Non- governmental organisation, aka NGO is mushrooming at an international level as well as in our homeland. United Nation in 1945 were the first them to mention in Article 71 of newly form Charter. They are defined specifically but are needed to influential in world affairs. Although a simple definition has been used to define them, a Non Governmental Organisation (NGO) is perceived to be an association of persons or a body of individuals. They often impact the social, economic and political activities of communities and the country as a whole. A non-governmental organization (NGO) is generally considered to be any non-state, non-profit, voluntary organization. As a non-state entity, an NGO is generally independent from government influence but government can grant funds for its functioning.
Starting an NGO is not easy as it seems. Several incumbent procedures need to be followed. It should be noted that the difference between a Non-government organisation, non-profit organisation and trust is slim but it is distinctive.
Before setting up a NGO one should decide the aim/objective of the NGO. After this, form a governing body that focus on the decision making in the NGO. Thereafter one should look into the legalities of setting up a NGO.
A NGO may be registered under any of the following Indian Acts:
- as a Charitable Trust
- as a Society under the Societies Registration Act
- as a licensed company under section 25 of the Companies Act, 1956
Registration of a NGO as a Trust
Section 3 of the Indian Trusts Act defines “trust” as an obligation annexed to the ownership of property, and arising out of a confidence reposed in an accepted by the owner or declared and accepted by him for the benefit of another, or of another and the owner. According to Section 7 of the Indian Trust Act, a trust may be created by (a) every person competent to contract and (b) by or on behalf of a minor.
A trust deed is required which should include:
- The name(s) of the author(s)/Settler(s) of the trust;
- The name(s) of the trustee(s);
- The name(s) if any, of the beneficiary/ beneficiaries or whether it shall be the public at large;
- The name by which the trust shall be known;
- The name where it’s principal and/or other offices shall be situate;
- The property that shall devolve upon the trustee(s) under the trust for the benefit of the beneficiary/ beneficiaries;
- An intention to divest the trust property upon the trustee(s);
- The objects of the trust;
- The procedure for appointment, removal or replacement of a trustee, their rights, duties and powers, etc;
- The rights and duties of the beneficiary/ beneficiaries;
- The mode and method of determination of the trust.
Registration of Immovable property under Trust Deed compliance
An instrument assigning any right, title or interest in an immovable property of value exceeding Rs.100, is required to be registered under the Registration Act, 1908. Thus, a trust deed involving an immovable property must be registered.
Registration of a NGO as a Society
An NGO may be formed as a society as per the Societies Registration Act, 1860, (see Annexure 2, VI), a society can be formed by minimum seven (or more) persons, eligible to enter into a contract, for any of the following purposes:
- Grant of Charitable assistance;
- Creation of military orphan funds;
- Promotion of science, literature or the fine arts; instruction and diffusion of useful knowledge, diffusion of political education, foundation or maintenance of libraries or reading rooms for general use of the members or the public, public museums and galleries of paintings and other work of art, collections of natural history, mechanical and philosophical inventions, instruments or designs Besides, the State Governments are empowered to add more objects to the above list.
Registration of a NGO as a licensed company under section 25 of the Companies Act, 1956
Under the section 25 of the Companies Act, 1956, the registration process is extravagant and tough. It needs singing of memorandum by the associate members. All the subscribers (minimum seven) should sign each page of the memorandum and the signatures should be witnessed by either an Oath Commissioner, Notary Public (Rs. 3/- Notarial stamp duty affixed), Gazetted Officer, Advocate, Chartered Accountant or 1st Class Magistrate with their rubber / official stamp and complete address.
If a NGO is receiving grant from foreign it needs to specify the details under FCRA Act. The Foreign Contribution (Regulation) Act, 1976 (FCRA) clearly states that a NGO who is receiving fund from Foreign need to receive clearance from the Ministry of Home Affairs, in the form of either permanent FCRA registration or prior permission on a case-to-case basis.