How to Form Your Non-Profit Organization in Mexico Biz Latin Hub
go to original February 22, 2022

A non-governmental organization (NGO) is a group of voluntary, non-profit citizens that is organized at the local, national, or international levels. The function of an NGO can be to provide humanitarian service and assistance or to represent citizens to their governments.

Within NGOs, there are two main groups, according to the World Bank:

  • Operational NGOs: Focused on development projects
  • Advocacy NGOs: Promoting particular causes

Some NGOs may belong to both categories.

The different types of NGOs

As a company, an NGO can have different legal status or legal forms. Some examples include:

  • BINGO: International and business-friendly
  • INGO: International organization
  • ENGO: Environmental organization
  • GONGO: A non-governmental organization organized by the government
  • QUANGO: Quasi-autonomous

You must be future-focussed when electing your NGO type, and assess how you want your organization to evolve going forward. Choosing your legal status is one of them.

Funding Processes

As non-profit organizations, NGOs cannot obtain funding like other business structures in Mexico, but they can use several sources for funding:

  • Contributions from its members
  • Individual or collective private donor
  • Selling goods and/or services
  • Receiving state subsidies.

Although NGOs are not dependent on a government, some in itself collect considerable amounts of grants to support their activities. Some reach budgets close to $1 billion, for example, World Vision finished its 57th year with nearly 26,000 employees and a budget of $2.6 billion.

Steps to Set Up an NGO in Mexico

As a civil law country, with a federal structure (or legal figure), Mexico officially recognizes 4 primary forms of Organización de la Sociedad Civil (OSC) organizations:

  • The civil association (AC)
  • The private assistance institution (Institución de Asistencia Privada) (IAP)
  • Civil society (CS)
  • The trust (Fideicomiso)

Being an OSC means having a different tax regime than a traditional business. They are exempt from Value-Added Tax (VAT) under Article 79 of the Mexican Income Tax Act is an “authorized donee”. As such, may issue exemptions from the Income Tax Act to such donors. The same applies to an American who wishes to become a donor of a Mexican OSC, will be able to deduct it from these taxes.

Register Your NGO in 5 Steps

There are 5 key steps to register your NGO in Mexico. This process can take between 3-8 months.



Requirements to Maintain your NGO in Mexico

Some of the obligations that NGOs in Mexico must comply are the following:

  • Present the annual report of activities performed during the period, in regards to the corporate purpose of your NGO This is due each January at the Federal Register of Civil Organizations, and is a requirement in order to keep your CLUNI
  • Notify any changes to the corporate purpose before the Federal Register of Civil Organizations
  • Perform the financial statements of your NGO, according to the accounting standards
  • Present all corporate information (bylaws, accounting records, activities, for example) as required by any authority
  • Present the monthly tax return before SAT of the withhold income tax by day 17 of each month
  • Present the annual tax return before SAT by 15 February each year.

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