(Illustration by Laura Marshall)
On August 28, 2025, the Ecuadorian government enacted legislation that severely limits the fundraising capacity of nonprofit organizations across the country. Based on the new Organic Law of Social Transparency, officials froze the bank accounts of at least 10 indigenous civil rights leaders between September and October 2025, and to date have filed lawsuits against at least 60 social leaders and nonprofit representatives for alleged unjustified private enrichment. Once regulation is fully underway, the law will impose significant bureaucratic burden and strict sanctions on nonprofit organizations.
Officials have taken these actions in the name of controlling the cash flows of organized crime, but in reality, the government is using the law as an authoritarian measure to cripple civil society and critical, politically opposed voices. In the last decade, other Latin American governments have implemented similar laws, almost always under the premise that organized civil society has become a space for money laundering or facilitating foreign political influence. This is despite the fact that no empirical evidence has shown that civil society is necessarily more susceptible to such crime than any other sectors, in Latin America or elsewhere. Countries with similar laws include El Salvador, Nicaragua, Paraguay, Perú, and Venezuela, where nonprofits have suffered a significant loss in resources and in some cases been completely silenced by the governments in power.
What follows is an analysis of the Ecuadorian case that seeks to contribute to the regional discussion on the challenges for organized civil society and potential solutions, including how nonprofits might strengthen alliances among themselves to exert influence.
Heightened Administrative Burden
The Organic Law of Social Transparency sets new rules for how the country’s approximately 75,000 Ecuadorian nonprofits register, report, and operate. Many aspects of the law align with the wider global trend of strengthening philanthropic compliance. For example, the law intends to optimize the management and administration of public assets, and to make the management of philanthropic funds more transparent by reinforcing compliance with international standards.
However, it also aims to transform the internal governance of nonprofit organizations, with significant administrative and legal implications. Among the main aspects of the law is the designation of a single supervisory body for nonprofits, the Superintendency of Popular and Solidarity Economy, which was created in 2011 and is already overstretched. Once this government office begins full regulation, it will determine how many nonprofits there are and what they do, and then classify them as low-, medium-, or high-risk based on factors such as the volume of resources they manage, origin of their funds, and territorial scope.
The law also mandates that nonprofits must implement new systems to guarantee transparency—including the development of internal codes of ethics, reports on management and use of resources, corruption risk management systems, and social and economic impact assessments—and the appointment of an internal transparency officer to serve as a liaison with the Superintendency. Nonprofits classified as low-risk will have to submit the information stipulated in the law every two years, while medium- and high-risk nonprofits will have to do so annually.
These measures fail to consider the wide variety of sizes and structures of Ecuadorian civil society organizations, including small community-based or grassroots organizations that operate with minimal budgets and rely on volunteer work. Many organizations will find it impossible to meet the additional administrative and financial burdens, as it may require hiring multidisciplinary teams to cover legal, accounting, and auditing requirements. This puts them at risk of being taken over, temporarily suspended, or closed by the regulatory agency.
Arbitrary Use and Account Closures
More broadly, the law aims to strengthen the state’s power to prevent, detect, and control irregular capital flows, money laundering, and the financing of illicit activities. In the current context of insecurity and violence that Ecuador is experiencing, concern over is not undue: Notably, Ecuador ended 2024 with a homicide rate of 38.8 percent, making it the most violent year in history and placing Ecuador as the third most violent country in Latin America. Meanwhile, the Financial Action Task Force, an intergovernmental organization that investigates suspected money laundering operations, places Ecuador at a medium-high risk of money laundering and terrorist financing.
The law includes an amendment to the existing Organic Law for the Prevention, Detection, and Combat of Money Laundering and the Financing of Other Crimes, which establishes the legal framework for preventing the use of the economic system in illicit activities. According to this reform, the Financial and Economic Analysis Unit (UAFE)—which enforces the Financial Task Force’s standards and reports to the executive branch of Ecuador’s government, and whose director is appointed by President of the Republic—can now block nonprofit bank accounts without a court order, based solely on National Intelligence System reports of suspicious transactions or its own intelligence.
Even more concerning is that the new oversight body has the power to dissolve organizations for reasons that lack a rigorous definition, such as threats to "public order" or "state security." This leaves organizations subject to dissolution processes that are not framed within international law and could affect due process, since involuntary dissolution should occur only in cases of clear and imminent danger, with due judicial guarantees. The law thus generates a real risk of discretion and arbitrary use of state power.
Several civil society organizations have suggested that these reforms pose a clear threat to their fundamental rights to freedom of expression, political autonomy, and civic participation, and their concerns have not been unfounded. According to the investigative journalism platform, GK City, the public prosecutor's office continues to investigate the more than 60 citizens whose accounts were closed last fall—including indigenous leaders, local authorities, lawyers, and representatives of various nonprofit organizations—for unjustified private enrichment, and several of them report that their bank accounts have been frozen since mid-September without prior notice.
These investigations occurred in the context of nationwide mobilizations against the implementation of a September 2025 executive decree to eliminate fuel subsidies that have historically kept agricultural and transportation costs low. In response, the Confederation of Indigenous Nationalities of Ecuador (CONAIE), the country's largest social organization, declared an indefinite national strike and lead protests later supported by farmers, students, and civil society organizations, creating a national movement calling for economic reforms and changes to government policies. During the protests, the CONAIE announced that state orders had blocked the bank accounts of several of its national leaders, as well as affiliated regional and local organizations, without prior notice. In a public statement, the organization called the orders a clear state intervention and attempt to intimidate. The President of the Republic himself confirmed this during a televised interview, when he highlighted that one of the strategies to manage the strike was to block its sources of financing by applying the new Organic Law of Social Transparency.
