Fundraising regulations in Georgia are defined by the Tax Code, which governs charitable activity, the status of a charitable organisation, and the tax benefits for donations. Charitable activity is the voluntary and gratuitous provision of assistance to those who need it, as well as public-benefit activity by organisations in fields such as human rights protection, environmental protection, the development of democracy and civil society, culture, education, science, health care, social protection, physical education and amateur sport, and art. Not charity: activity supporting state and local government bodies, an enterprise, a political party or another electoral subject; assistance by an individual to own relatives; and activity regarded as sponsorship under the Law on Advertising.
For whom charitable assistance may be provided
The Code lists possible recipients of assistance. Charity includes assistance to persons in need of social or medical support, to disadvantaged persons — including persons with disabilities, the elderly, orphans, persons who have lost their breadwinner, persons under international protection and internally displaced persons from the occupied territories — as well as to the sick, large families and persons affected by war, armed conflict, accident, natural disaster, catastrophe, epidemic or epizootic. The list also covers organisations providing services to children, the elderly and persons with disabilities, charitable and religious organisations, penitentiary institutions, and persons endowed with exceptional talent.
Granting charitable organisation status
A charitable organisation is an organisation to which charitable organisation status has been granted under the procedure established by the Tax Code. Status is granted to an organisation created for charitable activity, registered as required by legislation, with at least 1 year of such experience. The application is accompanied by a copy of the charter, a copy of the state or tax registration certificate, a report on the last year's activity, and the last year's financial documents confirmed by an independent auditor. On the application, the head of the Revenue Service takes a reasoned decision within 1 month, and if no decision is taken within that period, the status is deemed granted. Status is granted indefinitely and enters into force immediately upon granting. Where status has been revoked, restoration may be applied for no earlier than 1 year after the cause is eliminated. The status is thus not merely a label: its loss interrupts the deduction mechanism and requires a full re-application cycle.
The prohibition on distributing profit and reporting duties
Strict transparency applies: the distribution of profit and assets among members, founders, and members of the board and the board of trustees is impermissible, and upon liquidation the remaining property passes to a charitable organisation with similar purposes. By 1 April of each year the organisation must submit to the tax authority the last year's program report, a financial report on received income indicating the sources and the purpose of expenses, and financial documents confirmed by an independent auditor. The last year's reports must be published and made accessible to all interested persons, and the Revenue Service maintains a unified registry of charitable organisations which is open to everyone. Public accessibility of the registry makes verification of a donee a matter of minutes for any donor.
Deduction of donations and tax exemptions
The tax incentive operates in two directions. The amount paid by an enterprise or individual entrepreneur to a charitable organisation, and the market price of goods supplied gratuitously — other than immovable property — or services rendered, is deducted from gross income, but by no more than 10 percent of the amount remaining after the deductions provided for by the Code. On the other hand, profit tax does not apply to a donation given to a charitable organisation that does not exceed 10 percent of the net profit received by it in the previous calendar year. The exemptions also cover transfers to the state, a municipality or a public law legal entity, the supply of immovable property to a charitable organisation that has carried out charity toward persons with disabilities since childhood for at least the last 3 calendar years, and gratuitous hotel services for no more than 60 days per calendar year.
Frequently asked questions
What are the conditions for charitable status?
Creation for charitable activity, registration and at least 1 year of experience; the decision is taken within 1 month, failing which the status is deemed granted.
When does the organisation submit its reports?
By 1 April of each year — the program report, the financial report on income and the auditor-confirmed financial documents, which are published and made accessible to everyone.
How much is deducted for donations?
Up to 10 percent of the amount remaining after deductions; for profit tax purposes, a donation of up to 10 percent of the previous year's net profit is not taxed.
May the profit be distributed?
No — the distribution of a charitable organisation's profit and assets among members, founders, and members of the board and board of trustees is impermissible.
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