Nonprofit Organizations in Panama

Overview

Nonprofit Organizations (NPO) are legal Panamanian entities used to pursue charitable purposes.

The NPO is a private entity, with no political association, whose profits CANNOT be distributed to its founders, members or directors. However, the proceeds from NPO activities can be used to hire members, personnel or any other required services to fulfill its mission.

The Panamanian Government Ministry is responsible for the approval and supervision of NPOs, such as churches, religious organizations, civic organizations, community assemblies, or humanitarian organizations. Entities in activities such as sports, agriculture, credit unions, or labor unions CANNOT be granted NPO status.

The incorporation process is simple but may take 4 to 8 months. The Panamanian Government Ministry must approve the request, which must also have the consent of any other government institution related to the NPO activities and purpose.

Once the Panamanian Government Ministry approves the request, this note has to be notarized and registered in Panama’s Public Registry. Afterwards, the NPO’s legal representative can request a Registration Certificate from the Government Ministry.

Once incorporated, the NPO can open a bank account, purchase real estate, or pursue commercial activities to fulfill its objectives, as long as its proceeds are not used for profit. The NPO will also be responsible to maintain a minute book, a membership registry, and up-to-date accounting books.

NPOs with a legal permit for tax-exempt donations (issued by the DGI), that receive funds from the Government, or that transfer funds abroad (outside of Panama), must present a report to the Government Ministry of such activities during the first three calendar months of the following year. Failure to present this report for two consecutive years results in a temporary suspension.