ANNEX E: Legal and Financial Outline for NFGPO

1.1 Registration

1. What type of legal entities (for instance: public association, charity fund, public union, foundation, institute, company, association etc.) exist for not-for-profit organizations (NFPO)?
2. If more than one legal entity exists for NFPO, what are the advantages and disadvantages to the different types of entities
3. Given the potential novelty of establishing a NFPO, can any lessons can be learned from such organizations as trade unions, churches and political parties?
4. What ratio of the applications submitted are ultimately approved?
5. What are the necessary steps to create and register a NFPO with the government? In particular, what:
   1. is the government agency (national, regional and/or local) which has jurisdictional authority to receive and approve an application for a legal identity?
   2. are the fees for registration?
   3. information is required in an application?
   4. provisions are required in the organizational documents? (Such provisions as the NFPO's name, purpose and activities, powers, restrictions, the names and addresses of the organizers and the initial directors, dissolution procedures and distribution of assets, duration, officers, members and a process to amend the charter.)
   5. is the usual time period in which it takes the government to approve an application and does the law mandate a time period in which the authorities must act?
   6. if the government rejects an application, does it have to give reasons for a rejection, and if so - what reasons?
   7. judicial bodies can receive an appeal from the governmentÕs failure to act or from a government's rejection of an application?
   8. percent?
6. Please provide a blank copy of a registration application. If available, please provide copies of completed applications and any accompanying organizational documents that could serve as a good model of registration processes and procedures.
7. Can a NFPO be established pursuant to an executive decree or special act of the legislative branch of government? If a NFPO is created pursuant to such a process:
   1. can it enjoy special privileges, such as tax exemptions, that other NFPOs do not receive?
   2. does it take longer to register?
   3. does it have to go through the same process to amend its charter?
8. Have any/many NFPOs been established pursuant to a special process and if so, what were the facts and circumstances that warranted this process?
9. Approximately what would the attorneys' fee be to register a REC-like organization?
10. Can a foreign NFPO operate in the country? If so:
    1. does it have to register with the government?
    2. what are the registration procedures?
    3. is it restricted in the activities it can undertake?
11. What are the processes and procedures for a NFPO to register as an international organization?
12. What are the processes and procedures for NFPO to merge?
13. Is there any legal instrument, such as a memorandum of understanding or cooperative agreement, that could help preserve a favorable status for the organization - in the event a government seeks to retroactively change the laws governing NFPOs?

1.2. Administration

1. Do different government agencies have jurisdictional authority for different matters such as registration, governance and finance? For instance, does a Ministry of Finance decide and enforce the fiscal laws, and a Ministry of the Interior approve not-for-profit registration?
2. How many actions have government regulatory authorities brought against NFPOs allegedly operating in an improper manner and what was the disposition of these actions?
3. Is a NFPO prohibited from engaging in some activities? For instance political activities, which could include lobbying and campaigning.
4. Do any geographic restrictions exist on where a NFPO can operate?
5. To what extent does the government attempt to influence NFPOs' decisions and activities?
6. Can NFPOs have a membership base?
7. Are there any legal prohibitions against an expatriate serving as an officer of a NFPO?
8. Does the law prescribe a director's powers, removal or replacement, fiduciary responsibilities, term and compensation?
9. Are there any legal prohibitions against an expatriate serving on the board of directors for a non-profit organization?
10. What are the requirements, if any, for an expatriate working for a NFPO? In particular, such matters as residency status, visas, work permits, and state withholdings and taxes.
11. Can a director be held personally liable for a NFPOs actions?
12. Does the law prescribe: how often directors meetings are to be held, notice requirements, quorum rules, voting requirements and how conflicts of interest are to be treated?
13. If the above matters are left to a NFPO's discretion to be spelled out in a charter and bylaws, how do you recommend they be treated?
14. What are the processes and procedures for dissolving a NFPO? Does the law provide for:
    1. dissolution or is this done pursuant to a charter?
    2. the disposition of the NFPO's assets?
    3. a proceeding for involuntary dissolution and under what circumstances?
    4. the parties who have the right to institute a proceeding for dissolution?

2. FISCAL

2.1. Tax

1. Is a NFPO subject to the following taxes: income, profit, sales, use, property (real and personal, tangible or intangible), transfer (on gift and death transfers), customs duties, excise and value added taxes (VAT)? Are there any additional taxes?
2. At what level (national, state or local) are any of the above taxes imposed?
3. Are contributions from bilateral and multilateral donors taxed?
4. Can a NFPO receive a tax exemption? If so:
   1. are such exemptions negotiable?
   2. what are effective strategies for negotiating exemptions?
   3. do exemptions entail special registration and reporting requirements?
5. Do the country's laws allow for a deduction from taxable income of gifts of money and property to a NFPO and what taxes will be computed using that deduction?
6. What, if any, commercial activities can a NFPO conduct?

2.1.1 Banking

1. Can a NFPO maintain hard currency bank accounts, both in-country and/or offshore, and transfer funds freely between these accounts?
2. Are there problems in withdrawing funds from bank accounts, such as excessive charges for withdrawals?
3. How secure is an in-country account from government authorities who may try to impose confiscatory taxes or mafia influence?
4. What are the leading banks and financial institutions in the country?
5. Is there a problem with any of the above-listed banks receiving/sending regular check, draft or wire payments?

2.1.2 Financial Management

1. Can salaries be paid in hard currency?
2. If a NFPO has sufficient funds to establish an endowment, what would be an optimal asset allocation among stocks, bonds, securities, cash and other instruments that would take advantage of changing economic and market conditions?
3. How would the above-referenced investment portfolio differ if it was funded with hard currency rather than local currency?
4. How can the value of a local currency account be protected against inflation?
5. In addition to bilateral and multilateral donor contributions, do any of the following offer realistic sources of financing: government and foundation grants; fees for services; charitable donations, bequests, and legacies; tax revenue and user fees; membership fees, dues and assessments; and investment income?
6. What type of financial records and documentation (this includes local accounting principles and auditing requirements) must a NFPO maintain?
7. What type of financial records must a NFPO publish and/or file with the government?
8. What authorities are to receive such reports and how often?
9. What are the requirements for operating a grants program?
10. How do the laws address such issues as: personal tax remittance number registrations, social insurance, pension contributions, health insurance, travel reimbursement and car allowances.
11. What would the optimal compensation package look like for a NFPO's officers and staff.