NGOs are organizations that usually work towards the promotion of certain causes or the welfare of a target population. In order to achieve their objectives, NGOs need to follow a meticulous approach right from the stage of conceptualization. Here is a brief step-by-step guide for starting an NGO in India:
STEP 1: CONCEPTUALIZATION
The first step is to lay down the issues that the NGO wants to address, and identify the mission and vision.
STEP 2: FORMING THE GOVERNING BODY
Before registering the organization, there needs to be a governing body in place that will be responsible for all activities and decisions of the organization. The governing body will be involved in all matters of strategic relevance, including strategic planning, financial management, human resources and networking.
STEP 3: FORMULATION OF BYLAWS
Every NGO in India is legally required to document a trust deed/Memorandum of Understanding/bylaws that contain the name and address of the NGO, mission and objectives, details of governing body members, human resource and staffing information, rules and regulations, administrative laws and procedures.
STEP 4: REGISTRATION
In India, an NGO can be registered under any of the following Acts:
- Indian Trusts Act, 1882: A Charitable Trust is not legally obliged to obtain registration; unless the Trust wants to claim income tax exemptions or is based in a state that is governed by the Public Trusts Act.
- Societies Registration Act, 1860: A society can be formed by a group of seven or more people. Its formation is more complicated than that of a trust, but it also affords more flexibility in terms of regulations.
- Companies Act, 2013: An association that is formed for the promotion of art, science, commerce, religion or charity can be registered as a company but its members cannot be paid a dividend. All profits should be utilized for furthering the objectives of the company.
STEP 5: FUNDRAISING
This is probably the most decisive step for an NGO. Funds can be raised through internal sources (membership fees, sales, subscription charges, donations, etc.) or grants-in-aid from the Government, private organizations or foreign sources. Many NGOs are eligible for tax exemptions - be sure to check the eligibility status and file your application if the exemption applies to you.
Besides meeting the above mandatory requirements, one needs to build a wide professional network with other NGOs, agencies, media and the corporate sector. Like most other organizations, an NGO thrives primarily on the strength of partnerships.
Read more: 4 Things to Keep In Mind While Running An NGO
TRUST NGO IN INDIA
A trust can be either private or public. Private trusts are governed by the Indian Trusts Act (1882) and are used for private purposes, such as running a private estate or institution. For doing a charitable work for public, Public charitable trusts can be set up. India doesn’t have a national level law to govern charitable trusts, however; few states have enacted Public Charitable Trusts Act.
In the absence of a Trusts Act in a particular state or territory, the general principles of the Indian Trusts Act, 1882 shall apply. Trusts are registered using a document called Trust Deed. Along with this, you would need to attach a Rs. 100 Non-Judicial stamp paper. All trustees and witnesses will have to give thumb impressions/signatures on all papers.
Following items must be mentioned in the trust deed document:
- Name and Address of the Settlor (Settlor is the person who is setting up the trust).
- Name and address of other trustees.
- Name of the trust.
- Minimum and maximum number of trustees your trust can have.
- Address of the registered office of the trust.
- Objectives of the trust.
- Rules and regulations of the trust.
Other important aspects of a trust:
- For registering a trust, minimum two trustees are needed. All the trustees together are called Board of Trustees.
- Trustees cannot draw any remuneration from the trust fund. However, they may take reasonable compensation for the professional services they provide.
- At the time of registration, only the Settlor and two witnesses are required to be present in front of the sub-registrar. The trust deed will then go to the counter where data entry takes place. In the end, the Settlor will need to pay a fee of Rs. 1100.
- Also, a No-Objection Certificate (NOC) from the owner of the property where the registered office of the trust is to be situated has to be obtained.
- Two other documents that should be submitted at the time of making an application for registration are affidavit and consent letter.
- Indian public charitable trusts are irrevocable.
