Registration of a Charitable Foundation in Ukraine

Charitable activity is not only about helping those in need. For businesses, civic initiatives, volunteer teams and international partners, it is also a matter of choosing the right legal structure, ensuring transparent management of funds, tax safety and donor trust.

The most common legal form for systematic charitable activity in Ukraine is a charitable foundation. It allows an organisation to officially collect charitable donations, cooperate with Ukrainian and foreign donors, open bank accounts, enter into contracts, implement aid programmes and obtain non-profit status.

VINCO’S Legal Company provides end-to-end support for the registration of charitable foundations and other charitable organisations: from the initial consultation and drafting of the charter to state registration, obtaining non-profit status, opening a bank account and further legal support.

A charitable organisation is a private-law legal entity whose founding documents define charitable activity in one or more areas as its main purpose.

Charitable activity is voluntary and does not involve receiving profit or any remuneration from the beneficiary. For this reason, it is particularly important for a charitable organisation to correctly define its purpose, areas of assistance, governance structure, sources of funding and rules for the use of funds.

Beneficiaries of charitable assistance may include individuals, private-law legal entities, territorial communities and other persons or groups of persons receiving assistance for the purposes of charitable activity.

Ukrainian law provides for three main types of charitable organisations:

• charitable society;
• charitable institution;
• charitable foundation.

A charitable society is established by founders who transfer assets for charitable purposes. A charitable institution also operates on the basis of transferred assets, while its founders do not necessarily participate in management. A charitable foundation is the most flexible form; it does not require the founders to transfer assets and is convenient for systematically attracting donations and implementing aid programmes.

A charitable foundation is the most commonly used form of charitable organisation because it is convenient for collecting donations, implementing charitable programmes, cooperating with donors, carrying out grant activities and communicating internationally.

In practice, charitable foundations are often created to support the Armed Forces, healthcare, education, science, culture, children, persons in difficult life circumstances, internally displaced persons, people affected by war, and humanitarian or social projects.

A foundation may have its own bank accounts, enter into contracts, receive charitable contributions, acquire property for statutory activities, establish separate subdivisions, cooperate with non-residents and act as a party to legal relations.

The founders of a charitable organisation may be legally capable individuals and private-law legal entities. State authorities, local self-government bodies and other public-law legal entities may not act as founders.

A charitable foundation may be established by one or more persons. If the foundation is created by several founders, it is important to regulate decision-making procedures, powers of governing bodies, admission of new participants or changes in the composition of founders, and control over the use of funds from the very beginning.

Before preparing the documents, it is necessary to design the legal model of the future foundation. At this stage, the following should be determined:

• the name of the charitable foundation;
• the purpose of establishment and main areas of charitable activity;
• the circle of beneficiaries whom the foundation plans to assist;
• the composition of founders;
• the governance structure;
• the powers of the director;
• the decision-making procedure;
• sources of funding;
• whether registration as a recipient of humanitarian aid is required;
• whether international activity, grants, cooperation with non-residents or foreign bank accounts are planned.

The charter is the main document of a charitable foundation. It defines the purpose of activity, areas of charitable assistance, governing bodies, decision-making procedure, sources of income, rules for the use of funds and property, and the procedure for termination of the foundation.

Particular attention should be paid to non-profit provisions. The charter must prohibit the distribution of income or any part thereof among founders, participants, employees, members of governing bodies and related persons, except for remuneration for work, social contributions and expenses related to statutory activities.

The charter should also provide for the transfer of assets in the event of liquidation to another non-profit organisation of the relevant type or to the budget, if this is required to obtain non-profit status.

Registration of a charitable foundation usually includes the following stages:

1. Initial consultation and determination of the foundation’s operating model.
2. Name check and analysis of future areas of activity.
3. Development of the purpose of establishment, charitable programmes and governance structure.
4. Preparation of the charter, founder’s decision or minutes and other registration documents.
5. Holding the founding meeting or adopting the founder’s decision.
6. Signing documents and, where necessary, notarising signatures.
7. Filing documents with the state registrar or notary.
8. Obtaining an extract from the Unified State Register and the EDRPOU code.
9. Submitting documents for inclusion in the Register of Non-Profit Institutions and Organisations.
10. Support with opening a bank account.
11. Production of a seal at the client’s request.
12. Preparation of documents for the foundation’s further activity.

The following documents are usually prepared for state registration of a charitable foundation:

• application for state registration of a legal entity;
• founder’s decision or minutes of the founding meeting;
• charter of the charitable foundation;
• information on the director and governing bodies;
• information on ultimate beneficial owners, if required;
• ownership structure, where required by law;
• documents regarding corporate founders, if any;
• power of attorney or another document confirming the representative’s authority;
• Form 1-RN application for non-profit status if filed together with state registration.

State registration of a foundation as a legal entity does not automatically mean that it has obtained non-profit status. To avoid corporate income tax on funds received and used within statutory activities, the foundation must be included in the Register of Non-Profit Institutions and Organisations.

To do this, an application in Form 1-RN and the founding documents are submitted. A newly established organisation may submit the application during state registration or within 10 calendar days after it. If this deadline is met and the documents comply with legal requirements, non-profit status applies from the date of state registration.

Mistakes in the charter or late submission of the application may result in refusal to include the foundation in the Register of Non-Profit Organisations or create tax risks.

A charitable foundation may cooperate with foreign donors, international organisations, funds, businesses and individual non-residents. Certain areas of activity may require additional registration, for example as a recipient of humanitarian aid, as well as proper execution of contracts, acts, reports and supporting documents.

If foundation documents are to be used abroad, an apostille or consular legalisation and an official translation may be required. The form of legalisation depends on the country where the documents will be used.

International activity of a charitable foundation requires special attention to financial monitoring, currency operations, bank compliance, reporting, targeted use of funds and documentary confirmation of aid.

At first glance, registering a charitable foundation may seem simple. In practice, however, mistakes in founding documents often create problems after registration.

The most common risks are:

• incorrectly formulated purpose of the foundation;
• charter does not meet the requirements for non-profit status;
• no procedure for the use of assets in case of liquidation;
• governing bodies and their powers are defined incorrectly;
• the chosen name does not comply with requirements or duplicates another legal entity;
• future grant or international activity is not taken into account;
• documents are filed with technical errors;
• the foundation is registered but non-profit status is not obtained;
• difficulties arise when opening a bank account due to compliance checks;
• charitable contributions, aid, humanitarian cargo or reporting are documented incorrectly.

VINCO’S Legal Company provides end-to-end support for the establishment of charitable foundations and other charitable organisations.

We can assist with:

• consultation on the optimal type of charitable organisation;
• name check;
• development of the purpose of establishment and areas of activity;
• drafting a charter tailored to the specific operating model;
• preparation of the founder’s decision or minutes of the founding meeting;
• formation of the full package of registration documents;
• filing documents for state registration;
• obtaining an extract from the Unified State Register;
• support in obtaining non-profit status;
• opening a bank account;
• preparation of documents for humanitarian and grant activities;
• legal support for the foundation’s further operation.

After state registration, legal support should not stop. The foundation must properly maintain accounting records, enter into contracts, document charitable assistance, submit reports, keep primary documents and confirm the targeted use of funds.

The VINCO’S team can support the foundation after registration: prepare contracts, regulations, internal policies, donor documents, reports, decisions of governing bodies and legal opinions on specific charitable programmes.

If you plan to create a charitable foundation for systematic assistance, humanitarian projects, support for the Armed Forces, healthcare, education or social initiatives, VINCO’S will help register the organisation correctly and without unnecessary risks.