Non-profit Organizations (NPO’s): Aspects of this type of association and how it operates in the Dominican Republic
Author: María José Castillo
Non-profit Organizations (NPO) are created with the purpose of carrying out activities “for social welfare or public interest with lawful purposes,” by mutual agreement of five or more individuals or legal entities, as indicated in Law No. 122-05 on the Regulation and Promotion of Nonprofit Associations.
Unlike commercial companies, NPO’s do not aim to distribute financial profits among their members.
Types of NPO’s and what they entail
NPO’s are classified into four categories and subclassified into different types of organizations in accordance with Regulation No. 40-08 on the Regulation and Promotion of NPO’s. The classifications are as follows:
1) Public benefit or third-party service associations include activities that offer services that benefit society.
These associations include the following subclassifications:
– Social assistance organizations that provide health, education, nutrition, assistance to children and young people, human resources protection, etc.
– Community development organizations that provide community growth, improvement, and support services, etc.
– Economic development organizations that provide job training, licensing, and other activities that enable access to economic resources for low-income residents.
– Technical assistance organizations that provide specialized technical services such as consulting, advice, support, etc.
2) Mutual Benefit Associations promote development activities and protect the rights of their members as their main mission:
These associations include the following subclassifications:
– Professional associations made up of experts from different fields.
– Business organizations that bring together various companies and industrial, commercial, or productive societies.
– Recreational clubs made up of peoples who share an interest in developing such activities.
– Religious organizations or lodges made up of people to develop a religious or ethical interest.
3) Mixed associations carry out activities that are specific to the public benefit and mutual benefit groups.
4) Inter-association body of non-profit organizations, which includes consortia, networks, and other similar entities.
All associations incorporated under Law No. 122-05 acquire legal personality and may therefore:
– Appear as plaintiff or defendant before any court.
– Sign contracts and, consequently, lease, own, and acquire all kinds of properties; sell, transfer, and dispose of property, etc.
– Exercise any power necessary to perform these acts.
Benefits of payment exemptions, donations, and gifts
In accordance with these regulations, when the necessary requirements for establishing and operating a NPO’s in the Dominican Republic are met, such associations enjoy general exemptions from all “taxes, duties, fees, and special contributions, whether national or municipal, current or future”.
To benefit from these payment exceptions and exemptions relating to donations and gifts, NPO’s must be up to date with their obligations, which include the following:
– Register in the register provided by the National Center for the Promotion and Development of Non-Proft Associations (CASFL) for non-profit associations.
– Submit the annual affidavit to the General Directorate of Internal Revenue (DGII), in accordance with the relevant regulations.
Any individual or legal entity may make donations of any kind of property to a NOP’s. If the donation is not monetary, the actual value of the donation will be exempt after verification by the DGII.
How to dissolve an NPO?
Non-profit organizations are dissolved by the express will of three-quarters of the members or partners, or upon reaching the end of their term.
To dissolve an NPO, one or more members are appointed to liquidate the association’s assets and donate the resulting assets to an association with similar purposes.
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