The proposed 2026 draft radically alters the legal obligations of non-profits in Sri Lanka, shifting from the relatively flexible constraints of the older law into a rigid, national-security-oriented architecture. Under the VSSO Act of 1980, the legal scope was limited strictly to “voluntary social service activity,” focusing primarily on localized relief and welfare work for specific vulnerable groups, such as the disabled or destitute. Conversely, the Draft NGO Act (L.D.–O. 6/2026) broadens this definition to encompass any “non-profit oriented activity.” This change places a blanket regulatory net over trusts, societies, associations, microfinance groups, and any entity receiving international funding.
The Government has agreed to suspend the planned submission of the ‘New Bill on Registration and Supervision of Non-Governmental Organizations’ to Parliament. The decision follows a successful meeting held on 31 August at the Sethsiripaya Ministry Auditorium between the Minister of Rural Development, Social Protection, and Community Empowerment, Dr Upali Pannilage, and representatives of the National Collective of Civil and Non-Governmental Organizations. This is not a final decision and there is strong possibility that the act will be presented with minor modifications.
In this context, Sri Lanka Brief summarises the Draft NGO Act (L.D.–O. 6/2026), noting that it still poses a threat to the basic freedoms of Sri Lankan people. The draft bill has not been published officially; this update was compiled based on opinions and criticisms already published in national media.
- Background and Legislative Context: The proposed Non‑Governmental Organisations (Registration and Supervision) Act, L.D.–O. 6/2026 aims to replace the Voluntary Social Service Organisations Act No. 31 of 1980. Introduced amid Sri Lanka’s Financial Action Task Force (FATF) evaluation, the bill purports to enhance transparency and anti‑money‑laundering compliance. However, rights groups argue it extends state control over civic space beyond FATF’s risk‑based standards.
- Scope and Definitions: The Act defines “NGO” broadly to include trusts, societies, companies limited by guarantee, advocacy networks, and informal groups of five or more persons. This sweeping definition risks encompassing community collectives and advocacy movements, thereby chilling spontaneous civic organisation.
- Registration and Renewal Requirements: All entities must register with a Competent Authority (CA) and renew every three years. Failure to register constitutes an offence. Such mandatory registration contravenes Article 14(1)(c) of Sri Lanka’s Constitution and Article 22 of the ICCPR, which protect the right to freely form associations.
- Oversight and Inspection Powers: The CA may inspect premises, demand documents, and suspend organisations on vague grounds such as threats to “sovereignty” or “public order.” These discretionary powers lack judicial oversight and could enable arbitrary interference with civil‑society operations.
- Alignment with Government Policy: A clause requiring NGOs to “align with government policy” undermines independence and contradicts Article 14(1)(a) on freedom of expression. The UN Special Rapporteur on Freedom of Association has repeatedly warned against such alignment clauses as incompatible with democratic pluralism.
- Restrictions on Advocacy and Political Expression: The bill restricts advocacy during election periods and prohibits “political activity” by NGOs. This curtails watchdog functions and violates UN Human Rights Committee General Comment 34, which affirms that political expression is integral to democratic participation.
- Financial Reporting and Administrative Burden: Uniform reporting obligations apply to all organisations regardless of size or risk profile. Small community groups face disproportionate compliance costs, discouraging grassroots participation and undermining the principle of proportionality in regulation.
- Foreign Funding and Crowdfunding Controls: The Act introduces prior‑approval requirements for foreign funding and crowdfunding. Civil‑society networks note that FATF Recommendation 8 calls for risk‑based, not blanket, restrictions. Excessive control over resources infringes Article 13 of the UN Declaration on Human Rights Defenders.
- Search and Seizure Without Warrant: Authorities may enter NGO premises without judicial warrants. This violates due‑process guarantees and could intimidate activists. The Centre for Environmental Justice (CEJ) and Law & Society Trust (LST) have criticised these provisions as unconstitutional.
- Penalties and Criminalisation: Penalties include fines up to Rs 1 million and suspension of operations. Criminalising administrative non‑compliance discourages civic engagement and contradicts UN Guiding Principles on Freedom of Association.
- Consultation and Transparency Deficit: The drafting process lacked meaningful consultation with civil‑society stakeholders. Analysts such as Ambika Satkunanathan (Sri Lanka Brief, July 2026) highlight that exclusionary law‑making erodes trust and violates participatory‑governance norms.
- International Standards and Recommendations: The bill diverges from ICNL best‑practice principles, FATF Recommendation 8, and UN Special Rapporteur guidance, which emphasise proportionate oversight and protection of civic freedoms.
Recommendations:
- Sri Lanka should undertake a series of targeted reforms to ensure that the draft NGO Act aligns with constitutional guarantees and international human‑rights obligations. First, the legislation requires substantive revision to remove provisions compelling NGOs to “align with government policy” and restricting so‑called “political activity.” These clauses undermine the independence of civil society and conflict with ICCPR Articles 19 and 22, which protect the right to freedom of expression and freedom of association.
- Registration requirements should also be recalibrated. A voluntary or simplified registration pathway for low‑risk, small, or informal community groups would preserve civic space and uphold the right to freely form associations without fear of criminalisation. Oversight mechanisms must be strengthened through judicial safeguards: inspections, searches, and seizures should only occur under judicial warrant to protect due‑process rights and prevent arbitrary interference.
- Funding regulations should adopt a risk‑based approach consistent with FATF Recommendation 8, rather than blanket restrictions on foreign funding or crowdfunding. Civil‑society organisations must retain the ability to access resources essential for their operations, advocacy, and humanitarian work. Excessive financial controls risk violating the rights of human‑rights defenders and could disproportionately affect smaller organisations.
- The drafting process itself requires improvement. Establishing a multi‑stakeholder consultation mechanism—including civil‑society organisations, legal experts, and community representatives—would enhance transparency, legitimacy, and public trust. This participatory approach is consistent with democratic governance norms and international best practices.
- Finally, penalties under the Act should be revised to avoid criminalising administrative non‑compliance. Heavy fines and suspensions create a chilling effect on civic participation. Administrative remedies, capacity‑building support, and proportionate compliance measures would better balance regulatory objectives with fundamental freedoms. To ensure accountability, an independent oversight body reporting to Parliament should be established to monitor implementation, prevent abuse, and safeguard civic freedoms.
Compiled by Sunanda Deshapriya
06 September 2026.