PERU Law and Practice Contributed by: Camilo Maruy, Maite Colmenter, Roberto Polo and Llanet Gaslac, Rebaza, Alcázar & De Las Casas
10.2 Common Charitable Structures Non-profit associations and foundations are most commonly used for charitable planning. Both have legal personalities. The advantages include: • foundations that met certain conditions are not subject to income tax; • other foundations and non-profit associations are income tax exempt if certain conditions are met; • donations to non-profit associations and founda - tions can be deducted from the donor’s income tax, representing an incentive for contributions by third parties; • non-profit associations and foundations can carry out economic activities as long as those activities are aligned with their corporate purpose; and • foundations offer greater equity protection provid - ed that the assets are separated from the founders’ personal assets.
The disadvantages include: • neither foundations nor non-profit associations in Peru can distribute their profits among their mem - bers or beneficiaries but shall reinvest such profits in their social purposes; • these entities are usually subject to more rigorous legal and accounting requirements; and • greater public and government scrutiny compared to other entities.
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