Latin America

Transparency Versus Government Supervision in Peru

The International Journal
of Not-for-Profit Law

Volume 7, Issue 2, February 2005

By Beatriz Parodi Luna*

In Peru, NGOs are not a special legal entity. Instead, they are formally constituted under the legal forms of association and foundation (regulated by the Civil Code), mostly as civil associations.

The term NGO in Peruvian legislation refers to an “administrative qualification” derived from the Register known as Non-Governmental Development Organizations Receptor of International Technical Cooperation Register (ONGD-PERU), which is under the responsibility of the Peruvian International Cooperation Agency (Agencia Peruana de Cooperación International, or APCI).[1]

The provisions of the Peruvian International Technical Cooperation Law (Legislative Decree No. 719) set forth the eligibility criteria. The organization must have a nonprofit purpose and must carry out actions of development that involve international technical cooperation in one of the ways listed in Legislative Decree No. 719. Thus, not all types of nonprofit legal entities (associations and foundations) constituted in Peru are eligible for Administrative Register status–only those that both (i) carry out programs or projects for development, and (ii) channel technical international cooperation (cooperative sources). Listing in the Register is valid for two years. Registration is renewable by presenting pertinent information on the activities that the organization has carried out. The presentation must indicate the projects or activities to which the aid from each cooperative source was devoted, as well as the same information covering the two subsequent years.

The Peruvian Government has been asked about NGO rules, particularly concerning the reception and channeling of donations. In general, the questions have addressed how donations are received from cooperative sources (especially through international technical cooperation) and how they are to be applied to social programs or development projects. Inquiries arise because transparency or clarity does not exist in applying programs to a planned social interest or a nonprofit purpose. As a product of such inquiries, there have been projects to establish diverse legal norms resulting in rules and supervisory mechanisms for NGO activities, including limitations on the compensation paid to NGO Boards. In public debate, some have said that these limitations violate the constitutional rights of freedom of association and freedom of contracting by private organizations, and that the cooperation agreements with cooperative sources have already established adequate supervisory mechanisms (periodic disbursements subject to render of account, accountable management of separate accounts, rules to ensure that funds are applied to the designated activities, and clauses of resolution and reversion of the donation, among others).

On November 13, 2004, Law No. 28386 modified the Laws of International Technical Cooperation and the APCI to establish mechanisms for the APCI to receive information and to exercise supervision over international technical cooperation. In general, the following mechanisms have been established:

  • Organizations that receive international technical cooperation will annually send the APCI information on the amount and origin of the cooperation received for each plan, program, project, or specific development activity, which will be included in the transparency portal that the APCI will implement.
  • The National Superintendent of Tax Administration (SUNAT), which collects taxes, will monthly give the APCI detailed information about assets that have entered Peru related to international technical cooperation.
  • The control, supervision, and inspection of nonrefundable international cooperation received by development NGOs is the responsibility of the Executive Director of the APCI.
  • Organizations that misuse international cooperation, or apply it to different activities from those for which it is given, may have their ONGD-PERU registration canceled.
  • NGOs that are officially registered and that perform projects in areas of priority for development plans are executor units, responsible for identifying and performing actions and/or projects with the support of international technical cooperation, with the knowledge of the Central, Regional, and Local Governments, as appropriate.

As can be appreciated from the foregoing, the legal modifications are primarily directed at NGOs registered with the APCI. They do not encompass all NGOs. Some NGOs can receive donations or international technical cooperation directly through donation contracts, cooperation agreements, or other similar modes, but need not register with the APCI.

In our opinion, it should be considered that the International Technical Cooperation Law establishes the “general norms to which international technical cooperation and means coming from abroad negotiated through government organisms are subject” (Article 1 of Legislative Decree No. 719). Such an approach would impose an obligation to the extent that the international technical cooperation is channeled through the State. However, nothing prevents NGOs from proceeding directly, rather than going through the State, and entering contracts or donation agreements with cooperative sources and third parties in general. Such NGOs need not be authorized or register.

Nevertheless, listing in the ONGD-PERU Register will be necessary in order to have access to certain tax benefits granted by the Peruvian Government, such as the regime of tax refunds (mainly sales or purchase tax) paid for the acquisition of goods and services referred to in Legislative Decree No. 783.

Finally, if it is healthy that NGOs and, in general, Third Sector entities are managed under the criteria of transparency and visibility in front of society, it should not be forgotten that they are private organizations. Thus, it is necessary to obtain an adequate balance between transparency and State supervision.

We consider that because such organizations have access to resources and benefits of the State (for example, tax benefits, participation in public programs, transference of public resources), it is advisable to establish mechanisms that guarantee transparency in their activities and in the application of the resources to the designated purposes. Transparency in activities should not be construed as a violation of the right to privacy of such organizations, or an abridgment of their constitutional right of freedom of association. The same could be said of self-regulation to establish voluntarily the patterns for their actions in general and for the execution of social or development projects or programs under their charge in particular (as could be the case with contract clauses that regulate conflicts of interests, internal guidelines for the management of projects, codes of conduct enforced by voluntary adherence, and other mechanisms).


* Beatriz Parodi is a legal consultant in Lima, Peru; a member of the Advisory Council of the International Center for Not-for-Profit Law; and a member and director of APE-IDLO, the Peruvian Alumni Association of the International Development Law Organization.

[1] APCI was created by Law No. 27692, published on April 12, 2002, as a decentralized public organization assigned to the Ministry of Foreign Affairs that constitutes the ruling entity of international technical cooperation.