One of the main benefits of running an NGO is that you can serve the community via funds and volunteer work. It’s also an opportunity to solve an issue that is not suitable for the community.
Trust is the most common way of starting an NPO or NGO Registration, with the objectives of demolishing poverty, providing education, and offering medical relief. It can also promote arts, science, and literature.
As per the Indian Trust Act 1882, in a trust, the owner (trustor) can transfer the property to the trustee for the benefit of a beneficiary, along with an edict that -the trustee should hold the property for the beneficiaries of the Trust.
The Trusts are irrevocable i.e. they can’t be amended or terminated without the court’s order.
Trust is registered under state laws. It is recommended for small charitable activities. A Trust is an organization registered with limited members. In general, the Trusts are incorporated by offering property for a charitable purpose. However, cash funds might also be grand by the trust or trustees for charitable purposes while incorporating a trust.
In this, the beneficiaries include families or individuals. It is subdivided into -
- Whose beneficiaries and their shares can both be determined
- Both or either the beneficiaries and their shares cannot be determined
In this, the beneficiaries include the public. It can be further subdivided –
- Public Charitable Trust
- Public Religious Trust
As State Government regulates the trust, different states in India have different Trusts Acts for their regulation. Suppose, in any instance, a Trusts Act is absent in any particular state or territory; In that case, the general regulations of the Indian Trusts Act 1882 are applied to the trust registered in that region.
Key Highlights of NGO/Trust
- Easy Management
- of registering trust is very low in comparison to other NGO
- Annual Returns - There is no requirement for annual return filing
- Tax benefits under Income Tax Act
Constitution of the Trust
- Author/Founder/Settlor of the trust
- Managing trustee(s)
- Other trustees
- The quorum of the Board of Trustees shall not exceed a maximum of 21 members.
- A Trust is registered and regulated through Trust Deed. The Trust deed is an official shape of an NGO, which includes the support and recognition of the law along with the objects, rules and guidelines for the operation of the Trust.
- The trust deed shall be executed on stamp paper, and the value of the stamp paper will depend on the value of the capital invested by the members of the Trust.
- The trust deed has to be signed by both the settler and trustees in the presence of two witnesses.
Contents of Trust Deed
The Bible of any charitable trust is the trust deed that aims at the objects and mode of management. A trust Deed shall include the following -
- Number and details of trustees
- Name of the trust
- The registered office of the trust
- Details of the Author of the Trust
- Corpus/Assets of the Trust
- Plenum of the board with their qualification, terms and tenure
- Powers and functions of the Managing Trustee and other Trustees
- Closure and amendment of the trust deed and the applicability of the Act