Non-Profit Organizations: Trends in the Development of Legal Status and Regulation of Activities

Key conclusions

NPOs are a developing institution that draw special attention from the state

“NPOs are institutions that influence all spheres. It is crucial to regulate this area in a balanced manner since new statutes are emerging in the legislation in this regard, in particular, we have a new type of NPO — personal funds and hereditary funds,” Kutafin Moscow State Law University Rector Viktor Blazheyev said.

“Non-profit organizations are now a dynamically developing institution, without which it is difficult to envision the socioeconomic development of our country [...] Russian President Vladimir Putin’s policy to reduce administrative pressure in the commercial sector also applies to non-profit organizations. We must take into account the principles used to protect national interests since the non-profit sector is also very actively involved in this regard [...] We have to solve the problems of ensuring national security against external influence and at the very least neutralize all possible loopholes from pressure on our country in a time when all kinds of changes are taking place. This is precisely why the Ministry of Justice, along with other authorities, considers the non-profit sector to be a subject of special state attention in order to control their activities and legal regulation,” Deputy Minister of Justice of the Russian Federation Oleg Sviridenko said.

PROBLEMS

Lack of transparency in NPO activities and unfair competition

“We are seeing autonomous non-profit organizations being set up quite frequently, and this is one of the elements of activities, shall we say, of the wrong organization, including in terms of the budget process [...] We have many cases involving the recognition of such actions by the authorities as acts to restrict antimonopoly legislation [...] There is also a form of unfair competition – misleading consumers and competitors by creating confusion with a well-known non-profit organization. This also happens quite often,” Secretary of State – Deputy Head of the Federal Antimonopoly Service of the Russian Federation (FAS Russia) Deputy Director Sergey Puzyrevsky said.

“We see there are problems associated with the transparency of NGOs. Sometimes they accumulate huge amounts of money, and how they spend these funds is a major question,” Kutafin Moscow State Law University Rector Viktor Blazheyev said.

SOLUTIONS

New forms of interaction between the authorities

“The Ministry of Justice and the Federal Antimonopoly Service have signed an agreement on cooperation to ensure compliance with the law. They will cooperate on the activities of non-profit organizations that are at the confluence of where antimonopoly legislation is applied. As part of the agreement, we expect to establish constructive interaction when considering cases involving unfair competition above all else. As part of the agreement, specialists and experts from the Ministry of Justice will provide an opinion about cases involving violations of antimonopoly legislation in this area. If the antimonopoly service’s powers are not enough to make the appropriate decisions or if the activities related to the protection of the brand or the protection of the trade name or trademark extend a little more broadly, we will refer the materials to the Ministry of Justice or the regional divisions of the Ministry of Justice as part of the agreement so that they can make decisions within the framework of existing legislation and the general expertise of the Ministry of Justice to monitor non-profit organizations,” Secretary of State – Deputy Head of the Federal Antimonopoly Service of the Russian Federation (FAS Russia) Deputy Director Sergey Puzyrevsky said.

NPOs as a small business and protect the interests of organizations

“In their activities, NPOs face problems related to the protection of the company name as well as issues involving unfair competition and conflicts over the ownership of intellectual products and valuables ​​obtained as a result of the activities of NPOs [...] We have concluded an agreement on cooperation with the antimonopoly service [...] All the work that we started when developing the concept seemingly cannot take place without science. In this regard [...], we have decided that there will be a new academic discipline – the legal status of non-profit organizations in the Russian Federation. I hope that this year, or maybe next year, students will learn this discipline, and we will have the appropriate specialists,” Deputy Minister of Justice of the Russian Federation Oleg Sviridenko said.

“The protection of a company name should be the same for NPOs as it is for for-profit organizations […] NPOs are market participants all the same [...] We need to think about tax incentives for NPOs as for small businesses. If, for example, a small business publishes a journal, they will get benefits, but if an NPO publishes a journal, there will be no benefits, and it is beneficial to close the NPO and go [into business],” said Vladislav Grib, Deputy Secretary of the Civic Chamber of the Russian Federation.

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