How to form a non-profit organization in Mexico
By Alejandra García Lezama
There are around 16 steps to form your Non-Profit Organization in Mexico, find out about some of the most important ones.
For some years now, the importance of nonprofit organizations has grown exponentially. Their activities, challenges, difficulties and the importance of their role within society and as a potential mediator between the government and the citizens has become a crucial part of the social tissue. Nevertheless, when a group of people decide that their initiative should transform into a registered Non-profit Organization, most of the times they fail taking into account all the practical steps from the legal and accounting scope so that their NGO is effectively set up.
The process of creation and development of an “asociación civil” in México could not be considered stable or with a vision towards the future. There is a lot of misinformation about the requirements that guarantee a solid start from the beginning, achieving sustainability is not easy.
That is why SMA Grupo Jurídico has summarized a small manual with “The 16 steps to form your NonProfit Organization” with relevant information to have a better understanding and execution of the process. We will mention some of the most important ones:
1. Decide the corporate purpose of the organization.
The corporate purpose is the mission of the organization, their reason to exist. To define the corporate purpose, we suggest taking into consideration the nonprofit activities that could obtain tax benefits according to art 95 of the “Ley del Impuesto Sobre la Renta” (IRS)law. Using the same language and including the first paragraphs is very important especially if you want to be a “Donataria Autorizada” (authorized tax-exempt organization) or in case you want to register the organization in the Federal Registry of Nonprofit Organizations and have a CLUNI (Clave Unica de Inscripción).
2. Designate the legal representative of the organization.
The legal representative (s) will be the authorized person that would execute certain activities and procedures in the name of the organization. This type of activities could include things like opening a bank account, sign a lease or beyond, it depends on the type of responsibilities described in the Acta.
3. Prepare your articles of association or original “acta” and notarize them.
The articles of association or original “acta constitutiva” is the document that gives a legal existence to the Association. Some of the elements that must be included are:
• The social purpose
• That there is not a lucrative aim
• The governance entities whitin the organization
• Information about the organization’s assets
• The dissolution process including where the organization´s assets will go upon dissolution.
Once the articles of association are done the next step is notarize them and register them at the Public Registry.
4. Get the “Donataria Autorizada”.
Your organization could be legally constituted without being a “donataria autorizada”. Then, what is a donataria autorizada? When a nonprofit organization can receive tax-free donations without limits it is considered a “donataria autorizada”. These donations could be in specie or money and can be given by local or foreign residents. This gives the organization the possibility to issue tax-deductible receipts.
5. Enroll it to the Federal Registry of Non Profit Organizations (CLUNI)
The registry of Non profit Organizations is a federal office managed by the Federal Bureau of Social Development. Since 2005, enrolling in the Registry and having a CLUNI is an essential requirement to have access to resources, incentives and grants that the federal offices grant to non profit organizations that are legally constituted.
The estimated time to finish with all 16 steps to constitute your non profit organization vary between 4 months and a year depending on the organization and perseverance that the members have and the strategic planning from the beginning of your activities.