Non-governmental organizations (NGOs) serve as the backbone of social sector work in India. These organizations play a vital role in helping the weaker sections of our economy and society that are frequently disregarded by the government. As a result, it is commonly noted that NGOs carry out tasks that a wealthy welfare state would manage. On the other hand, NGOs, more often known as charity organizations, rely on donations from the wealthier sections of society to survive in India.
Starting an NGO
The Indian Trust Act of 1882, the Societies Registration Act of 1862, and the Companies Act of 2013 are the three Indian laws under which one may register an NGO. However, one has to do the following before beginning the registration process:
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Create the NGO's mission and vision. An NGO has to have objectives and a strategy for accomplishing them, just like you would require from a business.
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One of the initial steps in the NGO start-up process is the formation of a governing body.
Forming a Governing Body
A governing body must be established to create an NGO. This body will investigate how the NGO operates and what it does. They must also consider issues related to planning, human resources, and financial management.
The governing body must also make decisions on the organization's management and fund-raising strategies. The governing body of an NGO is typically considered to be the most important factor since a body that relies on donations for financing has to be led by a reputable set of people.
Trust Deed Documentation
The governing body must draft its bylaws, memorandum of association (in the case of a Section 8 company), or trust deed before the NGO can be registered. These documents must include the NGO's name and address, information about its members, rules, and regulations, and a list of administrative laws it must abide by.
Registration of an NGO
Depending on the ways it operates, an NGO may be registered in India through one of these three Acts. Each Act establishes certain rules and guidelines to make managing and operating a non-profit organization easier.
Act on Registration of Societies (In society, a minimum of seven members are required to be the members).
Act on Indian Trusts (In charitable trust at least two people are required, there is no limit of maximum members).
Companies Act (A non-profit company can be registered under section 8 of the Companies Act with the registrar of companies).
Indian Trust Act
In India, each state has its trust law, while the Indian Trust Act, of 1882, regulates the states without a distinct trust act. Additionally, NGOs are usually registered under this Act if the property is involved (for example, when schools or hospitals are being constructed).
For registration under the Indian Trust Act of 1882, a trust deed that contains all relevant information concerning the trust's financial management and fund collection details is required.
Application Process: To register such an NGO, a registration application must be filed. In the event of a trust, a form must be completed, the applicant must attach a court fee stamp, and a nominal registration cost, which is determined by the property's value, must be paid. Likewise, the trust deed must be presented with the application form.
Societies Registration Act, 1862
The Societies Registration Act, 1860, is the most effective method for establishing an NGO. Which organizations and societies may be registered under the Societies Act is expressly stated in Section 20 of that Act. Additionally, a district or state-level registration of an NGO under the Societies Act is possible.
A Society must be formed under this Act with a minimum of seven management committee members. These individuals will also be given the titles of president, vice president, treasurer, director, and members.
Application Process: A society can be registered at either the state or district level. Additionally, the process varies from state to state, but usually, an affidavit from the president, the memorandum of association, rules and regulations, and a consent letter from all members with ID proofs are necessary.
Indian Companies Act, 2013
Under Section 8 of the Companies Act of 2013, an organization may be registered "for promoting commerce, art, science, religion, charity, or any other useful object." However, such an organization's profits must be put toward its growth rather than being distributed as dividends to its members.
A memorandum of association detailing how the charitable company will operate and a minimum of three members (with no upper limit) are mandated.
Application Process
A company should make an application to determine whether the name of the company is available. The incorporation procedure is carried out using the Spice + form after the name's availability has been verified.
The memorandum of association is presented to the company law board along with an application and a certification from an attorney testifying to its compliance with the Act. Additionally, the applicant must run an ad in two newspapers published in that area, one in the local language and one in English.
Special Licenses
In addition to registering under the three acts, an NGO must also obtain a special license, such as one under the Shops and Establishments Act (for opening an office), an inner line permit (for opening offices in tribal and restricted areas), FCRA registration, and a no-objection certificate with a work visa, to open an office in tribal areas or locations that require special permission or to employ foreign nationals (for employing foreign nationals).
Additionally, to register under any of the above acts, a foreign national or an international NGO must first get special approval from the Reserve Bank of India and a no-objection certificate from the relevant authorities.
Furthermore, an NGO must apply for 80G certification along with their annual report if they wish to seek a tax exemption.
