Article 7.1);
- state-owned companies (Article 7.2);
- non-profit organizations, provided that they do not have the status of a self-regulatory organization (Article 8);
- private institutions (Article 9);
- State unitary enterprises and municipal unitary enterprises (Article 9.1);
- budgetary institutions (Article 9.2);
- autonomous NPOs (Article 10).
In addition, some NPOs have the right to engage in income-generating activities by creating business entities or participating in them. For example, funds (Article 7 of Law No. 7), autonomous non-profit organizations (Clause 5 of Article 123.24 of the Civil Code of the Russian Federation).
The given list of NPOs is open. The current Civil Code of the Russian Federation establishes additional organizational and legal forms in which a non-profit association can operate. However, not every one of them receives the right to engage in business - in some cases this is partially or completely prohibited by law.
Legislative restrictions on the implementation of entrepreneurial activities of NPOs
In accordance with paragraph. 2 p. 2 art. 24 of Law No. 7, the legislator may impose certain restrictions on the income-generating activities of individual NPOs. Examples of such restrictions include:
- a ban on participation in business companies in which third parties are members, for charitable organizations (clause 4, article 12 of the law “On Charitable...” dated 08/18/1995 No. 135);
- establishing a closed list of types of activities that political parties can engage in (information, printing and advertising activities, provided that they are aimed at promoting the party; production and sale of objects with their own symbols; sale and leasing/leasing of movable and immovable property belonging to the party , paragraphs 3 and 4 of Article 31 of the Law “On Political...” of July 11, 2001 No. 95);
- a complete ban on entrepreneurship for bar chambers (clause 10, article 29 of the law “On the Bar...” dated May 31, 2002 No. 63), etc.
Can a non-profit organization provide paid services?
Based on the definition of entrepreneurial activity given in paragraph 2 of Art. 2 of the Civil Code of the Russian Federation, we can conclude that as part of its implementation, a company can not only produce goods or perform work, but also provide certain services. It follows from the very essence of entrepreneurship that the provision of such services is carried out on a reimbursable basis. The legislator does not prohibit NPOs from engaging in entrepreneurial activities, and therefore does not exclude the possibility of them providing paid services. There is only one limitation: the money received must be used to achieve the goals of the NPO, and not distributed among its founders (participants).
Don't know your rights?
It is worth remembering that the paid services provided must be directly related to the goals of creating a company (Clause 2, Article 24 of Law No. 7). For example, an association that unites teachers and professors has the right to develop and sell teaching aids and textbooks, provide exam preparation services, or provide tutoring. At the same time, it will not be able to produce food or provide services for holding special events. Violation of this rule may entail the recognition of the concluded contract for the provision of services as void (clause 2 of Article 168 of the Civil Code of the Russian Federation), and also become the basis for the forced liquidation of the company on the basis of a court decision made at the request of a government agency or local government body (clause 4 Article 61 of the Civil Code of the Russian Federation).
Types of activities of NPOs
In accordance with paragraph 1 of Art. 24 of Law No. 7 An NPO may engage in one or more types of activities if it is:
- not prohibited by current Russian legislation (the legislator may establish restrictions on the implementation of certain types of activities for certain categories of NPOs);
- corresponds to the goals of the organization’s functioning as stated in its charter.
According to paragraph 2 of Art. 24 of Law No. 7 NPOs have the right to carry out the following types of income-generating activities:
- production of goods and provision of services;
- purchase and sale of securities (stocks, bonds, etc.);
- purchase and sale of rights (both property and non-property);
- participation in business companies;
- obtaining investor status in limited partnerships.
When carrying out entrepreneurial activities, NPOs do not have the right to enter into transactions that contradict the types of activities and operational goals stated in the charter. That is why, when planning to register an NPO, you should think about the direction in which the association will work and what kind of paid services it will provide.
If the business activity of a non-profit organization requires obtaining a special permit for its implementation (license), such permission will have to be issued in the manner established by the law regulating work in this area. The list of such types of activities is also determined by current legislation, and no differences are provided for commercial and non-profit organizations.
OKVED for NPOs
The basis for opening a new non-profit organization is an application drawn up in form P11001, approved by order of the Federal Tax Service of the Russian Federation “On approval...” dated January 25, 2012 No. ММВ-7-6/25@. Sheet I of the said application must contain information about the activity codes of the registered association, selected in accordance with the All-Russian Classifier of Types of Economic Activities (OKVED), put into effect by the order of Rosstandart “On the adoption...” of January 31, 2014 No. 14-st.
The application must indicate:
- code of the main activity of the association;
- codes of its additional activities.
For certain types of activities of NPOs, special codes are used. For example, code 87.90 can be used by organizations providing residential care services:
- in orphanages;
- children's boarding schools and hostels;
- temporary shelters for the homeless, etc.
If an NPO plans to conduct additional activities that qualify as entrepreneurial, it will need to indicate the corresponding codes in an additional window. It is worth remembering that the entrepreneurial activities of non-profit organizations
must be interconnected with the main direction of functioning for which they are created.
The selected OKVED codes must also be indicated in the charter of the NPO submitted for registration.
How to change selected OKVED codes
If the founders (participants) of the NPO decided on the need to carry out certain actions that qualify as entrepreneurial, after the constituent documents have been registered, they will have to be amended.
