What are the Popular Non Government Organisation (NGO) Entities in India?

If you are thinking for starting a new Non Government Organisation (NGO) in India then first you have to know, what is an NGO? and which popular NGO entity is best for your goal which you want to achieve;

 

ngo-entityWhat is an Non Government Organisation (NGO)?

Any organisation working for a social, cultural, economic, educational or religious cause is termed as an NGO or Non Government Organisation. NGOs have made favourable indents to needy sections of Indian society at par with a constantly changing socio-economic climate. NGOs have reached out to all sections of society including women, children, pavement dwellers, unorganised workers, youth, slum-dwellers and landless labourers.

Documents requirements for an NGO
  • Income & Expenditure Statement
  • Receipt & Payments Statement
  • Balance Sheet
  • Auditors Report
  • Activity/Annual Report of The Organisation for the previous year.
  • Budget Estimates for the project for current year
  • Details of Beneficiaries
  • Details Managing Committee
  • Details of Employees on Form
  • Copy of Registration Certificate
  • Memorandum of Association / bye-laws/ Articles.
  • Utilisation Certificate in respect of grants released in the previous year
  • List of Assets acquired wholly or substantially out of government grants under GFR 19

An NGO can also be formed under various legal identities:

(i)  Society registered under Societies Registration Act, 1860.

(ii)  Trust (Formed under the Trust deed and registered with Income Tax Authority.)

(iii) Limited company incorporated under section 25 of the Companies Act, 1956

(iv) Co-operative Society

(v)  Multi-State Co-operative Society

(vi) Trade Unions

(vii) Political Party in India

 

What is Trust?

A Charitable trust or Trust is a legal entity which can be set up by anyone who has decided to commit themselves in principle to setting aside some of their assets or income for Charitable causes. The main obligation is to work within the charitable purposes and the powers set out in the Trust Deed

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What is Society? 

A Society is formed when people come together to do something with some common purpose which is legal and useful for others. A society should generally not get into profit making activities. Societies are governed by the Societies Registration Act 1860.

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What is Sec. 25 Company? 

NON PROFIT COMPANY or Company under sec. 25 – is identical to an ordinary company in all respects except that it is not established for profit and commercial gain.  It is also called a Section 25 Company and is a voluntary association of people, registered under the Indian Companies Act, 1956. It is a company with limited liability that may be formed for “promoting commerce, art, science, religion, charity or any other useful object,” provided that no profits, if any or other income derived through promoting the company’s objects may be distributed in any form to its members.

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The main differences between a trust, a society and a section 25 company

Public Trust

Society

Section 25 Company

Statute/ Legislation Public Trust Act like Bombay Public Trusts Act of 1950 Societies Registration Act of 1860 Companies Act of 1956
Jurisdiction of the Act Concerned State where registered Concerned State where registered Concerned State where registered
Authority Charity Commissioner Registrar of Societies Registrar of Companies
Registration As Trust As society (and by default also as  Trust in Maharashtra & Gujarat) As Section – 25 company
Main Document Trust deed Memorandum of Associations and Rules & Regulations Memorandum and Articles of Association
Stamp Duty Trust deed to be executed on non-judicial stamp paper of prescribed value No stamp paper required for Memorandum of Associations and Rules & Regulations No stamp paper required for Memorandum and Articles of Association
Number of persons needed to register Minimum two trustees; no upper limit Minimum seven; no upper limit Minimum seven; no upper limit
Board of Management Trustees Governing body or council/managing or executive committee Board of Directors/Managing Committee
Mode of succession on board of management Usually by appointment Usually election by members of the general body Usually election by members of the general body

Co-operative Societies:

In India, cooperative societies were regarded as ideal instruments to motivate the people to come together and help themselves in the process of eliminating the unscrupulous middlemen making huge profit at the expense of the society.

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Multi-State Co-operative Societies:

Those co-operative societies, whose objects are not limited to one state and serving the interests of members in more than one state for social and economic betterment of its members are considered Multi State Co-operative Society.

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Trade Unions:

Trade Union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions

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Political Party:

Political Party is also a type of an NGO because it has many advantages which a NGO have. If you are thinking to make a new Political Party in India then first you have to know, what is a Political Party?

A political party is a group of citizens who come together to contest elections and hold power in the government. They agree on some policies and programmes for the society with a view to promote the collective good. Since there can be different views on what is good for all, parties try to persuade people why their policies are better than others. They seek to implement these policies by winning popular support through elections.

