A charitable foundation starts with its charter
The tax office looks at a foundation through its charter. If it doesn't prohibit distributing income among the founders, or doesn't say where the assets go on liquidation, there will be no non-profit status. And then charitable contributions are taxed as ordinary income.
The second typical problem: the charter states one purpose, and a year later the foundation is doing something quite different. Say, it raised money for hospital equipment and then decided to award scholarships. Formally that's already activity outside the charter. So I write the areas of work more broadly, with room for where the foundation may grow.
What foundation registration includes
- A conversation about goals. Who you help, where the money comes from, who makes decisions.
- The foundation's charter with areas of activity, rules for using funds and for liquidation.
- Governing bodies. General meeting, board, and a supervisory board if you need one.
- Founders' decisions and all the documents for filing.
- State registration and the register extract.
- Application for inclusion in the Register of Non-Profit Institutions and making sure the tax office accepts it.
Foundation, NGO or another form of charitable organisation
The law knows several forms of charitable organisation: a charitable society, a charitable institution and a charitable foundation. There's also the non-governmental organisation (NGO), which can help people too but operates under a different law.
| Charitable foundation | NGO | |
|---|---|---|
| Main purpose | Charitable aid | Protecting members' rights and interests, public goals |
| Who runs it | Founders, board, optionally a supervisory board | Members of the organisation and an executive body |
| Law | “On Charitable Activity and Charitable Organisations” | “On Public Associations” |
| Non-profit status | Yes, once included in the register | Yes, once included in the register |
If you're unsure where to start, tell me what exactly you want to do. We'll fit the form to the task, not the other way round.
What the tax office checks
For a foundation not to pay tax on donations, it has to be included in the Register of Non-Profit Institutions. The tax office reads the charter looking for two things. First: a ban on distributing income among the founders, members of the governing bodies and people connected with them. Second: that on liquidation the assets will go to another non-profit organisation or to the state budget.
If these aren't there, a refusal comes back and the charter has to be rewritten. I put this wording in from the start, so there's no need to file again.
After registration
The foundation reports on how funds are used and files financial statements. Day-to-day matters, from new board members to agreements with donors, can be handled under a legal retainer. I'd also recommend securing the foundation's name as a trademark if you plan large fundraisers: that way nobody can set up a fake foundation with the same name.
How it works
Your part: the founders' passports and signatures on the decision. The rest of the arrows are mine.
Law of Ukraine “On Charitable Activity and Charitable Organisations” (forms of charitable organisations, charter, governing bodies); Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations”; Tax Code of Ukraine, para. 133.4 of Art. 133 (requirements for non-profit organisations).
Frequently asked questions about registering a charitable foundation
How much does charitable foundation registration cost?
From €150 turnkey, including non-profit status. I'll name the exact amount after a call.
How many founders are needed?
A charitable foundation can be set up by one person or several. Founders can be individuals and legal entities, including foreign ones.
Is authorised capital required?
No. A foundation has no authorised capital, unlike an LLC.
Can a foundation pay its employees a salary?
Yes. What's prohibited is distributing income among the founders; paying employees under employment contracts is allowed.
Can a foundation be registered remotely?
Yes, by power of attorney. You don't need to come in person.
What happens if the foundation isn't included in the Register of Non-Profit Institutions?
The foundation will operate as an ordinary corporate taxpayer. Donations become income, and tax has to be paid on it.
If you plan a commercial project alongside the foundation, such as a social enterprise, it's better set up separately as an LLC. I'll prepare agreements with donors and partners as part of contract drafting.