INTRODUCTION

Non- Governmental Organizations (NGOs) play an important role in addressing social, economic, and environmental challenges in India. They operate independently of government control, focusing on diverse areas like education, healthcare, human rights, and environmental conservation. NGOs bridge gaps in government efforts, provide essential services, empower marginalized communities, and drive social change. Forming an NGO involves selecting the right structure, adhering to legal requirements, and ensuring compliance.

TYPES OF NGOS FORMATION IN INDIA

In India, NGOs are primarily categorized based on their legal structure and the laws under which they are registered or formed. The three main types are:

·       Trusts (regulated under the Indian Trusts Act, 1882)

·       Societies (regulated under the Societies Registration Act, 1860)

·       Section 8 Companies (regulated under the Companies Act, 2013)

1.Trusts (under the Indian Trusts Act, 1882)

Trusts are legal arrangements where one party (the trustee) holds and manages assets for the benefit of another party (the beneficiary). Trusts are established for charitable, religious, or social purposes, enabling the management and distribution of assets to achieve specific goals.

To form an NGO as a trust, it must be established as a public charitable trust.  Public trusts are governed by state-level acts, as there is no All-India Act for their establishment. For instance, Madhya Pradesh and Rajasthan have their own public trust acts. These trusts can be registered in one state and operate across multiple states.

 In contrast, private trusts are created under the Indian Trusts Act, 1882, and manage assets for private or religious purposes, benefiting specific individuals or families, without any privileges or tax benefits.

 2. Societies (under the Societies Registration Act, 1860)

The Societies Registration Act, 1860 is a central law in India that governs the registration and regulation of societies formed for charitable purposes. Key features include:

·        Societies can be established for public benefit activities, including education, art, science, and social welfare.

·        Requires at least 7 members to register.

3. Section 8 Companies (under the Companies Act, 2013)

Section 8 companies are non-profit entities established for promoting commerce, art, science, education, charity, or any other useful purpose. These companies Governed by the Companies Act, 2013, with compliance requirements similar to for-profit companies.

 It Requires a minimum of two members to register.

Eligible for tax exemptions under sections 12A and 80G of the Income Tax Act, allowing donors to receive tax deductions.

COMPARISON BETWEEN SOCIETY, TRUST AND SECTION 8 COMPANY

 

BENEFITS OF FORMING AN NGO

·       Tax Benefits: Access to 80G and 12A exemptions for the NGO and donors.

·       Funding: Eligible for government grants, CSR funds, and international aid.

·       Social Impact: Drive meaningful change in society.

·       Credibility: Legal status builds trust with donors and stakeholders.

·       Foreign Donations: Can receive international funds under FCRA.

·       Legal Recognition: Registered NGOs enjoy legal status, allow them to enter into contracts, purchase property and engage in legal proceedings.

CHALLENGES IN NGO FORMATION IN INDIA

1.    Funding Constraints: Securing initial funding and attracting donations can be difficult, especially for new NGOs lacking established credibility.

2.    Resource Limitations: Many NGOs face shortages in skilled personnel, volunteers, and necessary resources, impacting their operational effectiveness.

3.    Sustainability Issues: Long-term sustainability can be a challenge due to reliance on external funding and potential fluctuations in financial support.

FUNDING SOURCES FOR NGOs

1.    Government Grants: Funds provided by central or state governments for specific programs or projects.

2.    Corporate Social Responsibility (CSR): Financial support from corporations mandated by law to invest in social projects, as per the Companies Act, 2013.

3.    Foreign Contributions: Donations from international organizations and individuals, regulated under the Foreign Contribution (Regulation) Act (FCRA), 2010.

4.    Individual Donations: Contributions from individuals, including one-time donations and recurring support.

5.    Crowdfunding: Online platforms allowing NGOs to raise small amounts of money from a large number of people for specific projects or initiatives.

6.    Membership Fees: Funds generated from individuals or entities that pay fees to become members of the NGO.

7.    Fundraising Events: Organizing events such as charity runs, auctions, or galas to raise money.

8.    Philanthropic Foundations: Grants and funding from private and family foundations focused on specific causes or communities.

9.    Social Impact Investments: Investments made by individuals or organizations looking for social and financial returns, supporting sustainable development.

10.Partnerships and Collaborations: Joint initiatives with other NGOs, businesses, or government agencies to pool resources and funding for projects.

EXAMPLES OF NGOs

1. Prerana NGO- protect vulnerable children of commercial sexual exploitation.

2. Smile Foundation- safeguards the rights and dignity of vulnerable children.

3. Impaac Foundation- focus on quality education for children, healthcare, poverty eradication etc.

 

CONCLUSION

NGOs in India play a vital role in addressing social, economic, and environmental challenges. By operating as trusts, societies, or Section 8 companies, they provide essential services and empower marginalized communities. Despite benefit like tax exemptions, they face challenges in securing initial funding and ensuring sustainability. Navigating legal requirements and funding opportunities will be crucial for NGOs to drive meaningful change and foster community development.