Ugandan President Yoweri Museveni said the Democratic Governance Facility (DGF) - backed by the European Union, Denmark, Ireland and other states - could reopen "with government represented in the decision-making structures."
Museveni made the announcement at a meeting with Flemming Mortensen, Denmark's minister for development, who applauded the move and expressed support for having a government representative on the organization's board.
Some Ugandans who advocated for the government's oversight of all NGOs supported the decision as well. However, others demanded an inquiry into the reasons behind the ban, before reinstating it.
According to its website, DGF funds and supports organizations that promote democracy, rights and accountability in Uganda.
On January 2 of last year, Museveni issued an order suspending DGF after rights organizations accused the government and security forces of cracking down on the opposition ahead of a presidential election.
Museveni was declared the winner in the vote, defeating his main challenger, pop star-turned-politician Bobi Wine, who rejected the results. The European Union also said the election was not democratic.
One of Africa's longest serving leaders, Museveni has long faced criticism over rights abuses, with the U.S. last year imposing sanctions on his then military intelligence chief who is now a senior official in the police. The president, however, has dismissed the accusations.