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What reports a charitable organization submits is a question that concerns every manager and accountant of a nonprofit organization. Transparency of activities and timely reporting is not only a legal requirement, but also a guarantee of public trust in the charitable sector. Let’s take a closer look at what documents need to be submitted and when.
Every charitable organization in Ukraine operates in a legal framework that requires regular reporting to government agencies, donors, and the public. Timely submission and correct preparation of financial reports demonstrate not only the professionalism of the organization, but also its responsible attitude to charitable activities.
Tax reporting
A charitable organization’s report to the tax authorities is one of the most important elements of a non-profit organization’s activities. It is important to understand that although non-profit organizations are exempt from paying income tax under Article 17 of the Law of Ukraine "On Charitable Activities and Charitable Organizations", they are still required to keep detailed records of their income and expenses, as well as to report regularly to the State Fiscal Service (SFS) on their activities to confirm the intended use of funds and the preservation of their non-profit status.
Annual tax report of a charitable foundation on the use of income
This document is submitted within 60 calendar days after the end of the reporting year. The charitable foundation’s report on the use of income (profits) demonstrates the targeted use of funds and confirms the non-profit status of the organization.
It is important to remember that late submission or errors in filling out the report may lead to exclusion from the Register of Non-Profit Institutions and Organizations. This automatically means the loss of tax benefits and the need to pay income tax.
Combined tax report of a charitable organization
The combined personal income tax, unified social tax, and unified social contribution reporting is called "Tax calculation of the amounts of income accrued (paid) in favor of individual taxpayers and the amounts of tax withheld from them, as well as the amounts of accrued unified social contribution". This document is submitted by non-profit organizations that have employees and/or work under civil law contracts.
Previously, the tax calculation was a quarterly report and was submitted within 40 calendar days after the end of the reporting quarter (the last date was February 10, 2025 for the fourth quarter of 2024), but starting from January 1, 2025, the Law "On Amendments to the Tax Code of Ukraine on Peculiarities of Taxation during the Period of Martial Law" introduced monthly submission of the tax calculation. This means that starting from the January 2025 report, a monthly tax return is to be submitted within 20 calendar days after the end of the reporting period.
VAT return for registered taxpayers
Pursuant to Article 197 of the Tax Code of Ukraine, charitable and public organizations are not VAT payers. Although charitable assistance transactions are exempt from value added tax, there are controversial issues under Article 181 of the Tax Code regarding the need to register as a VAT payer for those organizations with an annual turnover of more than UAH 1 million. However, for the period of martial law, in accordance with clause 69.12 of the TCU, such organizations are exempt from mandatory registration as VAT payers.
If a charitable organization is registered as a VAT payer (e.g., voluntarily or due to its business activities prior to the introduction of martial law), it is obliged to file a VAT return on a monthly basis within 20 calendar days after the end of the reporting month. This applies only to organizations that have a valid VAT registration and carry out taxable transactions alongside their charitable activities.
Additional tax returns if there is property
If a charitable organization owns vehicles, land plots or real estate, additional reporting obligations arise:
- Tax return on transport tax - submitted annually no later than February 20 by owners of passenger cars up to 5 years old and with an average market value of more than 375 minimum wages.
- Land tax return - to be submitted no later than February 20 of the current year, with the annual amount broken down into equal monthly installments. It is important to note that submission of an annual declaration exempts from the obligation to submit monthly declarations.
As for the real estate tax, for the charitable sector, according to subpara. 266.2.2 of the TCU, there are certain exceptions. In particular, real estate owned by religious organizations, public organizations of persons with disabilities, and buildings of pre-school and general education institutions, regardless of their form of ownership and sources of funding, are exempt from taxation.
Financial statements: balance sheet and income statement of a charitable organization
What reports does a charitable foundation submit to the state statistics authorities? This issue is regulated by the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" and the relevant national accounting regulations (standards).
Financial reporting forms for non-profit organizations
Charitable organizations, as non-entrepreneurial companies, have the right to submit condensed financial statements. It consists of two main documents:
- Balance sheet (form No. 1-ms or No. 1-m)
- Report of a charitable foundation on financial results (form No. 2-ms or No. 2-m).
The choice of a particular form depends on the size of the organization. Micro organizations use forms No. 1-ms and No. 2-ms, while small organizations use forms No. 1-m and No. 2-m. Most charitable organizations fall under the criteria of small or micro-enterprises.
Financial statements are an integral part of the report on the use of income (profits) of a non-profit organization submitted to the tax authorities. The deadline for submitting financial statements is no later than February 28 of the year following the reporting year.
Publicity of financial information
It is important to understand that according to Article 14 of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine", the financial statements of companies do not constitute a commercial secret. It is not confidential information and does not belong to information with limited access.
This means that charitable organizations are obliged to provide copies of their financial statements upon request of legal entities and individuals. Such transparency helps build trust in the charitable sector and increases the level of accountability of organizations to society.
