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Business Standard
06-08-2025
- Business
- Business Standard
Top Legal Mistakes New NGOs Make: And How to Avoid Them
Non-Governmental Organizations (NGOs) are born from a powerful vision for social change. However, translating that vision into sustainable impact requires navigating a complex web of legal and regulatory compliance in India. New NGOs, with their passion often outweighing their legal acumen, frequently fall into common pitfalls that can jeopardize their mission, funding, and even their very existence 1. Choosing the Wrong Legal Structure This is perhaps the most fundamental mistake. New NGOs often don't fully grasp the implications of their initial registration choice. India offers three primary legal forms for NGOs Trusts: Governed by the Indian Trusts Act, 1882, or state-specific trust acts. Generally simpler to register and manage, but can have limitations on perpetual succession and ease of making changes. Societies: Registered under the Societies Registration Act, 1860, or state-level acts. Require a minimum of 7 members and are typically managed by a governing body. Offer more democratic functioning. Section 8 Companies: Registered under the Companies Act, 2013, by the Ministry of Corporate Affairs (MCA). These are non-profit companies that can engage in commercial activities to further their objectives, with profits reinvested, not distributed. They offer higher credibility, better governance frameworks, and easier scalability. How to Avoid: Don't rush this decision. Thoroughly research each structure's implications regarding liability, governance, funding sources, and future expansion plans. Consider your long-term goals. For comprehensive guidance on initial setup, explore services like NGO Registration online to help you choose wisely. 2. Delaying or Ignoring 12A and 80G Registration Many new NGOs incorrectly assume that simple registration makes them tax-exempt or allows donors to claim deductions. Section 12A Registration: Grants income tax exemption to the NGO on its income, provided it is applied towards its charitable objectives. Without 12A, all income, even donations, is taxable. Section 80G Registration: Allows donors to claim a tax deduction (typically 50% or 100%) on the donations they make to your NGO. This is a significant incentive for donors and crucial for fundraising. How to Avoid: Apply for 12A and 80G right after registering your NGO to ensure tax benefits and boost fundraising opportunities 3. Neglecting FCRA Compliance for Foreign Funding Receiving foreign donations is a common goal for many NGOs, but it comes with strict regulations under the Foreign Contribution (Regulation) Act (FCRA), 2010. Mistake: Receiving foreign funds without a valid FCRA registration, or violating FCRA rules even after registration. This can lead to severe penalties, freezing of bank accounts, and even blacklisting. How to Avoid: Never accept foreign donations without a valid FCRA registration. Open a separate FCRA bank account (specifically designated as an FCRA account at a State Bank of India branch). Ensure timely annual FCRA filings (Form FC-4) detailing all foreign receipts and expenditures. Maintain meticulous records of foreign contributions and their utilization. 4. Poor Financial Management and Record-Keeping Many NGOs operate with passion but lack robust financial systems. Mistakes: Mixing personal and organizational funds. Lack of proper accounting books (receipts, payments, ledgers). Not conducting regular internal audits. Failing to comply with TDS (Tax Deducted at Source) rules on payments made. Not providing proper donation receipts to donors. How to Avoid: Set up a proper accounting system from day one. Use a dedicated bank account for all transactions. Follow TDS rules and issue 80G-compliant donation receipts. Ensure annual audits by a Chartered Accountant as required. 5. Overlooking Annual Compliance Filings Beyond tax and FCRA, NGOs have annual filing obligations based on their structure. Mistakes: Missing deadlines for annual returns with the Registrar of Companies (for Section 8), Registrar of Societies, or Charity Commissioner (for Trusts). Not holding mandatory board/governing body meetings. Failing to maintain statutory registers. How to Avoid: Create a compliance calendar tailored to your NGO type, assign filing duties, and refer to NGO Annual Compliance resources to avoid penalties and stay active. 6. Inadequate Governance and Documentation While not directly a "legal" mistake, poor governance can lead to legal issues. Mistakes: Lack of clarity in the roles and responsibilities of board members/trustees. Not maintaining proper minutes of meetings (Board, General Body). Absence of a well-defined Memorandum of Association (MoA) / Trust Deed / By-laws outlining objectives and rules. Lack of transparency with stakeholders. How to Avoid: Establish clear governance policies, define board roles, and document meetings & resolutions. Conclusion Starting an NGO is a noble pursuit, but sustaining it requires meticulous attention to legal and financial compliance. The initial choice of legal structure sets the foundation for all subsequent obligations. By avoiding common mistakes like incorrect registration and delayed filings, new NGOs can stay compliant.
