May 3, 2007
Only a Matter of Time
NGOs Face New Reporting Requirements
By Josh Wilson and Tanya Chebotarevo
Josh Wilson and Tatyana Chebotarevo are market analysts with Alinga Consulting Group (www.acg.ru/english), a Moscow firm providing accounting, payroll, audit, legal, and HR services.
NGOs have anxiously submitted their reporting to Russia’s Federal Registration Service for the first time, as required by the controversial regulatory law "On Non-Profit Organizations."
The Presidential Council for Human Rights and Assistance in the Development of Civil Society Institutions has estimated that the NGOs have collectively spent 7.3 billion rubles ($280 million) on this endeavor – approximately 3 percent of their yearly budgets.
Previously, each NGO in Russia only had to inform the Registration Service on a yearly basis that it would be continuing its work. NGOs in Russia are active in nearly all of Russia’s most pressing demographic problems including AIDS education and prevention; funding the health care and education of orphans; and providing services to veterans, the elderly, and other groups who, in modern Russia, live largely in poverty. Critics claim that the new regulations are aimed at politically active organizations that the Kremlin fears are funded by foreign states seeking to topple the Russian government through a color revolution.
Now every NGO must submit reporting that describes the “primary activity of the organization,” its main goals and tasks, the number of projects it has implemented and the size and composition of audiences at any “main events” held by the organization. This is in addition to submitting a seven-page expense report that must account for the source and destination of every ruble that passes through the organization’s hands.
The Federal Registration service has no official comment on how this may burden Russia’s various NGOs. However, NGOs are generally unanimous in saying the burden is unnecessarily large. The World Wildlife Fund, for example, stated that its final report was 100 pages long and occupied a good portion of the organization’s Russia-based staff for two weeks straight.
The new process is likely to cost the state a good deal of cash and manpower as well. Russian economists have calculated that if officials manage to process each of the bulky reports in about 45 minutes, it will still require 140 employees each year to complete the process.
Originally, religious organizations were obliged along with other non-profit organizations to present full reporting along with NGOs. However, religious leaders from nearly every major denomination in Russia have been petitioning President Vladimir Putin and the government to exempt churches from this requirement. Their arguments state that the financial activity of churches is already sufficiently transparent and regulated by the tax authorities. The new requirements, they say, would pose an unbearable burden to churches, which have traditionally received much of their funding by small anonymous donations through collection boxes. Collection boxes would have been made effectively illegal by the new legislation; each donation, no matter how small, would have required documentation. Also, the documentation required on the size and composition of each congregation gathered for regular church services would be phenomenally lengthy.
The new decree has changed the old degree largely by inserting the words “excluding religious organizations.”