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Fundraising Compliance

Is crowdfunding regulated in Georgia?

Crowdfunding is not heavily regulated by a specific law yet, but general civil and tax laws apply. If it's donation-based, it's charity. If it's reward-based (pre-selling a product), it's e-commerce and subject to consumer protection and tax laws (VAT). Equity crowdfunding is complex and falls under securities regulation by the National Bank.

Can we send emails to past donors asking for more money?

Under the Law on Personal Data Protection, direct marketing (sending fundraising emails/SMS) requires explicit, opt-in consent from the recipient. You cannot just use the email provided for a transaction receipt for future marketing unless they ticked a "subscribe" box. You must also provide an easy opt-out mechanism.

Do we pay tax on income from charity shop sales?

Selling goods (t-shirts, crafts) is economic activity, even if profits go to charity. This income is generally subject to profit tax and VAT (if turnover exceeds 100,000 GEL). However, NNLEs (Non-Commercial Entities) have tax exemptions on profit if it is reinvested in the organization's goals, but VAT rules still apply.

How to handle corporate matching gifts?

Corporate matching requires a clear agreement with the company. The company needs proof of your charitable status to claim tax deductions (if applicable). We help draft partnership memorandums that define reporting obligations so the corporate donor is satisfied that their funds are matched and used correctly.

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Fundraising is vital for the viability of Non-Governmental Organizations (NGOs), yet it is tightly regulated to prevent fraud and money laundering. In Georgia, fundraising involves not only grant writing but also public collections (crowdfunding), charity boxes, online campaigns, and corporate partnerships. Each method has its legal specificities. For instance, collecting money in public spaces may require municipal permits, while using online platforms necessitates compliance with personal data protection and e-commerce regulations. Ensuring compliance is essential to gain donor trust and avoid legal sanctions.

The fundraising compliance service assists organizations in setting up legal frameworks for raising funds. Specialists offer:

  • Drafting legal documentation (Terms & Conditions, Privacy Policy) for online donation platforms;
  • Providing legal support for charity events and actions (e.g., auctions, concerts);
  • Developing rules for managing anonymous donations considering anti-money laundering risks;
  • Creating policies for relationships with corporate donors;
  • Legal analysis of crowdfunding campaigns;
  • Assessing tax obligations for various revenue generation methods.
This service ensures your campaign is ethical and lawful.

Adhering to fundraising regulations is crucial in practical examples. For instance, an organization hosts a charity dinner with ticket sales. This is considered economic activity, not simple donation, triggering VAT and profit tax obligations if not structured correctly. Another example is raising funds via social media for a sick child — if the organization uses an individual's personal bank account, the income might be subject to personal income tax. Also, accepting cryptocurrency donations creates specific challenges regarding identification and conversion, requiring legal consultation.

The legal framework includes the "Civil Code of Georgia," "Law on E-commerce," and "Law on Personal Data Protection." Particularly important is the "Law on Facilitating the Prevention of Money Laundering and Terrorism Financing," which obliges organizations to know the identity of their donors above certain thresholds. The "Tax Code of Georgia" defines which income is considered charity and which is commercial activity. A lawyer helps you navigate this complex maze.

The process begins with an audit of the planned campaign. The lawyer reviews marketing materials to ensure they do not contain misleading information (which could be considered fraud). Then, agreements with payment systems and partners are prepared. For online campaigns, a data protection policy is created. With the help of a specialist on Legal.ge, you can raise funds with peace of mind, knowing your activities are fully compliant with the law.

Legal.ge offers access to lawyers experienced in charity law. Trust is the main currency of fundraising. Protect your reputation and donor interests with legally sound processes. Find your advisor on Legal.ge.

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