A month after the national strike ended, three Amazonian collectives—The Ceibo Alliance, The Union of Those Affected by Texaco’s Oil Operations, and Pakkiru—requested that an anti-corruption judge revoke the freezing of their bank accounts, a measure the UAFE imposed for alleged crimes during the national strike. The judge ruled in their favor and emphasized that the measure was unjustified, as the UAFE had presented no information or evidence that the organizations posed any threat to security and public order, nor that they financed violent acts of terrorism. The Pachamama Foundation, which has worked in Ecuador for more than two decades, also denounced the freezing of all its bank accounts and the opening of a criminalization process against its executive president.
It is worth noting that while the law empowers the UAFE to freeze funds for up to eight days without a court order, in most of these cases, it exceeded the stipulated time frame and did not release the funds. These measures caused severe disruption to numerous organizations, impacting operating expenses like payroll, the continuation of development projects, the achievement of performance indicators, and the timely disbursement of funds by funders. Even organizations outside of Ecuador have criticized the law. As the International Center for Not-for-Profit Law notes, “While the law is presented as aligning with international standards, its vague rules, heavy sanctions, and intrusive oversight risk restricting civil society.”
Lawsuits of Unconstitutionality
When the law was first proposed in August 2025, more than 40 civil society organizations and nonprofit networks issued a joint statement to Ecuador’s National Assembly expressing their opposition to it, arguing that it violated fundamental rights and limited nonprofits’ financial and operational sustainability. According to the statement, by linking nonprofits to illicit activities such as money laundering through narrative and without presenting verifiable data, the government undermines the legitimacy of nonprofit actions, discourages international cooperation, and prejudices access to international and philanthropic funding.
Since then, different nonprofits have filed seven lawsuits challenging the law’s constitutionality. The first challenged it in its entirety, claiming that it flagrantly violated the principle of “unity of subject matter” by addressing multiple issues (including mining, taxes, and control over nonprofit financing) when the Constitution of Ecuador requires that bills refer to only one subject. Meanwhile, a group of 11 nonprofits filed a lawsuit arguing that the law conflates various legal issues, including tax reforms for nonprofit organizations, and the CONAIE and 13 civil society organizations filed a suit citing, among other things, the lack of pre-legislative consultation during the law's approval process, and the potential elimination of rights of indigenous peoples and nationalities. They further denounced the legislation as an attempt to eliminate social organizations, limit public debate, and persecute protest in the country.
It is important to mention that, as a precedent, more than 50 organizations have filed lawsuits challenging the constitutionality of different, previously enacted emergency laws. The Constitutional Court of Ecuador has suspended several of these laws—including the National Solidarity Law, which focused on the criminal economy, and the Public Integrity Law, which focused on state contracting processes—due to procedural flaws in their approval and their heterogeneous content (a mix of economic, criminal, and security matters).This has led to a hostile relationship between the executive branch and the court, with the former attempting to promote the narrative that the tribunal is a political obstacle. However, international organizations such as Human Rights Watch have criticized these attacks, and the suspensions nevertheless offer encouragement for nonprofits to continue pursuing legal action.
To that end, in February 2026, the court admitted at least four of the seven lawsuits nonprofits filed challenging the Organic Social Transparency Law’s constitutionality, opening the door to a real possibility that the court could repeal it. Nonprofits in Ecuador continue to evaluate response actions, including the prospect of appealing to international human rights bodies to raise awareness of the impacts, and to press for the analysis and resolution of the lawsuits filed.
The Power of Alliances
Compliance with rigorous regulatory regimes can help nonprofits gain reputational advantages, as they signal a commitment to good practices, transparency, and integrity. They can also help nonprofits ensure that funds they receive from donors are in accordance with their social impact. However, as the case presented here illustrates, governments and agencies can also establish legal frameworks with the intent of controlling and limiting the power of voices within civil society who oppose economic, social, and extractive policies. These frameworks not only constitute a violation of the right to freedom of association and expression and the autonomy of nonprofits, but also reveal an unprecedented strategy for dismantling and criminalizing nonprofit organizations, and undermining political and civil liberties. The case of Ecuador adds to the wave of authoritarian practices sweeping across Latin America, with the enactment of laws that, due to their biased and unilateral nature, pose a threat to organized civil society in the region and limit its ability to obtain funding from international development cooperation or philanthropy.
This situation underscores the importance of nonprofits strengthening alliances among themselves to exert influence—whether through legal tools that guarantee due process, or through local and international advocacy—and curb abuses stemming from these legal frameworks.
Nonprofits can also work together to analyze new laws and create recommendations for the field, including ideas for reform. In Ecuador, several nonprofits have conducted participatory workshops to identify the main challenges they will face as government agencies continue to implement the Organic Social Transparency Law. This has resulted in a guide that helps civil society organizations organize information about their operations and identify their responsibilities under the law. The workshops also culminated in a series of technical recommendations that aim to make the application of the law "proportional, predictable, and operationally viable.” Recommendations include the establishment of co-creation and validation mechanisms through technical working groups, pilot projects, and feedback processes; the simplification of nonprofit registration; a clearer definition of the law's implementation phases; the development of an interoperable technological platform with data protection guarantees; and the development of regulatory adjustments that integrate with existing transparency mechanisms in the sector.
While it is unlikely that governments will choose to significantly reduce the burden of compliance or refrain from using it to exert control over the social sector, programmatic alliances within civil society remain indispensable for limiting the negative impacts of legislation like the Organic Social Transparency Law. Working together, these organizations can find ways to maintain their access to funding, retain their political and social freedoms, and continue doing the social work the world so badly needs.
Read more stories by Tania Dávila Paredes.