SOCIETY REGISTRATION IN INDIA
The Section 20 of Societies Registration Act 1860 states that the below mentioned societies can be registered as per the Act:
- charitable societies
- libraries or reading rooms that can be used by the general public
- military orphan funds or societies which have been set up at various presidencies in India
- public museums and galleries of paintings and other works of art, collection of natural history, inventions, designs, and instruments
- societies established for the promotion of science, fine arts, and literature
In general, the societies operating in India function under the Societies Registration Act 1860. However, in some states there are charity commissioners. In these states the Bombay Public Trusts Act also needs to be followed in order to register the society. There should be at least 7 members in the managing committee of a society. The managing committee operates as a governing or executive body or a council.
Even though the processes of application differ from one state to another, the following forms should be submitted with the duplicates of the following and the applicable registration fee:
- Memorandum of Association and rules and regulations (Need not be executed on stamp paper).
- Affidavit by the society secretary or president on a non judicial stamp paper worth Rs. 20.
- Consent letters from every managing committee member.
- A declaration from the managing committee members that the society funds will only be used for executing its aims and purposes.
- Authority letter that has been signed by managing committee members.
In case of the societies the main instruments are the Memorandums of Association and the Rules and Regulations that enlist the aims of the society and the way it is going to be managed. The memorandum of association must mention:
- Name of the society
- Address of the registered office
- Names, addresses and occupations of the designated governing body
- The objective of the NGO
- Minimum of 7 members in the society. There is no upper limit on the number of members in the society.
- These members have various designations that can be decided among them. Common designations are President, Vice-President, Secretary, Joint-Secretary and Treasurer etc.
- These members are collectively the governing body of the NGO. This body controls and regulates the functioning of the NGO.
- All the members of society are elected for a specific period (which should be mentioned in the MOA). After expiry of this period; the post is filled through elections in which members of the Governing Body take part.
- Because of the involvement of election process –societies are more democratic than trusts. But at the same time –power struggle and politics may also creep in as drawbacks.
- Unlike trusts, societies function only within a definite geographical area. To make an all India level society, you would need at least eight members (of which five should be from different states of India.
HOW TO START A SECTION 8 COMPANY
The Indian Companies Act 2013’s Section 8 states that a Section 8 company can be set up for the promotion of critical domains such as commerce, religion, art, charity, and science. The company thus formed will also be required to use its income and profits for the promotion and the members will not be paid any dividend.
The main instrument in this case is a memorandum and the articles of association. No stamp papers are needed in this case. It should have at least 3 trustees. Its Board of Management operates as a managing committee or board of directors.
The following factors need to be kept in mind while making the application for registering the company:
- The application needs to be made for making a name available to the registrar of companies. It should be done in form no. 1A, which should be submitted along with the fee. If the first name suggested is not accepted the applicant should have 3 other names ready in the same application.
- Once a name is confirmed, a written application should be furnished to the Company Law Board’s Regional Director. The application needs to be provided with the following documents:
a)3 typewritten or printed copies of the articles of association and memorandum of the prospective company. These should be properly signed by the promoters with their complete name, occupation and address details
b) A declaration by a chartered accountant or an advocate that the articles of association and the memorandum have been created in accordance with the Act’s rules and requirements concerning matters such as registration.
c) Three copies of a list that has the promoters’ names, work details, and addresses. If the promoter is a firm, then these details of every partner should be provided. Similar details of the prospective board of directors, promoters, and partners have to be provided.
d) A statement of total assets, along with the approximate worth, and debts owed by the association as applicable on the date of association or 7 days after the same.
e) A statement of expected yearly earnings and expenses of the company-to-be. The sources of income and areas of expenses need to be specified as well.
f) A statement that provides a short description of the previous accomplishments of the promoters and the work they aim to do following registration as per Section 8.
g) A statement on the reasons for making the application.
h) A declaration by every applicant stating their perfect mental health, absence of criminal records and court cases and suitability as a director as per Companies Act 1956’s Section 203.
- The applicants need to provide to the registrar of companies, copies of their application and documents that have been provided to the Company Law Board’s Regional Director.
- Within 7 days of filing the application with the Company Law Board’s Regional Director the applicants are also required to issue at least one notice in the leading English or vernacular daily of the region where the NGO will be registered. This needs to be done as per the prescribed manner.
- The regional director can take the decision on providing the license after consultation with concerned authorities, ministry, and departments regarding the objections that may be raised within a period of 30 days of publishing the newspaper notice.
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