With varying interest levels, people have seriously diverted their minds towards opening NGOs (Non Governmental Organizations). I have seen many people quitting high profile jobs and opening NGOs. However, opening and managing NGO is not an easy thing to do but at the same time it is not that difficult. NGOs are basically the non-profit organizations which are formed with a basic purpose of promoting the certain causes or for the welfare of the masses of the country. That is, NGOs are started for addressing a specific issue.
In India, NGOs are registered under the Societies Registration Act, 1860. There are few societies who are allowed to be registered under this act as NGO. Some of these societies are: charitable societies, galleries of paintings including other works of art, libraries and leading rooms, military orphan funds or societies, museums, societies specifically established for the promotion of science, fine arts, literature, etc.
In order to set up and run a NGO, you need to have a board of trustees who can run its affairs. You can also say that NGO is self governed organization. NGO can be registered in the capacity of trusts, societies or even private limited companies under section 25 of the Act. In all these modes, there are few basic things that will remain same. These requirements are as follows:
- You need to fill up a registration. You can get this form free of cost from the office of Registrar
- A Memorandum of Association
- A letter of consent and an authority letter duly signed by all the members of the active committee. A managing committee, can be formed with a minimum of seven persons.
- A certified copy of rules and regulations specifying that the rules and regulations mentioned therein are correct. It needs to be certified by at least three members of the managing committee.
- A declaration that the funds of the NGO will be utilized only for the purpose of catering to the objectives of the society.
All the above mentioned documents are submitted to the Registrar in duplicate along with the registration fee. Registration fee for Mahila Mandal is Rs. 10 and for all other NGOs, it is Rs. 50. A society can only be registered with a name that is not registered in the State. Once the Registrar’s office is through with the verification procedure and is satisfied with the society, it issues a Certificate of Registration.
Now let us take a brief look at the various ways of incorporating NGO.
Indian Trusts Act – Under this Act, it is not mandatory for a charitable trust to obtain a certificate of registration. However, if the trust expects or wishes to claim a deduction in income tax, then it must apply for registration and obtain a certificate. Normally, a public charitable trust is floated in cases where there is involvement of property including land and building. There are different Trust Acts for different States in India. Trust deed is one of the main instruments of a public charitable trust. Major contents of this trust deed are the aims, objectives and the operating mode of management of the trust, minimum number of trustees, maximum number of trustees, procedure of appointment and expulsion of trustees. In order to form a NGO by the way of forming a trust, there has to be a minimum of two trustees. The trust deed needs to be signed by the existing trustees in front of two witnesses.
Societies Registration Act – In order to form a society there has to be a minimum of seven persons. Forming a society involves more formalities as compared to forming a trust. But the benefit of forming a society is that it offers more flexibility to the society in terms of regulations. NGOs formed as societies are regulated by the Societies Regulation Act, 1860. Such societies can be charitable societies, societies for promoting science, literature or fine arts, military orphan funds, societies for diffusion of political education, libraries, etc.
Companies Act – NGOs formed under section 25 of the Companies Act, 1956 are mainly associations that are established with the purpose of promoting art, science, commerce, religion or charity. However, unlike companies, members of these NGOs cannot receive dividend. And all the profits earned by running the operations of NGO should only be utilized in furthering the objectives of NGO for which it has been formed. Memorandum and Articles of Association are the main instruments of NGOs formed under Companies Act. In this case, there has to be a minimum of three trustees in order to form NGO.
Apart from the above methods, NGO can also be formed by getting a special license or permission.
