The International Journal
of Not-for-Profit Law
Volume 7, Issue 2, February 2005
By Consuelo Castro*
Mexican nonprofit regulation has advanced with the launching of the Federal Law for the Promotion of the Activities Conducted by Civil Society Organizations, which was enacted and published in the Mexican Official Journal on February 9, 2004. This law is the final result of the efforts initiated in 1994 by the Centro Mexicano para la Filantropía ( Mexican Center for Philanthropy), known as CEMEFI; the Convergencia de Organismos Civiles (Convergence of Civic Organizations); the Foro de Apoyo Mutuo (Mutual Support Forum); and the Fundación Miguel Alemán (Miguel Aleman Foundation). These organizations together drafted this bill and promoted it for a decade in Congress.
This new law recognizes the social interest of the activities of civil society organizations. The list of activities to be encouraged includes charitable, sports, civic education, community development, environment, human rights promotion, culture, science, and technology, among others. Organizations undertaking many of the activities on this list already have tax incentives, but others, such as organizations dedicated to human rights or sports, may not be authorized to receive tax-deductible donations.
The new law is expected to affect future federal laws in various ways, such as by granting tax incentives to such activities. This seems likely because the new regulatory framework creates an important basis for coordinating efforts of the federal government to promote nonprofit organizations and their civil society activities. An Inter-Ministry Commission has been created in order to design, implement, and follow up on the promotional actions of the federal government. The commission is being organized by the Ministry of Social Development, the Ministry of the Interior, the Finance and Public Credit Ministry, and the Ministry of Foreign Affairs. The Commission was formally created by a decree published on May 14. The Ministry of Social Development, through the Instituto Nacional de Desarrollo Social (National Institute for Social Development, known as INDESOL), will be the Secretariat. The Commission’s internal operational rules were published in the Official Journal on November 23.[1]
From the nonprofit sector, a Technical Consulting Board or council was also formed. The Board was elected on December 9, 2004. It will comprise nine representatives from civil society organizations; four from the academic, scientific, and cultural sector; and two members of the House of Representatives. This Board will provide feedback to the Inter-Ministry Commission regarding implementation of the registry and promotion activities. For the time being, members are elected to serve for staggered terms–one year, two years, or three years–so that not all members will be up for renewal at the same time. Nine alternates to the members were also chosen in case of resignations.
A federal registry of nonprofit organizations has been created, as well as an information system. The rules for this registry were published in the Official Journal of November 23.[2] The registry is free and voluntary, and the process of registering can be initiated online. The benefits of registering are still being created. For example, in order to apply for “federal conversion funds,” which will be given next year by the Ministry of Social Development, organizations must be registered. In the future, other ministries will gradually impose the same requirement on nonprofit organizations seeking such support as subsidies, grants, tax exemptions, and funds.
It will take time for nonprofit organizations to register, because doing so will often require changing their bylaws. Many tax-exempt organizations now provide in their bylaws that, in case of dissolution, all assets will be transferred to another tax-exempt organization. In order to register under the new law, an organization’s bylaws must stipulate that the recipient of assets upon dissolution will also be registered under this law. Organizations will need to document the bylaw change with a Public Notary, which will incur a cost. The Ministry of Social Development has signed an agreement with the Public Notaries Association in order to reduce the costs for organizations changing their bylaws in this fashion.
The information system implemented from this registry will give organizations visibility as well as provide transparency of the mechanisms and incentives that the federal government dedicates to nonprofit organizations. INDESOL as a matter of fact has already established its web page, https://www.corresponsabilidad.gob.mx.
In the long term, the registry is expected to simplify governmental procedures at different ministries. Registration may even be deemed a special kind of ID. For instance, in order to give tax-exempt status, the Ministry of Finance now requires that the nonprofit activities of the organization be certified by a public entity–depending on the subject, either the Ministry of Health or the Ministry of Culture. However, it is difficult to get this certification because the governmental entities have neither offices nor rules for certification. With the registry, the possibility exists for the federal government to establish one “window” for all governmental procedures that nonprofit organizations need. This may require great coordination as well as a genuine commitment to fostering the work of the nonprofit sector. We anticipate a long process, which has just started.
The importance of this law resides in its ability to serve as a means for enhancing philanthropy and thereby promoting civil society participation in activities that seek to develop our country.
Notes
* Consuelo Castro is a Coordinator of Legal Advice and Professionalization at the Mexican Center for Philanthropy and a member of the Advisory Council of the International Center for Not-for-Profit Law.
[1] In Spanish, Reglamento Interno de la Comisión de Fomento de las Actividades de las organizaciones de la Sociedad Civil.
[2] In Spanish, Reglamento Interno del Registro Federal de las Organizaciones de la Sociedad Civil.