NGOs claim new foundations law is a government ‘power grab’ and prepare legal challenges

A new law that imposes additional controls on non-government organizations will be challenged in the Constitutional Court. Opponents of the Law of Foundations, which passed the National Assembly Tuesday by a single vote, claim it violates the rights of civil society organizations involved in community projects.

The National Assembly passed the Law of Foundations Tuesday by a single vote.

“This is another power grab by the Noboa government and we feel confident that the court will see it as unconstitutional,” said César Ricaurte, director of Fundamedios, a non-profit media support organization. “This is similar to other recently passed legislation that seeks to increase the authority of the government at the expense of the rights of citizens.”

President Daniel Noboa insists the new law, also called the Law on Social Transparency, is necessary for attacking widespread money laundering occurring in the country’s NGOs. According to the Finance Ministry, $30 billion a year in drug and illegal mining money passed through NGOs in 2024, a figure Ricaurte rejects. “The figure was manufactured out of thin air with no basis in reality,” he says. “Studies that track criminal activity, such as the United Nations and InSight Crime, say that $5 or $6 billion was laundered in the country last year. A small portion of this may occur in NGOs but most it happens in the business sector.”

The new law in grants broad powers to the government to oversee NGO financial records and freeze funds that it considers suspicious. It gives the Financial and Economic Analysis Unit (UAFE) and the Superintendence of Popular and Solidarity Economy (SEPS) authority to hold NGOs accountable for financial transactions and to explain the “nature and purpose of all activities.”

According to opponents, the law also erects “shields” protecting the actions government officials from public oversight. “How ironic that it demands open access to the actions of civil society organizations while it reduces transparency for the government,” says Gabriela Alvear, director of the Diversity Dialogue Group. “This law is unconstitutional on its face and I believe the Constitutional Court will recognize it for what it is – an attempt to restrict the activities of NGOs and civil society projects.”

The leadership of the National Assembly will be “summoned” to explain how the Law of Foundations does not violate basic human rights, including the right to assembly, says Alvear, who is leading opposition to the legislation. “We are not against the government, but they are treating us like enemies,” she says. “We will fight for our rights and I believe we will prevail.”

Ricaurte sees a “smokescreen shielding corporate friends” of the government in the new law. “Where the money laundering is occurring is with the banks, the banana exporters, the licensed mining companies, and others,” he says. “Of course, Noboa is not going after these people. This law diverts public attention from the real problem.”