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Why Should One Resort to Running an NGO in India?

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Introduction

NGO is the short form for non-governmental organization. This concept gained momentum in the later years of independence in India, with main transformation as witnessed around the year 1970s.

As concerning the Indian society, still the problem looms over pertaining to issues like that of illiteracy, unemployment and hunger related issues. The driving force behind such a scenario was the prevalence of the non-participatory attitude of the people with respect to the programmers that were launched to work for their welfare.

Therefore it is quite imperative to seek involvement of the people so that all the programmers can be properly monitored and executed. As believed by many prominent institutions, NGOs carry the requisite potential to bring about a total alleviation in the situation of the poor people.

As viewed from a broader perspective, the term NGO is most suited to indicate the organization that resorts to taking voluntary action in the realm of social reforms. In contrast to the government, the activities taken by an NGO are very much different in character.
Read Our Blog: Registration of NGO

In short, the characteristics of the NGO can be broadly laid down as follows:

  1. Firstly, any NGO is formed on a voluntary basis.
  2. The main work of any NGO is aimed at ameliorating the suffering of the downtrodden and working for their upliftment.
  3. The NGO works with an independent will and with an aim that is non-self- serving in itself.

From the voluntary formation of the NGO it can be construed that there existed no pressure or compulsion from the side of the government. There is also an element of offering selfless service, therefore it is seen that most of the staff members even agree to work at lower salaries.

What Are the Types of NGOs?

NGOs can well be classified in the following categories as given below:

  • Operational NGOs:

In the very first place comes the NGOs that work at the grassroot level. Their work dynamics is in parallel to working with the oppressed sections in the society. The spread of the NGOs could possibly confine to the smaller area or in many cases extend up to covering the population on the larger basis.

The NGOs can be classified as performing charitable work or work for the welfare of the people that can possibly range from providing food to the hungry people to taking quick action and providing aid and assistance in the event of natural calamities.

On the other hand all the development NGOs resort to offering the much needed facilities that can include arranging for the seeds and fertilizers for the farmers to providing technical know-how.

  • Support NGOs

The support NGOs work to provide those services that promise to impart strength to the NGOs working at the grassroot level.

  • Network NGOs

These NGOs are also known by the name of umbrella NGOs. These can be construed to be the associations that are very much formal in nature and also include the groups of  the grassroot NGOs that are informal in nature.

These NGOs meet at periodical intervals and hold discussions on the concerning issues. They can better be understood as much like the forums that enable the atmosphere to hold discussions, moreover experiences are also shared to forge better outcomes.

These NGOs resort to giving effect to the endeavours that seek to carry out development projects. However, with respect to such NGOs, their participation in advocacy is a relatively recent phenomenon.

  • Funding NGOs

The primary goal entailing such NGOs is to provide the necessary funds to those NGOs that are located at the grassroot level. Other people’s organizations also receive the funding from these NGOs.

Major chunk of these NGOs find its source of funding from the foreign entities, however the funds can even be raised in India itself.

Are There any Challenges or Weaknesses of the NGOs?

NGOs and its related endeavours can face many obstacles during its functioning, some of them are as given below:

  • The vital problem faced by the NGOs is with respect to its spatial limitation. The territorial space that follows the NGO is dictated by many factors like availability of finance, the size of the NGO and its associated structural capacity.
  • Following the above mentioned limitation, there is lack of respect for quality governance and utilization of transparent methods. The NGOs must be subjected to having governance that runs on quality. However if there is no such mechanism in place, then probably the NGO might not function smoothly.
  • The major problem that the NGOs might face lies in the question of whether the benefits of their programmes are getting reaped by the poor section of society. Usually the scenario is that in most cases the poor people remain in ignorance with respect to such initiatives.
  • Most of the time it is seen that the credit facilities do not reach the poor farmers in the stipulated time.

What are the Relevant Acts in India That Deal with NGO Registration?

On the first hand, one must opt for the relevant act under which you want your NGO to be registered under. These are given below: 

  • The very first act that deals with the registration of an NGO is called the Trusts Act, 1882.

In accordance with the provisions of this Act, the NGOs are required to be registered entailing a charitable purpose like that of providing relief from poverty, making an effort to offer educational services and also providing medical services.

  • The very next act under which the NGO can be registered is the Society Registration Act, 1860.

The NGOs that seek to get registered under this act must know for sure that they must entail a charitable purpose, and which can also include the scientific purpose. The NGO that can be registered under this act can also entail any other purpose as provisioned under Section 20 of the above act.