Hans India
24-07-2025
- Politics
- Hans India
NGOs providing last minute connectivity to govt welfare schemes
I have always held the view that among their other strengths, Non-Government Organisations (NGOs) and voluntary organisations have the commitment and the ability to stay with the people to monitor implementations of the programmes earmarked for them, until the benefits reach the intended beneficiaries, thus providing the all-important last mile connectivity link. Initiatives undertaken by government departments, on the other hand, often create a vacuum, when they withdraw, either because the programs have run their course, or when the funds have dried up, even if the goals are yet to be achieved. Also, government programmes rarely succeed in infusing the element of ownership to beneficiaries of the interventions, something which NGOs are especially good at doing. NGOs possess the last mile connectivity that can impact programmatic quality. Sometime ago, I was invited to join as a member of the Trust Board (TB) of the well-known NGO, Durgabai Deshmukh Mahila Sabha, reputed for its work for the underprivileged sections and, in particular, women, children and the physically and mentally challenged, apart from running well-known and much sought after educational and healthcare institutions. Despite my reluctance to accept commitments to render full justice, to which I may not have the time energy or, for that matter, the background, I accepted. My decision was in no small measure influenced by the knowledge that my mother, Papayamma, was a founder trustee of that great organisation. And it was my father, Bhimasankaram, who was, in fact, the first donor to the organisation, with the princely amount of a hundred rupees in those days! A proposal was recently mooted in the TB, suggesting that the organisation apply to the government of India for registration under the Foreign Contribution (Regulation) Act (FCRA). That set me thinking about the subject of assistance to NGOs, particularly in view of the long association, that I have had with them. A relationship began way back in 1971, when, as the Sub Collector at Ongole in Prakasam district of Andhra Pradesh, when I first met the charming and indefatigable Father Windy, a Belgian Jesuit priest, who was constructing a colony for tribals in a village just outside Chirala town, very imaginatively named Itanagar. In later days, I came to know the legendary Dr. B.V. Parameswara Rao, founder of the very well-known NGO 'Bhagavatula Charitable Trust' (BCT), which has been doing yeoman service to poor people, especially in agriculture and allied sectors, health, education and skill development. Impressed by the outstanding work being done by the organization, none other than the President of the World Bank at that time visited the area and personally congratulated Parameswara Rao. The work done by it in Self Help Groups of women, in association with the National Bank for Agricultural and Rural Development (NABARD), was later to result in NABARD becoming the arm of the state and central governments for upscaling the model. Years later, while serving as the Secretary to Sharda Mukherjee, Governor of Andhra Pradesh, an organization named 'Chetana' was founded by the Governor, primarily to provide assistance to the victims of the super cyclone and unprecedented tidal wave that hit the East Coast of Andhra Pradesh in 1977. Later, after moving from the Raj Bhavan in Hyderabad to Krishna district as Collector, I founded 'Anveshana', an NGO that was to serve as a bridge between the district administration, the various departments of the government in charge of development programmes and the beneficiaries thereof. It was also then that I assisted the Governor in the discharge of her functions and responsibilities as the Chairman of the State Red Cross Society, a state level unit of the reputed humanitarian and charitable organisation, the International Red Cross Society which everybody has heard of. I had a close association with NGOs again, as the Additional Secretary in charge of the department of Land Resources, in the Ministry of Rural Development of the government of India, during which period I had the occasion to visit and observe the excellent work being done by the legendary Ramakrishna Mission at Belur, near the then Calcutta. It was also during the same period that I had the opportunity of observing from close quarters the functioning of the Council for Advancement of Peoples Action and Rural Technology (CAPART), an autonomous body set up by the Ministry of Rural Development to interface between the government and NGOs, which seeks to improve the quality of life in India's rural areas. After my return to Hyderabad, upon completing my tenure as a member of National Disaster Management Authority (NDMA) in Delhi, and encouraged by the leisure I experienced after four decades of hectic activity, I started an organisation to address some of my very long cherished desires. Named 'Vaaradhi', it aims to serve as a platform for like-minded organisations – a forum for the exchange of views, pooling and sharing of experiences and focusing, primarily, on encouraging youth to become productive citizens of the country in the future. Coming back to the question of NGOs seeking and receiving support, it has been my experience that finances are not the only challenge they face. They often approach agencies and individuals for many other forms of support, including expertise in areas such as health care, education, agriculture, and skill