New Nicaraguan Legislation Impacts Foreign Foundation Grantmaking

On Thursday October 15, 2020, The Law for the Regulation of Foreign Agents, or Ley de Regulación de Agentes Extranjeros, was enacted in Nicaragua. This law regulates foreign agents, including nonprofits that receive foreign funding.

On Tuesday October 27, 2020, another law, The Special Law on Cybercrimes or Ley Especial de Ciberdelitos, was also enacted.

Combined, these two laws will fundamentally reshape how foreign funders can support Nicaraguan nonprofits and how civic space is regulated in the country.

The Law for the Regulation of Foreign Agents

According to the Associated Press, the Foreign Agent Law “requires any Nicaraguan citizen working for ‘governments, companies, foundations or foreign organizations’ to register with the Interior Ministry, report monthly their income and spending and provide prior notice of what the foreign funds will be spent on.”

This law will require nonprofit organizations in Nicaragua who receive foreign funds to register with the government as a “foreign agent”. The term foreign agent is derived from the Foreign Agent Registration Act (FARA), a 1938 law in the United States. The Council’s FARA resources show how the law has been applied in the U.S. and how it has been adopted by other countries such as Russia. 

Once registered as a foreign agent, nonprofits will be heavily impacted by the foreign agent designation. Nicaraguan nonprofits who register as foreign agents:

1. Will be unable to “finance or promote the financing of any type of organization, movement, political party, coalition or political alliance or association”,
2. Will need to request prior permission to receive foreign funds,
3. Will be required to report monthly to the government on received foreign funds and how they will be spent,
4. Must spend foreign funds only on projects which the government has approved,
5. May not receive anonymous funds,
6. Must register their staff as foreign agents, not just the organization they serve,
7. Will face dissolution, criminal penalties, and forfeiture of assets for incompliance.

Experts fear that other impacts of the law include:

• Potential public stigma as the nonprofit and its staff hold a “foreign agent” designation
• Nonprofits, and their staff, working on issues seen as controversial to the government could face enhanced scrutiny and penalties

Foundations Making Grants to Nicaraguan Nonprofits

Given the impacts of the new Foreign Agents law, the Council has three recommendations for funders currently supporting grantees in Nicaragua:

1. Consider suspending grantmaking until more clarity about the new Foreign Agents law is available. It will be especially important to understand what type of humanitarian work and/or organizations will be exempted from the law.
2. Assess and discuss your current and historical grantmaking to Nicaraguan nonprofits with local partners, with a specific focus on identifying any funding or grantees that could be construed as political within the local context.
3. Communicate with your nonprofit partners in Nicaragua about the potential impact of this law on their work and learn how your foundation may best support them moving forward.

The Special Law on Cybercrimes

As new analysis of this law becomes available, we will provide updates to this section.

The Cybercrimes Law, according to the Associated Press, focuses on “mandating prison sentences for those who use online platforms to spread false information or information that could raise alarm among people.”

Experts are concerned that vague language and terminology such as “public order” are not defined within the law. The lack of clarity about how this law will be enforced has raised concerns among experts that it will be used to stifle dissent and freedom of expression by citizens and non-profit organizations in Nicaragua.

Additional Resources

• Nicaragua passes controversial ‘foreign agents’ law – WINGS