It must also be noted that there is a requirement of seven members which must form the minimum basis.

  • Last but not the least, comes the company Act, 2013.

In relation to the above mentioned act, it must be kept in mind that the NGo who seek to get registered under this act have to be in compliance with the motive that promotes science and other things like art and culture. These objectives are inculcated that seek to  make the society function in the right direction.

Ngo in India: What are the Advantages?

The advantages that follow behind the idea of running an Ngo in India comes in bundles. Some of the advantages can be jotted down as given below:

1)    The very first advantage that comes along with the NGO being registered in India is related to having the tax waiver. The main thing is that if any NGO gets registered under the Societies Act, 1860, then in that case there would be no such requirement to pay heed to the liabilities pertaining to tax. This is probably because such an NGO would be exempted from any such liability.

Apart from the above mentioned things, waivers are extended by the government to such institutions pertaining to the entertainment tax along with the service tax.

2)    Next in line, is the advantage that talks about the legal identity of the NGO. It can be said that any NGO once registered becomes capable of embracing altogether a separate identity that is legal in nature in the eyes of law.

3)    It is no hidden fact that on account of the NGO being registered, the NGO becomes capable of having the access to the government associated funding. In addition to this, such entities can possibly reach out to the private sources that can fund them for a good cause.

Also, the NGOs that entail the registration under the Trust Act, 1882 are very much entitled to receive the requisite land from the government of India so that their operations can be carried out in a smooth fashion. 
Read Our Blog: What is the Difference between NGO and Trust?

4)    Considering the current scenario prevailing in India there is no such requirement imposed pertaining to the way the capital has to be procured by a certain NGO so that it could be set up. Therefore it can be said that this is in itself an amazing advantage, keeping in view that in most cases, the startups lack the required support, especially the fiscal one.

5)    As provisioned under section 8 prescribed by the Companies Act, 2013, the ownership can easily be transferred without any legal hindrances by the members who hold the sole responsibility of running an NGO.

6)    The NGOs never fall short of support from various entities including that of the government. However it needs to be ensured that the NGOs should have better chalked out goals, this would in turn make sure that the NGO entails continuity and sustain for longer periods. It has been seen that the NGOs which lack the consistent and clear goals, may not be able to function for a longer span of time.

7)    If in any case, NGO resort to including a persistent working method with concerted efforts, then after a while, it would not counter any problem in forging support from the NGOs that work on an international level and work in collaboration with them. This will increase their reach to international platforms.

8)    The programmes that are launched by the NGOs are much more beneficial since they constitute the element that concerns the good of the local community. The projects that the NGOs work on take into account the factors that would help improve the society in many ways and impact the life of the people in a better way.

The approach taken by the NGOs in implementing the programmes is very much flexible and takes into account the needs of the local people, that is the very reason behind the success of the NGO.

9)    NGO plays a very crucial role when it comes to acquisitions made with respect to the matters having financial nature or it can even be related to the assets. By employing such means one can be prevented from the need to pay heed to the liabilities including that of the divorce and even bankruptcies.

Property or assets as owned and held by an NGO are covered under the garb of protection against any sort of action that arises in the legal realm. This in itself shows that the activities undertaken by the NGO can be carried out without having to worry about any outside attack affecting the finances.

Conclusion

In the nutshell it can be concluded that there is no harm in setting up an NGO as long as it has defined roles and objectives in place. The core objectives of the NGO must remain intact at all times and all the work must be carried out in alignment with them.

 

The great advantage in setting up an NGO probably lies in the fact that it can bring forth endless benefits like exemption from tax liabilities and various other concessions. They never fall short of the funding as many entities willing come forward to extend funds to the NGOs. 

 

In addition, for an NGO to ensure its sustenance, it must always perform its obligations within the framework of its core objectives. Any NGO that is sidelined from its objectives will not sustain in the longer run.  

 

It is really important to take note that the NGO must entail registration under any of the above mentioned acts so that all the benefits can be reaped by them from time to time. This way, the legal identity of the NGo is also retained without any problem. 

 

Further, the objectives of the NGO must be aligned with the objective of ensuring the welfare of the society. Preferably the objectives must be the one that should embrace charity or offering facilities and services like education.

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Author
Vinay Singh
Vinay Thakur is Managing Partner in Corpseed. He focused on payments, digital transformation, and financial technology for over 15 years and holds strong expertise on fintech startups, banking innovation, and investors with a keen understanding of the trends and activities of startups, banks, and investors in the space.