If you want to form a Non-Governmental Organization or NGO in Chile, it is important to understand the key steps and legal requirements to do so. Likewise, you must identify the main goals of your NGO.
We outline what you need to know to form your NGO in Chile, one of the most stable and attractive economies in Latin America.
What is an NGO?
Non-Government Organizations, or NGOs, are typically non-profit, civil organizations that operate in the private realm. These organizations should have a specific goal or mission that dictates their internal structures and operation.
NGOs usually rely on different sources of funding, these can be either local, regional or international.
NGOs in Chile
NGOs in Chile are recognized as foundations or “fundaciones”. Local laws define these organizations as a group of determined assets specifically assigned to an unequivocal general interest or goal. This goal requires NGOs to be permanent, non-profit, and clearly established by its founders. It is important to note that foundations are legal entities themselves, and are differentiated from any relevant entities that play a part in its establishment.
We recommend that NGOs in Chile use the legal structure of a foundation rather than other types of structures such as associations or corporations. Foundations are easier to incorporate and administrate. Likewise, their missions are often better aligned with the objectives of foreign investors looking to enter Chile.
Key aspects of NGOs in Chile
Board of Directors
An NGO in Chile must have a Board of Directors. The Board of Directors must have at least 3 members in charge of managing the administration of the organization. In the case of foundations, each Director can only exert their position for a period of 5 years.
Note that Directors of an NGO in Chile do not receive a salary. Nevertheless, directors do have the right to demand reimbursement for the expenses they have incurred while executing their position.
An NGO by-law is a legal document that describes the founder’s intentions. It contains the legal name of the organization, appointments of directors, timeframes, contact information, among others regards. It must contain the following clauses:
- Period of time for which the NGO is created.
- Organization’s goals, mission or purpose.
- Funds declarations and an explanation of how (and by whom) they were provided.
Why create an NGO in Chile?
Non-government organizations or foundations in Chile are permitted to receive donations from third parties, and also to participate in rounds of government injections. Furthermore, there are several laws and executive decrees which partially exempt foundations from certain taxes including the Income Tax Law.
Steps to form an NGO in Chile
There are 5 key steps to form an NGO in Chile, and the process can take between 3-6 months. These are:
Step 1: Obtain a “Certificado de Similitud” at the Civil Registry or Registro Civil
A ‘Certificado de Similitud’ ensures the name your NGO is not taken.
Step 2: Draft and sign the NGO’s by-laws
The by-laws specify the objectives of the NGO and its financing methods.
Step 3: Register the foundation at the relevant local town hall
You must register the NGO or the foundation before the town hall of the city where it will operate.
Step 4: Register the foundation at the National Legal Non-Profit Registry
This registration before the foundation at the National Legal Non-Profit Registry certifies the NGO as a non-profit organization in the eyes of the Chilean government.
Step 5: Request and obtain a tax identification number (RUT)
All non-profit organizations in Chile must request a tax identification number. You must also file the affidavit of “initiation of activities” on behalf of the NGO before the local authorities.
Typically the by-law/notary stage can be executed in 1-4 weeks. The remainder of the process registering the foundation at the town hall, which could take between 3-8 weeks.
Form an NGO in Chile with the support of Biz Latin Hub
Are you thinking about turning your social project into an official NGO to promote social and other non-profit causes, and also profit from tax benefits? This process requires key knowledge of the local legal requirements and processes for forming an NGO and maintaining its ongoing compliance needs. To position yourself for the best chance for success in Chile, engage with trusted legal experts who can support your objectives and keep you informed of your obligations under the law.
Our team of legal and accounting experts can guide you through all required company formation processes, providing security and assurance of the correct establishment and compliance of your NGO in Chile. Contact us for more information.
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