Accounting Reporting of Charitable Funds in Ukraine

Charitable funds, according to Ukrainian legislation, are legal entities, which means they are required to maintain and submit accounting reports. Some may argue against this, as they believe that engaging in charitable activities through a charitable fund without generating profits exempts them from reporting. However, this is not the case.

The distinction between a charitable fund and other legal entities lies in the fact that their primary purpose is not to generate profit.

Just like any other organization, charitable funds have expenses and revenues. Charitable funds also have specific expenses, categorized as administrative (taxes, fees, rent, employee salaries, etc.) and project-related (equipment purchases, etc.).

In other words, charitable funds must maintain a comprehensive accounting record of both the income they receive and the expenses they incur.

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Taxation of Charitable Funds

Surprisingly, charitable funds are also subject to taxation. If they have employees, they must pay personal income tax (PIT) and unified social tax (UST). If the fund owns transportation, real estate, or land, it may also be subject to property or transport taxes.

Accounting Reporting

To ensure the proper functioning of a charitable fund, timely reporting is required for regulatory authorities, founders, and donors. Donors and benefactors understandably want to see how the funds they contribute are being used for their intended purposes.

The main reports that need to be submitted include:

• Report on the use of income of a nonprofit organization – submitted to the tax authorities once a year.
• Financial reporting (condensed balance sheet and statement of financial results).

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Management Reporting

The foundation of management reporting is the budget, which is formulated in the form of revenue and expenditure plans. This allows the organization to define the objectives it needs to achieve.

The budget can be prepared for the organization as a whole (at the beginning of the calendar year) and/or for each project (for each donor, before the start of the project).

As evident from the information provided above, despite being a nonprofit organization that does not generate profit, a charitable fund is still a legal entity and is obligated to adhere to tax legislation and maintain accounting reporting. If there is no need or desire to employ an in-house accountant, specialized companies can always be approached for accounting assistance.

Everyone should focus on their respective roles – charitable funds should focus on providing assistance, while accountants should manage financial reporting and accounting. Save time and resources by filling out the form to calculate the cost of accounting services.