What is a non-profit organization and why does it matter that a foundation is one?

Before donating to any foundation, you should know What is a non-profit organization?, Because that's what protects your money and ensures your donation is tax-deductible. A non-profit organization (ESAL) is an entity that, by law, does not distribute profits to its owners and reinvests everything it receives in fulfilling its mission. Every penny goes back to the cause.

It sounds technical, but it matters a lot when you're about to donate your money. We'll explain what it is, why it's in your best interest to donate, and how to verify that a foundation is a legitimate non-profit organization and not a front.

What is an ESAL, in simple terms?

A non-profit organization is a legal entity that exists for a social, cultural, or community mission, not to enrich someone. That's exactly it. What is a non-profit organization?: a Colombian legal figure that prohibits distributing surpluses among founders or members.

If the organization generates a surplus during the year, that money doesn't go into anyone's pockets: it's reinvested in the cause. A foundation that builds housing, for example, uses that surplus to build more houses, not to pay dividends.

How is a non-profit organization (ESAL) established and controlled?

A non-profit organization (ESAL) registers with the Chamber of Commerce in its jurisdiction and receives its own tax identification number (NIT) and registration number. This registration makes it traceable: anyone can verify its legal existence and who represents it.

Furthermore, many non-profit organizations (ESALs) apply to be registered under the Special Tax Regime (RTE) with the DIAN (Colombian Tax Authority). Being registered under the RTE involves reporting information to the tax authority annually and submitting to audits. In other words, a properly constituted ESAL leaves a record with two different government entities. You can consult the framework on the DIAN website. DIAN.

Why knowing what an ESAL is protects you when you donate

Know What is a non-profit organization? It gives you three concrete guarantees when you donate. These aren't bureaucratic details: they're what separates a serious foundation from a bottomless pit.

• Legal guarantee. It is registered with the Chamber of Commerce, with a Tax Identification Number (NIT) and an identifiable representative. It truly exists and is accountable to the law.
• Guarantee of control. If you are registered with the RTE (Special Tax Regime), you report to the DIAN (Colombian Tax Authority) and are subject to auditing. The State is watching your accounts.
• Benefit for you. Donating to a non-profit organization registered with the RTE entitles you to the 25% tax credit. We explain it step by step in our guide on the tax-deductible donation.

How to verify that a foundation is a reputable non-profit organization

Check three things before you hand over your money, and don't settle for a pretty logo on a website.

1. I asked for the NIT and the ESAL registration number, and confirmed that it appears in the Chamber of Commerce registry.
2. Check if it is in the Special Tax Regime of the DIAN; that confirms that it reports and is accountable.
3. Ask them to publish how they use the resources. A foundation that shows results has nothing to hide.

If you want a more detailed method, we've put together a complete guide for choosing a reliable foundation to donate to. Transparency is demanded, not assumed.

Hepacom is a non-profit organization: these are our details

The Hechos Para la Comunidad Foundation (Hepacom) is a registered non-profit organization, with Tax ID 900.841.914-1 and ESAL registration S0001780, headquartered in Itagüí (Antioquia) and with national reach. Our mission is to build and improve decent housing for vulnerable families.

As a non-profit organization, we reinvest everything in that mission and publish how the resources are used. You can review our transparency Whenever you want: we'll show the accounts with the full name. If you prefer to ask us directly, write to us on WhatsApp at +57 300 143 7951 or email us at contactanos@hepacom.org.

Non-profit organization facing an account that requests donations

To make the difference clear, here's a comparison between a legitimate non-profit organization and a random account that receives donations. The column on the left shows what protects you; the one on the right shows what should make you suspicious.

Aspect	registered non-profit organization	Account without backup
Legal personality	Tax ID and registration with the Chamber of Commerce	It does not exist as a legal entity.
Destination of surpluses	They are reinvested in the mission, by law.	No rules regarding the money received
State Control	Report to the DIAN if you are in the RTE	Nobody audits their accounts.
Support for your contribution	Issues donation certificate	No valid receipt provided

Verify these points in the Chamber of Commerce registry before donating.

Common mistakes in understanding what a non-profit organization is

• Assuming that all foundations provide tax benefits: Only non-profit organizations qualified under the Special Tax Regime are entitled to this right.
• Relying solely on the name or logo: «"Foundation" in the name does not guarantee registration or control; what matters is the NIT and the registration.
• Believing that non-profit means not handling money: Yes, he manages it, but he cannot distribute it among his members.

Frequently Asked Questions

What does it mean for a foundation to be a non-profit organization?

This means it is a non-profit organization: an organization that does not distribute profits to its members and reinvests all its income in its mission. It is registered with the Chamber of Commerce and may be under the DIAN's Special Tax Regime.

Can all non-profit organizations provide tax benefits for my donation?

Not automatically. Only non-profit organizations registered under the DIAN's Special Tax Regime allow your donation to qualify for the 25% discount. Therefore, it's advisable to confirm that the foundation is registered under the Special Tax Regime before donating.

How do I verify that a foundation is legally constituted?

Ask for their Tax Identification Number (NIT) and ESAL registration number, and confirm that it appears in the Chamber of Commerce registry. If it's also registered with the RTE (Registry of Taxpayers), it reports to the DIAN (National Tax and Customs Directorate), adding another layer of control. Hepacom has NIT 900.841.914-1 and registration number S0001780.

Why does it matter to donate to a non-profit organization and not to an individual?

Because a non-profit organization is accountable to the law, leaves a record with government entities, and, if registered in the RTE (Registry of Taxpayers), entitles you to tax benefits. Donating to a private individual offers none of these guarantees or support.

You already know what to look for. If you want to contribute to a registered non-profit organization that builds decent housing, donate today at hepacom.org And, while you're at it, recover the 25% in your tax return.

This guide is part of our Complete guide to decent housing in Colombia, where we bring together how to access housing and how to help another family have their own.