It is a Non-Governmental Organization which can be formed by a group of private persons, registered under the Society Registration Act of 1860 and recognized by government for performing some of the functions or allocated work on behalf of government. This is a very unique and informal type of arrangement made by the government wherein the government extents the help, support and authority to a private body to perform some of the work of the government on behalf of it. We can thus say that a NGO is a body performing certain duties of the government which may or may not be funded by the government. The activities of the NGOs are mainly welfare activities which may be of various types. In some cases the activities assigned to the NGO are also administrative also. The NGO is widely used for the registered trusts as well as societies in India which perform such work. The government is more concerned about the compliance of the various norms related to the grants to be given to the society and the utilization of the funds by the NGO.
The management of NGO is mainly in the hands of the persons who have formed it as per the bye laws and regulations prescribed by the government. Since most of the NGOs are run on government donated funds, some measures to ensure the appropriate expenditure of the funds given by the government are taken at the management level. Government also seeks the audit of the funds and the way in which the funds have been spent. This all is done in a transparent manner which provides a lot of operational freedom to the NGO to operate and achieve its goals. In most of such cases there is a provision in the bye laws that all the income, earning, movable & immovable properties of the NGO shall be solely utilized and applied towards of the promotion of its aims and objects as set for in the memorandum of association. No profit on there of shall be paid or transferred directly by way of dividends, bonus, profits or in any manner whatsoever to the present or future members of the society or any person, through any one or more of the present of the future members. No member of the society shall have any personal claim on any movable or immovable properties of the society or make any profit whatsoever by virtue of this membership.
Establishing a NGO in India- legal frame work
A NGO can be established either through a registered Society or through a Trust.
A. NGO by a Society under The Society Registration Act, 1860
The establishment of a NGO in India is through the registration of a Society under the Society Registration Act of 1860 for which at least seven persons are required as the desirous persons to establish the said society. The identification and residential proof of the said persons is essential. The application for registration of the society is submitted before the registrar of Society who confirms all the documents and then on the basis of which the Registrar of Society grants the registration of society.
STEPS INVOLVED IN FORMATION OF A NGO UNDER THE SOCIETY REGISTRATION ACT OF 1860 IN INDIA:
STEP-I Forming a group of minimum seven persons as desirous persons to form the said society.
STEP-II Clearance of the name of the society from the Registrar concerned where the office of the society is proposed to be located.
STEP-III Drafting of the deed of society as per the Society Registration Act 1860 and all other standing orders issued from time to time which contains the rules and regulations for running the society and the bye laws.
STEP-IV Obtaining a NOC from the owner of the premises where the office of the society is proposed to be located.
STEP-V Filing the proof of residence and identification of the desirous persons.
STEP-VI Submitting the society documents alongwith all the relevant documents and the drafted deed before the registrar for registration.
STEP-VII Issuance of the Registration Certificate by the Registrar of Society.
STEP-VIII Obtaining a PAN card for the society from the Income Tax Department.
STEP-IX Opening a bank account for the society for the regulation of funds of the society.
STEP-X Getting the exemption under Section 80 (G) of the Income Tax Act for exempting the donations from taxation.
STEP-XI Getting clearances from RBI for receipt of foreign funds in the society.
STEP-XII Filing of ITR for the society after the end of the financial year.
NGO UNDER THE INDIAN TRUSTS ACT:
Any legal entity can establish a Trust in India through a registered Trust Deed under the Indian Trusts Act which becomes a legal entity. All activities of a NGO can be done through the aims and objectives of the said trust. The registration of Trust in India involves the following simple steps:
STEP I: Selecting the name of the trust.
STEP II: Drafting the Trust Deed which should contain all the important aims and objectives of the trust.
STEP III: One settlor or trustee can also run the said trust however a board of trustees can be also named and several persons can be involved in the running of the trust.
