How Russian CSOs can operate in crisis situations
Ways in which CSOs can operate in crisis situations: some thoughts from Philin Philgood experts
What you need to know about opening an overseas bank account, how to optimise expenditure and post information on social networks.
On 22 March, the Philin Philgood team of experts held an online seminar to help CSOs operate in difficult and unfamiliar environments.
Foreign bank accounts
Some of Philin Philgood partners and clients receive charity funds from abroad and transfer them to different countries, said Natalya Safokhina, head of Philin Philgood’s financial department. She said that a Russian CSO must inform the Federal Tax Service (FTS) if it opens an account in another state. The opening, closure and changing of account details must be notified within 30 days. Should a CSO fail to do so, it will have to pay a fine of 100,000 roubles. Failing or forgetting to report the opening of a foreign account may result in a fine of up to one million roubles when their finances are audited.
Reports should be made by following a standard format and there are several ways in which this can be done: Send a notification by post, bring it in person to your local tax office, hand it in via a representative who has power of attorney, or send it electronically via a private account on the tax authority’s website.
The FTS also needs to know how much money is being held in foreign accounts. A separate cash flow statement is used for this purpose. Russian and foreign currency accounts that are opened through Russian Federation banks do not need to be reported.
CSOs that find themselves in difficulties should think about optimising expenses.
“It is time for CSOs to reconsider existing levels of expenditure and focus on implementing one or two programmes that are particularly important for a charity’s work”, said Safokhina. She added that CSOs have learned to work remotely, so it makes sense to bring in new workers from other regions to do so as well which will reduce costs.
Safokhina also feels that consideration needs to be given to leasing premises that charities currently have. Some can be given up or you can move to another location. “Many of you work with people who are on GPC contracts which imposes an additional burden. You can switch them to self-employed status which is a simple procedure and would help save on contributions”, she says. Another option is to hire someone on an apprenticeship. In doing so, a CSO can teach him or her how to do the work and pay them a stipend rather than salary. The former would only be liable for income tax.
Natalya Drozdovskaya, head of Philin Philgood’s legal department, said that CSOs had raised a number of concerns about managing Facebook and Instagram accounts belonging to Meta which has been classed as extremist by the Russian state.
Natalya also remarked that publicising CSO activities on these social networks is now highly risky. But what kind of activities are we talking about? “If your account promotes general information about a charity and does not include derogatory comments, appeals or promote propaganda, or anything that relates directly or indirectly to the security of the Russian Federation, then you won’t be doing anything wrong. Responsibility for this has still to be determined”, said Natalya.
CSOs should also be careful in their use of social network logos which could be seen as propaganda for an extremist organisation. The most practical advice for CSOs today is to remove any references to Facebook and Instagram in public documents and on websites and to check for any controversial statements posted on these social networks.