The popstar pair will work together to pick a winner for the online competition, which will see artists submit videos, music, poetry and photographs to best express their take on freedom.
The victor will then be awarded a $10,000 grant to a nonprofit organisation of their choice, with Madge and K-Pez working together to select an artist "whose creative expression demonstrates a unique view of the fight for human rights", Billboard reports.
Speaking of her new role, the Unconditionally singer said: "I am so fortunate to have the freedom to express myself through music.
"Now I'm calling all of my incredibly creative KatyCats to use their talent to show Madonna and me how they express their freedom."
Perry added: "I believe that 2014 can be a year of great social change. Together we can all stand up for Human Rights. Join the conversation, and let your art be your voice."
Madonna noted: "Art can change the world, but first it needs to be seen and heard. Katy Perry and I are asking you to be that voice and show us how you define freedom in 2014.
"This will be a year of monumental changes for human rights, and we want you to be a part of that change. Let us hear from you."
US illusionist David Blaine was last month's guest curator, with the Art of Freedom project first launching in September 2013.