This policy brief is published in the Nonprofit Policy Forum.

This policy brief argues though the draft association act, 2025 responds to legitimate concerns about administrative coherence, accountability, federal alignment, and foreign funding oversight, its chosen instruments are disproportionate to those stated goals, overly centralized, and likely to restrict associational freedom. The analysis examines four key dimensions: establishment and registration, operational scope, state supervision, and resource access. The draft centralizes registration authority under the Ministry of Home Affairs, introduces vague morality clauses enabling arbitrary denials, imposes complex multi-tiered approval processes for foreign funding, and establishes extensive surveillance mechanisms. These provisions disproportionately burden smaller, community-based organizations while undermining Nepal’s federal principles. The brief situates Nepal’s approach within a global pattern of closing civic space and argues that the draft act represents a directional shift toward greater state control of civil society and offers recommendations for creating an enabling environment that balances accountability with organizational autonomy, consistent with constitutional guarantees of associational freedom.