Donor report of a charitable organization
What reports does a charitable organization submit to its donors? This question does not have a universal answer, as the forms and deadlines for donor reporting are determined individually in each grant agreement or charitable assistance agreement.
Peculiarities of reporting to donors
Each donor sets its own requirements for financial and programmatic reporting. They usually include a detailed description of the use of funds, results achieved, supporting documents and photo reports. International donors often require an independent audit.
Some donor organizations provide their own report templates, while others accept reports in any form. It is important to carefully study the terms and conditions of each grant agreement and comply with the established reporting deadlines.
Consequences of violation of donor requirements
Late submission or inadequate quality of donor reports can have serious consequences. These include termination of funding, a demand for a refund, and exclusion from the list of potential grantees for the future.
Therefore, it is better to appoint a separate person responsible for donor reporting or create a system of reminders about the deadlines for submitting reports. This will help avoid delays and maintain your reputation as a reliable partner.
Management report of a charitable foundation or organization’s budget
A charitable organization’s report for internal use is an estimate or management financial statement. Although the law does not directly require the preparation of a budget, this document plays an important role in the activities of a charitable organization.
The importance of a budget for a nonprofit organization
The budget has several important functions. First, it is a tool for planning the organization’s activities for the year. Second, it serves as a reporting document on the actual income received and expenses incurred. And thirdly, it confirms the intended use of funds in accordance with the requirements of Article 133.4 of the Tax Code of Ukraine.
The estimate approved by the organization’s governing body protects the non-profit during tax audits. It demonstrates that all expenses of the organization are in line with its statutory goals and charitable programs.
Structure and approval of the budget
The form of the budget is determined by the organization itself in accordance with its charter. Usually, the document contains sections of income by source and expenses by activity. Administrative expenses are allocated separately and may not exceed 20% of the current year’s income.
The budget is approved by the general meeting or the board of the organization 1-2 times a year. In this way, the governing body agrees on all types and amounts of income and expenses, which is important to confirm the transparent and responsible management of the organization.
Public reporting: special cases
Some categories of charitable organizations have additional public reporting obligations. What reports should a charitable organization submit in such cases?
Report of a charitable foundation on collections via SMS
According to Art. 7 of the Law of Ukraine "On Charitable Activities and Charitable Organizations", foundations that receive donations via SMS are required to report on the use of such funds on their websites.
The form of such a report is determined by the organization itself, but it must contain information on the total amount of funds raised, the areas of their use, and the results achieved. Regular updating of such information increases the trust of philanthropists.
Reporting by charitable organizations in healthcare institutions
Special requirements are set for charitable foundations established at hospitals and other medical institutions. According to the Order of the Ministry of Health No. 848 of 25.07.2017, such foundations must publish information on the funds received and used on their websites.
The reports should be updated quarterly and contain detailed information on revenues by source, expenditures by use, and fund balances. Such transparency is especially important in the medical sector, where the trust of patients and their families is crucial.
Audit of charitable organizations: when it is needed
The law does not provide for a mandatory audit for charitable organizations. In what situations is it advisable or necessary to conduct an independent audit?
Donor requirements and statutory provisions
Most often, the requirement to conduct an audit is contained in grant agreements with international donors. Large foundations and development organizations require confirmation of the targeted use of funds by an independent auditor.
Also, the requirement for a mandatory annual audit can be enshrined in the charter of a charitable organization. This increases the level of trust in the organization and demonstrates its openness.
Benefits of a voluntary audit
Even in the absence of mandatory requirements, an audit has a number of advantages. An audit report confirms the reliability of financial statements and the correctness of accounting. This creates additional public trust and allows you to attract new partners.
For example, the International Unity Movement charitable foundation has been audited by the International Organization for Standardization (ISO), proving that its management meets the highest international standards. The international certificate ISO 37301, which is confirmed by an annual audit, testifies to the work of the charitable foundation in accordance with the principles of compliance management. It demonstrates not only the foundation’s commitment to accountability and culture of integrity, but also its commitment to protecting donors’ personal data, creating barriers to prevent fraud, and acting in full compliance with national and international laws.
Thus, voluntary audit not only emphasizes the professionalism and reliability of the organization, but also opens up new opportunities for cooperation with leading international partners and donors.
Conclusions and recommendations
The question of what reports a charitable organization should submit is not a simple one, as each foundation has an individual set of reporting obligations depending on its size, type of activity, sources of funding and property.
The basic set includes tax reporting (annual report on the use of income, tax report on personal income tax, social security and unified social tax), financial reporting (balance sheet and income statement), donor reporting in accordance with the terms of agreements, and management reporting for the internal needs of the organization.
Transparency and timeliness of the foundation’s reporting is not only a legal requirement, but also the basis of public trust in the entire charitable sector.
