What Is An NGO And How NGOs Work?

In many ways, running an NGO requires just as much skill as running a company and sometimes, even more so. NGOs have played a key role in advancing social justice in our society.

Starting and running your own NGO can be a very fulfilling thing to do,  especially when your heart is set on social work. However, it requires more than just a good heart and a great idea. 

To run a successful NGO, not only do you have to be good at marketing your cause, but you also need to be on top of the legal compliances involved in operating one. 

Therefore one can conclude that starting an NGO requires adequate legal planning, a lot of hard work, and a strong desire to help people. 

What Is an NGO?

A Non Governmental Organisation, commonly known as an NGO, is an association that is registered under the sanction of the government and works for the upliftment of society. The association has a clear and definite social program or cause, which it supports.

The causes an NGO can support may be cultural, religious, social or educational in nature. 

The Features of a Non-Governmental Organisation in India

• NGOs have a particular purpose or cause that they support
• NGOs are voluntary groups, created by like-minded people who want to help serve society
• They function as autonomous bodies, enjoying little to no governmental interference
• NGOs have their own set of rules, regulations, and policies depending on their cause
• NGOs are not profit-making or profit-sharing companies. Rather, they help in empowering and bettering society
• NGOs generate, create, and manage their funds via contributions and donations from the public.
• NGOs play an important role in international development, aid, and philanthropy.
  • Many NGOs are non-profits, with annual budgets of millions or billions of dollars.
  • NGOs receive funding from a variety of sources, including private donations and membership dues, as well as government grants.
  • Public policy is influenced by advocacy NGOs.
  • The American Red Cross, the Salvation Army, and Amnesty International are some of the most well-known NGOs.

KEY TAKEAWAYS

• Non-governmental organizations play an important role in international development, aid, and philanthropy.
• Many NGOs are non-profit organizations and have annual budgets of up to billions of dollars.
• NGOs receive funding from a variety of sources, including private donations and membership dues.
• In order to influence public policy, advocacy NGOs work.
• In addition to the American Red Cross, the Salvation Army, and Amnesty International, there are many other well-known NGOs.

What Steps to Follow When Starting an NGO in India?

1. First and foremost, you must decide the specific social cause you want your NGO to work on and back up
2. Then you must draft clear statements regarding your NGO’s mission, vision, and objectives
3. Decide on an efficient board of directors who will be able to lead the NGO to its goals
4. Try to onboard like-minded people so that the team works together at all times
5. Draft appropriate Memorandum and Articles of Association
6. Decide on a good name, and then register your NGO
7. Once you have undertaken the NGO registration, start trying to get funds for your NGO
8. Grow your connections and try to build a wide and broad network

Which Associations Can Act as a Non-Governmental Organisation in India?

1. A Trust composed of one or more people can sign up as an NGO, as per the Indian Trusts Act, 1982
2. Any company, club, or association consisting of professionals can act as an NGO by registering under the Companies Act, of 2013
3. Further, it is to be noted that any society of people that aims to better society can sign up as an NGO as per the Societies Registration Act, 1860 by approaching the Registrar of the Societies
4. Any statutory body which hands out memberships to persons based on their stature.
5. Also, any Charitable Trust can sign up as a Non-Governmental Organisation under the Charitable Endowments Act, of 1920
6. Likewise, any other group, society, or association that aims to uplift society.

The term NGO serves as an umbrella term that covers all legal entities that work with philanthropic and charitable aims. As per Indian laws, Non-Governmental Organisation registration occurs in India in the following ways:

• Trust Registration
• Society Registration
• Section 8 Company incorporation

An overview of public trust registration –

1. Formed when the owner of a property agrees that all the benefits from the property will be used for the upliftment of society
2. The main aim of a trust creator is to use the assets they have to empower society
3. Does not normally have fixed beneficiaries
4. Irrevocable without court or legal intervention

Documents for trust registration

• A completely drafted trust deed
• Proof of registered office – (Rental Agreement or ownership document)
• ID proof of the Founder of the Trust
• Two witnesses

An overview of society registration

• Has a valid memorandum of association, rules, and other regulations,
• Is registered with the Registrar of Society/Commissioner of Trusts, 
• May alter their MOA or change their objectives from time to time. However, all changes must be communicated to the Registrar annually,
• Termination via a clause in their bylaws.

Documents for society registration

• Name of the society
• Address proof 
• Identity proof of members 
• Memorandum of Association 
• By-laws of the society

An overview of Section 8 Company 

1. Requires valid MOA and AOA 
2. Registration should be made under the Registrar of Companies of the central government
3. The process is similar to the incorporation of public/private limited company
4. Must conform to annual compliance measures other companies fulfill

Documents for Section 8 Company

1. Company name
2. Address proof of the office
3. Identity proof of directors 
4. Memorandum of Association 
5. Articles of Association 

What Are Non-Governmental Organisation Compliances?

• After NGO registration, they must apply for a PAN.
  Check Here to more about: https://incometaxindia.gov.in/
• Non-Governmental Organisations must also register under Section 12A of the Income Tax Act to avail of tax benefits. While this is not a mandatory clause, NGOs must do this, to be exempt from taxation.
• Non-Governmental Organisations must then register themselves under Section 80G Deduction to allow their donors to be exempt from taxation on their donations. While it is not mandatory, it is highly advantageous to Non-Governmental Organisations.
• In case a Non-Governmental Organisation wants to accept foreign funds, it must have FCRA Registration from the Home Affairs Ministry’s FCRA division.
• Further, to deduct tax from the source, NGOs must register for TAN.
• In case an NGO does research or consultancy for earning money, and that income crosses a certain threshold, then the Non-Governmental Organisation must obtain GST registration.
• In case NGOs want to deposit tax from employees by deducting their salary, they must obtain professional tax registration.

How to Register a Non-Governmental Organisation With Vakilsearch

Vakilsearch can help you register an NGO in 3 simple steps:

1. Right Entity Selection – Our experts will guide you on which entity is best for you, based on your activity.
2. Online Paperwork – All documents are prepared online, in a simple and hassle-free manner.
3. Registration – We will then register the Non-Governmental Organisation under the appropriate law and handle all the formalities on your behalf.