development apart from project formulation. BCT, in particular, has been able to strike fruitful and productive partnerships with many organisations, including Indian Council for Agricultural Research, Tech Mahindra Foundation and Head and Heart for the Handicapped (HHH). Some NGOs prefer getting assistance from outside the country, especially from Non-Resident Indians (NRI)s and Persons of Indian Origin (PIO) though such support is abundantly forthcoming from domestic sources, perhaps on account of personal contacts, or a shared commitment, to a cause or purpose. Unfortunately, however, the route has proved a convenient conduit for the murky business of religious conversions. Remittances from those residing abroad have also, on occasion, been used for nefarious, including terrorist, acts and are rightly perceived, by the central government, as a threat to the economic growth of the country. As a result, the Foreign Contribution Regulation Act, 2010, was brought in, to regulate acceptance, and utilisation, of foreign contributions, in case it is detrimental to the national interest. The advantage with assistance secured from domestic organisations and individuals is that, it often comes without any strings attached. Assistance from agencies abroad not only generally entails compliance to various stipulations which may not only be difficult to comply with, but also may be at variance with the protocols and principles prescribed by the state and central governments. In monetary terms, the total outlay of the Ministry of Rural Development (MoRD) alone is around ₹1.8 lakh crore annually, forming a substantial portion of the development budget across central and state governments. Foreign assistance through FCRA accounts for approximately ₹17,500 to ₹18,500 crore annually - just about 10% of MoRD's allocation - and only a fraction of that goes to rural development activities. Similarly, in the health sector, the contribution of NGOs is estimated to be between two and five per cent of the country's total health expenditure, based on past studies. These numbers indicate that while NGOs play a vital and catalytic role, their financial scale remains modest in comparison to public outlays. Every year, NGOs in India receive about ₹43,210 crore from local sources such as the mandatory contributions by corporate entities prescribed under the Corporate Social Responsibility (CSR) provision of the Companies Act 2013, high-net-worth individuals, and family trusts. Well over twice the amount they get from foreign contributions through FCRA, which averages around ₹17,776 crore annually. That being the case, I remain skeptical not only about the need for and desirability of taking the FCRA route, which may amongst to rushing in where angels fear to tread. Justifiably, or otherwise, the fact remains that, generally speaking, people repose little faith in governments. They would rather approach other agencies, either for redressal of their grievances, or fulfilling their requirements. Governments, as a matter of fact, are held in such little respect that someone said, 'I don't make jokes. I just watch the government and report the facts!' Another pertinent point, in this context, is that the archetypal Indian is in the habit of preferring the exotic to something the Telugu saying goes, food cooked in the neighbour's kitchen, is always tastier! (The writer was formerly Chief Secretary, Government of Andhra Pradesh)
Time of India
15-07-2025
- Health
- Time of India
State to tie up with hospitals and corporates to help needy patients
Mumbai: The state govt is initiating a three-way funding arrangement to improve healthcare access for underprivileged patients. The chief minister's medical assistance cell is currently negotiating with corporate entities and hospitals to establish this tripartite funding structure. "A portion of the patient's medical bill will be paid by a corporate house, and the state will also contribute a bit," said Rameshwar Naik, who heads the Chief Minister's Medical Assistance Cell. The third partner would be the treating hospital itself. "We are trying to assess how much hospitals can contribute by reducing charges or providing free services," he added. The tripartite method would ensure more patients get help. "Instead of one corporate house helping one patient, the tripartite method will ensure more patients can be assisted," said a govt official. "The chief minister has also directed that we start crowdfunding efforts for patients who need specialised treatment that runs into lakhs or crores of rupees," said Naik, who heads the state's Charity Hospital Relief Cell. A few months back, Chief Minister Devendra Fadnavis linked the work of his medical assistance cell with the charity commissioner's office to ensure that economically needy patients get access to free beds and care in the various trust-run hospitals in the state. As charity trusts get concessions from the state, their hospitals have to provide 10% of the beds free of cost to families earning less than Rs 1.8 lakh per annum; another 10% of the beds are given at a subsidised rate to families earning less than Rs 3.6 lakh per annum. In the first six months of the year, 23,269 people were provided with Rs 149 crore in assistance by the Chief Minister's Medical Assistance Fund and Charity Hospital Relief Cell. The state is the first to receive Foreign Contribution (Regulation) Act (FCRA) registration to the Chief Minister's Relief Fund of Maharashtra, enabling it to receive foreign donations for "social" programmes.
