MIL-OSI Russia: Ministry of Economic Development finalizes regulation of NPO endowment funds

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MIL OSI Translation. Region: Russian Federation –

Source: Ministry of Economic Development (Russia) – An important disclaimer is at the bottom of this article.

The Ministry of Economic Development of Russia has drafted a federal law on improving the operation of endowment funds of non-commercial organizations and increasing their financial stability. The document, in particular, provides for the right of the supreme governing body of a non-profit organization – the owner of the endowment to extend the period provided for the collection of donations for the formation of the endowment once a year, rather than repeatedly, as was previously the case. The innovation is intended to motivate organizations to collect funds for the formation of the FCC more efficiently and more quickly.

Endowment Fund is a part of the NPO’s property, which is formed and replenished from donations and income from the management of this property, and is used to finance the organization’s statutory activities. Investment income is used to support NPO projects. Now there are about 300 such organizations operating in Russia, the volume of the endowment fund market as of the end of 2023 exceeded 150 billion rubles.

Some of the provisions of the draft law are brought in line with current practice. Thus, the period for approval of an NPO’s financial plan is increased from one to two months. The additional time is necessary to assess potential revenues in the coming year, projects and amounts to be financed, and approval by the NPO’s governing bodies.

The document also proposes to increase from 30 to 60 days the period for replenishing the endowment with real estate. This is due to the peculiarities of the existing regulatory framework and the high costs of maintaining real estate. According to Oksana Oracheva, General Director of the Vladimir Potanin Charitable Foundation, the proposed changes will facilitate the development of endowment funds for non-profit organizations.

“We see that as the endowment market develops, issues that require legislative clarification for the sector to operate more efficiently are manifesting themselves. For example, increasing the timeframe for adopting a financial plan will allow NPOs to make more informed financial decisions, and increasing the timeframe for processing real estate donations will remove one of the barriers to using this instrument. The proposed changes take into account the existing practice of work and will help further development of endowment funds”, – commented Oksana Oracheva.

It is proposed to harmonize the norms on auditing the FCC with the Law “On Auditing Activities”. The right to audit FCCs will be assigned to audit organizations. FCCs shall be audited if the book value of property exceeds 20 million rubles at the end of the reporting year.

The bill has been supported by the Government of the Russian Federation and sent to the State Duma. Its consideration and adoption is planned for the fall session, and the norms are scheduled to come into force by the end of the year.

Please note; This information is raw content directly from the source of the information. It is accurate to what the source states and does not reflect the position of MIL-OSI or its customers.

Please note; This information is raw content directly from the information source. It is accurate to what the source is stating and does not reflect the position of MIL-OSI or its clients.

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and or sentence structure not be perfect.

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