How to Start a Nonprofit in Montenegro
Starting a foundation or nonprofit organization is a magnificent way for idealists, daydreamers, and visionaries who have the passion and motivation to bring people in their community together to make a real difference. Unlike for-profits, NGOs are commonly established to foster charitable, scientific, educational, or religious causes for the public good. Nonprofits are tax-exempt in Montenegro under the National Revenue Code.
Even though nonprofit organizations resemble limited companies in their legal structure, a key difference is that they are not allowed to distribute profits from their commercial operations to shareholders. Nonprofits largely finance themselves through grants, as well as public, individual, or corporate donations.
The Process of Starting an NGO
Montenegro’s Law on Nonprofit Organizations distinguishes between foundations, which can be established by a single person, and nonprofit organizations, which require at least three founders, including one Montenegrin resident. Founding a nonprofit can be a protracted process, depending on how quickly you can form a board of directors, incorporate the organization, and apply for tax-exempt status. Here are the steps in the process:
- Draft and sign the Memorandum of Association, the Articles of Association, and the minutes of the inaugural meeting.
- Notarize the Memorandum of Association
- Complete the registration form and submit it, along with the documents mentioned above, to the Ministry of Public Administration.
- Order a company stamp
- Register your nonprofit with Montenegro’s Statistical Office (Monstat)
- Obtain a tax identification number (PIB) from the Tax Administration of Montenegro
- Register with Montenegro’s Company Register (CRPS) if the NGO plans to engage in any commercial activity
- Open a bank account
Can Your Nonprofit Make Money?
While nonprofits are technically allowed to generate a profit, they are not permitted to distribute it as dividends to shareholders. Instead, all profits must be reinvested into the administration of the NGO to further its mission and cover expenses such as office rent, software subscriptions, and marketing costs.
With regard to salaries, employees are paid the same way as employees in a for-profit company. However, the employee’s compensation must not be tied to the NGO’s profits and should be ‘reasonable,’ as determined by the national pay scale and the amounts typically paid by companies for similar services.
NGO Funding Sources
Most nonprofits finance their operations through a diversified mix of revenue streams, including:
- Fundraising events, such as auctions, charity galas, sports tournaments, and similar activities
- Private and corporate contributions or sponsorships
- Government grants
- Monthly/yearly membership fees
- Sale of merchandise
Book Your 15-Minute Intro Call
Get in touch with our team; we can advise you on drafting your foundation documents and provide an after-care service once your NGO is up and running.
