New Controls Planned for Funding of NGOs

The government has sent legislation to the State Duma that would make it harder for foreign and Russian donors to assist nongovernmental organizations here, part of an ongoing Kremlin effort to tighten control over civil society.

The changes are included in a package of amendments to the Tax Code that was submitted to the Duma on June 1 and is to be considered in a first reading next month.

Under the proposed legislation, foreign organizations will be required to register each grant made to a Russian NGO with a government commission. If they fail to register a grant, the NGO will have to pay a 24 percent tax on the money it receives, said Yury Dzhibladze, a legal expert and head of the Center for Development of Democracy and Human Rights, who has seen the legislation.

"A new system of barriers and obstacles is being built for the charity movement in Russia, which has just started to raise its head," Dzhibladze said.

Russian organizations that want to support NGOs will have to be included on a government list of approved grant makers, or their contributions will not be recognized as grants and will be subject to taxation as well, Dzhibladze said.

A staff member of the Duma's Budget and Tax Committee, who declined to give his name, confirmed that the amendments were submitted by the government and said they will be considered Friday at a committee meeting.

No comment from the government was available. The government press office said it never comments on legislation the government sends to the Duma.

If passed, the legislation is likely to create a major hurdle for NGOs operating in Russia. But the NGOS say they are holding off on making any public outcry, hoping to lobby the Duma before the amendments come up for a vote.

Of seven NGOs contacted Wednesday, none had been officially notified of the proposed changes, but some said they were vaguely aware of them.

"We have been aware of the proposals, but need to look into them more thoroughly to decide how dangerous they are," said Lev Ponomaryov, who heads the For Human Rights group.

Two major providers of grants to Russian NGOs, the U.S. Agency for International Development and the Ford Foundation, said they would not comment on the government's proposals.

Russian donors have just as much reason to be concerned. It is not clear how the list of approved foundations will be put together or how transparent the process will be, Dzhibladze said.

"It is clear that, though not very numerous, foundations affiliated with major Russian corporations that have fallen out with the Kremlin will have no chance of getting on the list," he said.

Independent NGOs have been worried that the government will take steps to restrict their activities and access to funding ever since President Vladimir Putin's state of the nation address in May, in which he accused some NGOs of serving the interests of their financial backers.

While Putin did not name any NGOs, he made a clear reference to organizations like Open Russia, financed by jailed Yukos founder Mikhail Khodorkovsky.

"A different objective has been a priority for some of those organizations, namely, getting financing from influential foreign and domestic foundations, while others serve dubious group and commercial interests," Putin said. "But acute problems existing in the country and faced by its citizens go unnoticed."

Darya Miloslavskaya, a legal expert with the Urban Economics Institute and the Press Development Institute, said the proposed legislation is in line with Putin's remarks.

If the amendments are passed by the Duma, foreign organizations will have to register their grants with the government foreign aid commission. Established in 1999 to handle foreign charity and aid, the commission had been operating under the Economic Development and Trade Ministry but was effectively shut down when left out of the government reorganization in February, Miloslavskaya said.

The official in the government press office could not say when the commission will resume operating.

Grant recipients will also be obliged to provide the commission with guarantees from the government administrations where the NGOs are located that the funds will go toward the programs they were intended for, Miloslavskaya said.

"With the Kremlin's new line against NGOs, such guarantees will be difficult to receive," she said.

"What the government is doing now could once and for all put an end to nongovernmental organizations and the services they have been providing much more competently than the government itself," Miloslavskaya said.

The amendments, however, also include some positive changes for nongovernmental organizations, Dzhibladze said.

Under existing law, there are only four fields of activities that are not subject to taxation: science, culture, education and environment. Last year, Dzhibladze said, he and other activists representing NGOs managed to reach agreement with government officials on amending the Tax Code to give official tax-exempt status to human rights activities, health projects and social aid, as well.

Last month he learned from Ella Pamfilova, head of the presidential commission on human rights, that the amendment he has been pushing for since last year had been sent to the Duma. It was as he was reading the legislation to find his amendment that he came across the other proposed changes, he said.




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