Three components are needed for a political party:

  • The leaders,
  • The active members and
  • The followers

The Indian political parties are categorized into two main types:

  • National level parties:

National parties are political parties which, participate in different elections all over India.

  • State level parties:

The state level political parties are those, which are recognized in less than four states and they work in the states.

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How to form a Society in India?

Societies Registration Act, 1860 is a central act for registering not-for-profit organizations.  Almost all the states in India have adopted (with modifications, if any) the central Act for creating state level authorities for registering and supervising various types of not-for-profit entities. According to the act, any seven persons who subscribe to a Memorandum of Association (MOA) can register a society.  The Memorandum should include the names of the society, its objectives, the names, addresses and occupations of those members subscribing to it as well as the first governing body to be constituted on registration. The MOA should be accompanied by the Rules and Regulations- this should include details such as the procedure for enrolling and removing various categories of members, procedure of forming the governing body, conduct of meetings, election and removal of office bearers, procedure for conducting annual general body meetings, etc. The membership of the society may be kept open (or by invitation) to anybody who subscribes to its aims and objectives, for which a fee may be charged.  Although the society can sue and can be sued, the liability of the members is limited, as no judgment can be enforced against the members’ private assets. The society has a perpetual existence and common seal, and can sue or be sued in the name of the office bearer as prescribed under its rules (sec.6). This enables its effective participation in public life

In order to ensure compliance with the purpose and byelaws or memorandum of association, democratic process is provided by allowing the general body meeting of members to decide the composition of the governing body and control their acts through deliberations in the meeting (sec.12&15). Alteration, extension, or abridgement of purpose of the association or any decision on amalgamation can be effected when the proposition of such measure made by the governing body is approved by the votes of three-fifths of the members present in the special meeting convened for this purpose with due notice (sec.12). For dissolution of the society also, similar approval is required (sec.13). All the documents filed by the society with the Registrar are open to inspection by any person (sec.17). This enables transparency and democratic control. Members guilty of offences against the property of the society are punishable with imprisonment or fine (sec.10).

While the Central Act has abstained from providing for extensive governmental control, except routine matters of filing annual statements, many of the state legislations have gone for widespread governmental controls to deal with abuses, malfeasance and nonfeasance of societies. The legal measures include: state’s power of enquiry, investigation and surcharge: cancellation of registration and consequent dissolution of societies; super session of governing body; appointment of administrator; dissolution; and removal of defunct societies. The policies of state legislations vary from one to another in adopting these measures. Under section 25 of the Karnataka Act and section 32 of the Madhya Pradesh Act, the Registrar on his own motion, and on the application of the majority of the members of the governing body or of not less than one-third of the members of the society, can hold or authorize an enquiry into the constitution, working and financial condition of the society.

 

What are the Advantages of Society?

  • Simple process of registration.
  • Simple record-keeping and even simpler regulations.
  • Low possibility of interference by the regulator.
  • Exemption from tax due to charitable nature of operations.

What are the Disadvantages of Society?

  •  Tax exemption extended to societies may apply to public trusts only to the extent the Income Tax department accepts their activities as being charitable.
  • As a charitable institutional form, in essence inappropriate for the for-profit, financially sustainable strategic goal of finance operations;
  • No system of equity investment or ownership, thereby, making it less attractive for commercial investors interested in microfinance;
  • Commercial investors generally regard the investments in such entities risky primarily on account of their lack of professionalism and managerial practices and are, therefore, reluctant to commit large volumes of funds to such NGOs;
  • In accordance with Section 45S of the RBI Act, 1934, no unincorporated bodies are allowed to accept deposits from the public. Organisations registered under the Societies Registration Act and the Trust Act is considered unincorporated bodies. Therefore, according to the law, they are not even allowed to collect savings from their clients; and
  • Also vulnerable to the implication under the money lenders (prevention of usurious interest rates) acts of various state governments.

Documents required for Society

  • Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate or the local office of the Registrar of Societies)
  • Memorandum of association and rules and regulations
  • Consent letters of all the members of the managing committee
  • Authority letter duly signed by all the members of the managing committee
  •  An affidavit sworn by the president or secretary of the society on non-judicial stamp paper of Rs.20-/, together with a court fee stamp
  • A declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims and objects of the society.

 

To form a Society in India just fill this form: