Registration with the new agency is a byzantine process that often allows the agency to reject the legality of the NGO for an obscure technical reason. Once registered, the NGOs are subject to scrutiny. Meetings are to open to agency officers and all foreign funding must be listed.
NGOs that deal with sensitive issues, like the war in Chechnya, are facing the worst pressure, with some no longer being allowed to register.
Presidential adviser Ella Panfilova, who advised Putin on this law, said that while it's not perfect, critics are overreacting.
"Today the law is not worse than in any other countries," she said. "It's not good. I cannot say that it is great or perfect. It's mediocre. But it doesn't have anything terrible in it right now. The problem is how it will be applied. … There are many articles which are very vague."
For many Russians, life has only improved under Putin. With oil revenues driving the economy forward at a rate of 7 percent a year, those living in the bigger cities are finding themselves living at a higher standard of living. The booming economy coincides with Russia taking a larger role in world affairs -- including Putin's harsh criticism of U.S policies.
Paranoia of U.S. involvement is part of the problem for NGO's like RCFC.
In the wake of Ukraine's orange revolution, which was widely regarded as orchestrated by the United States, many Russians have developed what is called 'orange paranoia. Many support Putin's law against nonprofits, and think Russia is already a democratic country and that the law is necessary for maintaining autonomy.
"I think most NGOs are already checked in Russia, but it should be fixed in law because now they are working in other ways [that are] not legal," said Dmitry Lukichyoo, an 18-year-old economics student in Moscow. "Only we should choose our leaders and not do like the Ukraine, where, like we all think, the government was brought by USA."
Ludmilla Alexeeva is Russia's oldest and best-known human rights activist. The vibrant 78-year-old heads the prominent Moscow Helsinki Group, which monitors human rights in Russia.
Alexeeva points out that activists like her managed to work under the Soviet Union, when repression was much worse. But while there are no longer bread lines in Moscow or dissidents being sent off to Siberia, Alexeeva said that the law has created a very familiar atmosphere of fear among human rights activists.
This fear, she said, is the very intention of the new law, a tactic that will undermine the nascent foundation of connections and stability that the country's NGOs have managed to achieve in the 15 years since the fall of communism.
"The real danger is that the law will attack the network of connections between NGOs," she said. "This will be destroyed, of course, and it's very sad because … we worked hard to build such a network. Our human rights activities are successful because we are networked, not separate organizations."
Chelysheva and her colleagues held an impromptu protest after their court date, attended by less than 30 people. Security officers represented more than a third of the attendees.
She said that the group will soldier on, reregistering under a new name in Europe to circumvent the ruling. But she is pessimistic about the future of Russia.
"We are already in our past," she said. "It's not just the time of the Soviet Union. It's not just the Communist Party who is in charge now. People who are in power now, they belong to this military clique. What they are trying to protect is their own self-interest. Right now, we are living in an almost authoritarian state that is run by this military clique."