To do this, an application drawn up in form P13001 is submitted to the registration authority. It indicates the updated OKVED codes selected by the founders of the NPO. The document will need to be accompanied by a decision to make changes, as well as a new version of the charter. You will have to pay to make changes. The amount of the state duty, in accordance with clause 3 of Art. 333.33 of the Tax Code of the Russian Federation, is 800 rubles.
Violation of this rule entails the imposition of a fine on the official representing the NPO, the amount of which varies from 5 thousand to 10 thousand rubles. (clause 4 of article 14.25 of the Code of Administrative Offenses of the Russian Federation).
So, the answer to the question of whether non-profit organizations can engage in entrepreneurial activity is, in some cases, positive. An NPO has the right to engage in profit-generating activities, but on the condition that the funds received will be used by it to achieve the goals of its functioning as set out in the charter. NPOs do not have the right to distribute earned assets among their own founders (participants). In addition, there should be no additional restrictions on the implementation of such actions established by current federal laws. If an NPO plans to conduct commercial activities, it will have to include information about this in the registration application, indicating in it the OKVED codes corresponding to the chosen direction. In the course of carrying out business activities, non-profit organizations may provide paid services to the population and legal entities, provided that this does not contradict the statutory goals of the association.
Non-profit organizations - legal entities that do not pursue profit as the main goal of their activities and do not distribute the profits received among participants (Article 50 of the Civil Code of the Russian Federation).
Distinguishing non-profit organizations from commercial ones:
- for non-profit organizations economic activity is auxiliary, ensuring their participation in property circulation, and the civil legal status of these organizations is of a secondary nature;
- commercial organizations carry out economic activities, which are basic for them and are fully regulated by civil law.
Unlike commercial organizations, non-profit organizations are not professional participants in property relations. Therefore, for non-profit legal entities the legislator establishes special (target) legal capacity(clause 1 of article 49 of the Civil Code) and allows the use of their existing property only to achieve the goals specified in their constituent documents (clause 4 of article 213 of the Civil Code).
The participation of non-profit legal entities in civil circulation is determined by the need for material support for their main activities, which should not be entrepreneurial.
Non-profit organizations can be created to achieve social, charitable, cultural, educational, scientific and managerial goals, to protect the health of citizens, develop physical culture and sports, satisfy the spiritual and other non-material needs of citizens, protect the rights and legitimate interests of citizens and organizations, resolve disputes and conflicts, providing legal assistance, as well as for other purposes aimed at achieving public benefits (Article 2 of the Federal Law of January 12, 1996 N 7-FZ “On Non-Profit Organizations”).
Thus, non-profit organizations carry out activities aimed at creating public goods; they are strongholds of the infrastructure of civil society. They participate not in production, but in the redistribution of material goods (national product). In all other respects, non-profit organizations are full and permanent participants in property circulation along with commercial organizations.
More details
A non-profit organization can be created as a result of:
- its institutions;
- reorganization of another non-profit organization of the same organizational and legal form;
- as a result of reorganization in the form of transformation of a legal entity of a different organizational and legal form (in cases provided for by federal laws).
The decision to create a non-profit organization as a result of its establishment is made by its founders (founder).
A non-profit corporate organization is the owner of its property.
The charter of a non-profit corporate organization may provide that decisions on the creation of other legal entities by the corporation, as well as decisions on the participation of the corporation in other legal entities, on the creation of branches and on the opening of representative offices of the corporation are made by the collegial body of the corporation.
A non-profit organization is considered created as a legal entity from the moment of its state registration in the manner prescribed by law, has separate property in its ownership or operational management, is liable (except for cases established by law) for its obligations with this property, can acquire and exercise property in its own name and non-property rights, bear responsibilities, be a plaintiff and defendant in court.
A non-profit organization must have an independent balance sheet and (or) budget.
A non-profit organization is created without a limitation on the period of activity, unless otherwise established by the constituent documents of the non-profit organization.
A non-profit organization has the right, in accordance with the established procedure, to open bank accounts on the territory of the Russian Federation and outside its territory, with the exception of cases established by federal law.
A non-profit organization has a seal with the full name of this non-profit organization in Russian.
A non-profit organization has the right to have:
- stamps and forms with your name;
- symbols - emblems, coats of arms, other heraldic signs, flags and anthems, the description of which must be contained in the constituent documents.
List of non-profit organizations
Establishment- a unitary non-profit organization created by the owner to carry out managerial, socio-cultural or other functions of a non-commercial nature (Article 123.21 of the Civil Code of the Russian Federation).
Autonomous non-profit organization - a unitary non-profit organization that does not have membership and was created on the basis of property contributions from citizens and (or) legal entities for the purpose of providing services in the fields of education, healthcare, culture, science and other areas of non-profit activity (Article 123.24 of the Civil Code of the Russian Federation).
Religious organization - a voluntary association of citizens of the Russian Federation or other persons permanently and legally residing on the territory of the Russian Federation, formed by them for the purpose of jointly professing and spreading the faith and registered in the manner prescribed by law as a legal entity (local religious organization), an association of these organizations (centralized religious organization), as well as an organization created by the said association in accordance with the law on freedom of conscience and on religious associations for the purpose of joint professing and spreading the faith and (or) a governing or coordinating body created by the said association (Article 123.26
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