NGO stands for Non-governmental Organization. Generally, NGOs provide social justice, development, and human rights. It provides services directly to the local community. Basically, NGOs are non-profit organizations. However, they can take funds from both the Government and the private entities.
The NGOs can’t distribute the profits to the members as a dividend. Whatever the profit an NGO earns, it must be reinvested in other projects or non-profit activities.
In India, there are three forms of organizations that may act as an NGO. These are Trust, Society, and Section 8 Company. You can have the trust registered under the Indian Trust Act, Society registration under Societies Registration Act, 1862, and section 8 company registration under Companies Act, 2013.
Starting an NGO in India – Stepwise Guide
First of all, you have to determine the specific form of organization for registration purposes. Before applying for the registration, determine the Mission, Vision, and objective of the NGO’s activity. After fixing the goal, you must have an action plan for achieving the goal. In addition to that, form a governing body for startup operations.
Generally, a governing body looks into the functioning of the daily activities. It looks into matters of financial management, human resources, and planning. The governing body will decide on strategies pertaining to fund-raising and management of people, too. Basically, the formation of a governing body with respectable and dedicated people is an important aspect of the overall success of the NGO.
Ways of Starting an NGO in India
There are broadly 3 ways of starting an NGO in India.
1. Trust Formation for Starting NGO
Basically, you may form a trust when there is property involved, especially in terms of land and building. However, the Trust Act in India varies from state to state. The states without a particular trust Act, are governed by the Indian Trust Act, 1882.
For the trust registration, you have to prepare the trust deed. Generally, a trust deed contains the name and address of the NGO, details of members, rules and regulations, and a set of administrative laws. A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees.
In addition to this, you have to affix a court fee stamp and a nominal registration charge. Generally, the amount depends upon the value of the property. And finally, you have to submit the application form along with the trust deed.
2. Society Formation for Starting NGO
Generally, society registration is the most popular way of starting NGOs. You can follow Section 20 of the Societies Act to know which organizations and societies you can register under the Act. Additionally, you can get the registration under the Societies Act 1860 at the state or district level.
Generally, the memorandum of association and rules and regulations are the most important instrument for society registration. Here, you have to mention the aims and objects and modes of management of the society.
Actually, a Society needs a minimum of seven managing committee members. However, there is no upper limit to the number of managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee.
For society registration, you have to submit several documents. The list includes a 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, together with a court fee stamp.
Additionally, you have to submit a declaration by the members of the managing committee. Here, you have to mention that you will use the funds of the society only for the purpose of furthering the aims and objects of the society.
3. Company Formation for Starting NGO
You can register an NGO under Section 8 of the Companies Act, 2013 ‘for promoting commerce, art, science, religion, charity or any other useful object’. However, for company registration, the body must have a minimum of 3 members. And there is no upper limit. Additionally, you have to prepare a Memorandum of Association.
First of all, you have to check the name availability. After getting the confirmation of the name, you have to apply in writing to the regional director of the company law board. The application should be accompanied by several documents. Submit three printed or typewritten copies of the memorandum and articles of association of the proposed company, duly signed by all the promoters with full name, address, and occupation.
Licenses & Permissions for Starting an NGO
Apart from registration under the three acts, if you want to open an NGO office in tribal areas or locations, it requires special permission. Additionally, if you want to employ foreign nationals, they require Special Licensing. Find the list below.
- The Shop and Establishment Act for opening an office
- Inner line permit for offices in Tribal and restricted areas
- FCRA registration and a no-objection certificate, with a work visa for employing foreign nationals.
Also, if an NGO wants a tax exemption, they have to file an application along with their annual report to acquire 80G certification.
Cost of Starting an NGO in India
The registration cost of starting an NGO in India can be divided into two categories. One is the government fees and the other is professional fees.
The registration fees will depend on the applied state. The rates vary from state to state. The same holds true for hiring professionals. Most registration consultants have their own packages. You need to negotiate with them for the best price.
Finally. if you want to open an NGO of your own, it is always an advantage if you have working experience before with NGO. It will help you in learning the management and daily operations. In general, people get involved with NGOs for some bigger cause of society or human beings.
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Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.