Law of Ukraine
“On Charity Work and Charity Organizations”
Date of entry into force:
February 3, 2013
The Law determines the general principles of charity work in Ukraine, provides for legal relations in the society aimed at developing charity work, asserting humanism and compassion, and creates favorable conditions for the creation and functioning of charity organizations.
Article 1 of the Law provides definitions of terms used in it. For example, charity work is voluntary personal and/or material assistance for the purposes determined by the Law, which does not entail a profit for the benefactor, or payment of any fee or compensation to the benefactor by or on behalf of the beneficiary. A charity organization is a legal entity of private law, whose constituent documents stipulate that its main objective is charity work in one or several spheres. Philanthropic work is charity work in the spheres of education, culture and the arts, protection of cultural heritage, science and scientific research, carried out according to the procedure established by the Law and other laws of Ukraine.
The purposes and spheres of charity work are established by Article 3 of the Law.
According to Article 4 of the Law, the entities involved in charity work are:
- charity organizations created and working according to the Law;
- other benefactors (legally capable natural persons or legal entities of private law (including charity organizations) that voluntarily carry out one or several types of charity work);
- beneficiaries (recipients of charity (natural persons, non-profit organizations or territorial communities) that receive assistance from one or several benefactors, for the purposes determined by the Law).
Article 5 of the Law envisages the following types of charity work:
- free transfer of ownership of funds or other property to beneficiaries, and free assignment of property rights to beneficiaries;
- free transfer of the right of use, other corporeal rights, and property rights, to beneficiaries;
- free transfer of income from property and property rights to beneficiaries;
- free provision of services and completion of works for the benefit of beneficiaries;
- joint charity work and performing other contracts (agreements) on charity work;
- public collection of charitable contributions;
- managing charity endowments;
- executing wills, charitable bequests and charity inheritance agreements;
- holding charity auctions, non-monetary lotteries, competitions and other charity events not prohibited by the law.
A charitable donation is a free transfer of funds, other property or property rights by the benefactor to the beneficiary for the purpose of achieving specific objectives of charitable work determined according to the Law. A charitable grant is a special-purpose assistance in the form of currency assets, which must be used by the beneficiary during the term determined by the benefactor. A charitable donation may be granted to beneficiaries determined through a competition, by the benefactor or his authorized persons. The terms of the competition may determine the actions that the beneficiary must carry out in favor of third persons, except those affiliated with the benefactor. The purpose and procedure for using the charitable donation may be changed by consent of the benefactor or his successors, as well by a court ruling, or in other cases provided for by law or the legal relations of the benefactor. The benefactor or his authorized persons have the right to control the purpose-oriented utilization of the charitable donation, including in favor of third persons (Article 6 of the Law).
Article 8 of the Law establishes that benefactors have the right to set up easements of land plots or other immovable property in favor of charity organizations or other beneficiaries, subject to their use for the purposes of charity work.
Philanthropist work is preparation or support of charity events related to creation, reproduction or use, according to the procedure established by the legislation, of creative products and other objects of the intellectual property right, including charity performances, subject to free access to such events. This provision does not apply to events related to advertisement (except public service advertising), election campaigning, and reproduction or use of commercial (brand) names, trademarks (product and service logos) and industrial prototypes protected according to the law (Article 10 of the Law).
According to Article 12 of the Law, charity organizations can be founded by legally capable natural persons and legal entities, except state authorities, bodies of local self-government, and other public legal entities. Charity organization founders or their authorized persons make the decision to found charity organizations, approve their constituent documents and the membership of the management bodies, and make other decisions related to creation and state registration of charity organizations. Charity companies and charity funds may have, in addition to founders, other participants that joined according to the procedure established by the statutes of such charity companies or charity funds.
A charity organization can be created as a charity company, charity institution or a charity fund, with regard to the specifics established by the Law and other laws of Ukraine (Article 13 of the Law).
Article 16 of the Law envisages that charity organizations have property rights and other corporeal rights for funds, securities, land plots, other movable and immovable property, and intangible assets, unless otherwise established by law or their constituent documents. The use of assets (incomes) and legal relations of charity organizations must not be in conflict with legislative acts and the objectives of charity work. The amount of administrative expenses of a charity organization must not exceed 20% of the organization’s income in the current year. Expenses related to managing charitable endowments are included in the administrative expenses of the charity organization, unless otherwise established by the legislation or by legal relations between the charity organization and the benefactor. Charity organizations have the right to carry out non-profit business activity that facilitates achieving their statute objectives.
The decision to liquidate a charity organization is made by the management body authorized by the constituent documents of the charity organization. The bases for a court decision to liquidate a charity organization are determined by the law. Assets remaining after liquidation of a charity organization and satisfaction of all creditor demands may be transferred to one or several charity organizations according to the procedure established by the constituent documents, or by decision of a court (Article 18 of the Law).
The procedure for management of charity organizations is envisaged by Chapter IV of the Law.
The final provisions of the Law envisage declaring null and void the Law of Ukraine “On Charity and Charity Organizations” N531/97-VR of September 16, 1997.
The Law also introduces appropriate amendments to Article 131 of the Civil Code of Ukraine, Article 197 of the Tax Code of Ukraine, Articles 1 and 2 of the Law of Ukraine “On Humanitarian Aid”, and Articles 3, 10 and 29 of the Law of Ukraine “On State Registration of Legal Entities and Natural Persons – Entrepreneurs”.