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Donor Advisory

How to set up a charitable foundation in Georgia?

Setting up a foundation (NNLE) is a straightforward process taking 1-2 days. You need a charter defining the mission and governance structure. However, creating the operational policies for grant-making requires careful legal drafting to ensure transparency and tax efficiency. We handle both registration and policy creation.

Are international donors subject to Georgian taxes?

Generally, no. Foreign donors providing grants are not taxed in Georgia. However, if the donor opens a local branch to manage operations, that branch becomes a taxpayer. We advise on the most efficient presence structure (representative office vs. direct funding) to minimize tax exposure.

Can we fund individuals directly?

Yes, but it's tax-inefficient. Grants to individuals (for education, treatment, etc.) are often treated as taxable income for the recipient unless specific exemptions apply. It is usually better to channel funds through a registered NGO or educational institution that can manage the distribution tax-free.

What reporting is required from donors to the government?

Foreign donors do not typically report directly to the Georgian government unless they have a local entity. However, the recipient NGO is strictly required to register the grant project with the Revenue Service via the e-Grant system. We ensure your grantees comply with this to avoid project disruptions.

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Donor advisory is a specialized legal service for foundations, corporations, international organizations, and philanthropists planning charitable or grant-making activities in Georgia. Georgian legislation creates a specific framework for issuing grants, requiring precise compliance with tax and anti-corruption regulations. Donors often have questions: How do we structure a grant so the recipient is not taxed? How do we monitor spending? What are our responsibilities regarding anti-money laundering? This service addresses these challenges and helps donors manage their philanthropic portfolios effectively and securely.

The service includes comprehensive legal and tax consultation for donor organizations. Specialists offer:

  • Drafting grant agreements in compliance with Georgian legislation and the donor's internal policies;
  • Conducting legal due diligence of recipient organizations before issuing a grant;
  • Tax consultation on interactions with organizations holding charitable status;
  • Ensuring compliance with Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations;
  • Creating legal mechanisms for monitoring targeted grant spending;
  • Representation with state agencies regarding grant registration or reporting issues.
This service minimizes the donor's reputational and financial risks.

Donor advisory is relevant in many scenarios. For example, an international corporation plans to fund a local environmental project as part of its Corporate Social Responsibility (CSR). They need assurance that the funds will be used for the intended purpose and will not create tax liabilities. Another example is a foreign foundation issuing small grants to individuals — here it is essential to know whether this amount is subject to income tax (in most cases, yes, unlike grants to NGOs). Also, a diaspora member wants to fund a village school — a lawyer advises on how to do this: via direct donation, through the municipality, or by setting up a local foundation.

The legal framework relies on the "Law on Grants," which defines the circle of grantors and recipients. It is important to note that a grant recipient can only be an NNLE or a Legal Entity of Public Law (LEPL), not a Limited Liability Company (LLC). The "Tax Code of Georgia" regulates the taxation regime of charity. Also relevant is the "Law on Facilitating the Prevention of Money Laundering and Terrorism Financing," which obliges financial institutions and donors to verify the origin of transactions.

The process begins with an analysis of the donor's goals. The lawyer evaluates the planned project and selects the optimal legal form of funding (grant, donation, sponsorship — these are three different concepts). Then, an agreement is drafted, detailing reporting obligations and "clawback" mechanisms in case of misuse of funds. Engaging a specialist on Legal.ge ensures that your philanthropy is transparent, lawful, and maximally effective.

Legal.ge is a trusted partner for donor organizations. Through our platform, you can connect with lawyers experienced in international development projects who know how to protect donor interests in the local context. Make your aid safe and impactful with Legal.ge.

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