Time of India
14-07-2025
- Health
- Time of India
Maharashtra govt plans tripartite funding to aid needy patients
Mumbai: The state govt is initiating a three-way funding arrangement to improve healthcare access for underprivileged patients. The chief minister's medical assistance cell is currently negotiating with corporate entities and hospitals to establish this tripartite funding structure. Tired of too many ads? go ad free now "A portion of the patient's medical bill will be paid by a corporate house, and the state will also contribute a bit," said Rameshwar Naik, who heads the Chief Minister's Medical Assistance Cell. The third partner would be the treating hospital itself. "We are trying to assess how much hospitals can contribute by reducing charges or providing free services," he added. The tripartite method would ensure more patients get help. "Instead of one corporate house helping one patient, the tripartite method will ensure more patients can be assisted," said a govt official. "The chief minister has also directed that we start crowdfunding efforts for patients who need specialised treatment that runs into lakhs or crores of rupees," said Naik, who heads the state's Charity Hospital Relief Cell. A few months back, Chief Minister Devendra Fadnavis linked the work of his medical assistance cell with the charity commissioner's office to ensure that economically needy patients get access to free beds and care in the various trust-run hospitals in the state. As charity trusts get concessions from the state, their hospitals have to provide 10% of the beds free of cost to families earning less than Rs 1.8 lakh per annum; another 10% of the beds are given at a subsidised rate to families earning less than Rs 3.6 lakh per annum. In the first six months of the year, 23,269 people were provided with Rs 149 crore in assistance by the Chief Minister's Medical Assistance Fund and Charity Hospital Relief Cell. The state is the first to receive Foreign Contribution (Regulation) Act (FCRA) registration to the Chief Minister's Relief Fund of Maharashtra, enabling it to receive foreign donations for "social" programmes.
Time of India
10-07-2025
- Time of India
ED registers money launderingcase against Chhangur Baba
Lucknow: The Enforcement Directorate (ED) on Thursday registered a money laundering case against Jamaluddin alias Chhangur Baba, the alleged mastermind of an illegal religious conversion syndicate in the state. ED is now preparing to take him into custody. The probe stems from suspected foreign remittances exceeding Rs 100 crore into around 40 bank accounts linked to the accused and his associates. ED has sought the details of income tax returns of all 40 entities of Chhangur Baba in the last 10 years and information about immovable properties from respective SRO (sub registrar office). The 40 entities under the scanner may have more than a hundred bank accounts. According to ED officials, the accused might have used these funds to coerce or lure people into conversion. ED officials have formally obtained a copy of the FIR from the UP Police to investigate the alleged flow of funds that allegedly fuelled a large-scale religious conversion racket. Ghanshyam Rohera, also known as Chhangur Baba and Jamaluddin, his wife Neetu Rohera aka Nasreen, son Mahboob, daughter Samale Rohera (Sabiha), Gunja Gupta (Alina), Abu Ansari, Meraj, Rashid, Shihabuddin, Sabroj, Ramzan, among others, have been named as accused in the case registered by the ATS. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Invertir $112 en Cervecería Nacional CFD podría devolverte un segundo salario Empieza a invertir. EC Empieza ahora Undo ED will scrutinise the movable and immovable assets of the accused. A source said that Neetu Rohera received Rs 13.9 crore in her account in just four months via NEFT, with Rs 5 crore was reportedly deposited from another country. Ghanshyam Rohera (Jamaluddin) received Rs 16.22 crore and Rs 18.66 crore, respectively, in two accounts, besides fund transfers from UAE. Their daughter's passport listed no foreign travel, yet her conversion certificate indicates she underwent conversion abroad. The accused had acquired properties worth over Rs 100 crore in Balrampur and Pune. In Balrampur alone, plots worth Rs 1.5 crore were bought and developed into residential and commercial structures without legal land-use conversion. In Pune, over 2 lakh sq ft of land was purchased for Rs 16 crore under agreements shared with multiple stakeholders, including families of CGM court's staff. The focus of investigation will also be on whether these transactions violated the Prevention of Money Laundering Act (PMLA) and Foreign Contribution (Regulation) Act (FCRA). Chhangur Baba, Nasreen in 7-day ATS custody Lucknow: The Anti-terrorist squad (ATS) took Jamaluddin alias Chhangur Baba and his associate Neetu alias Nasreen into seven-day custody for interrogation. Additional director general (law & order) Amitabh Yash said the ATS would probe financial transactions, foreign funding sources, illegal properties, and conversion network being run by the gang. A copy of the FIR has been shared with the Enforcement Directorate which is likely to initiate a parallel probe into money laundering. Meanwhile, large-scale demolition drive continued for the third consecutive day at Chhangur Baba's mansion in Utraula, Balrampur district. Spread over three bighas along the Utraula–Mankapur main road, the Rs 3-crore property allegedly served as the hub for forced religious conversions. Eight bulldozers razed key parts of the mansion, including the main gate, an illegally constructed hospital, a 30x20 ft administrative block of an under-construction degree college, and a 50x20 ft stable. Officials said that five structural pillars were also demolished. Over three days, authorities have cleared nearly 700 sq ft of unauthorized construction and extracted approximately one lakh quintals of debris. According to tehsildar Satyapal Prajapati, demolition notices were issued on May 17, June 17, and July 7. However, no response was received from Chhangur Baba or Nasreen, prompting the administration to proceed with razing the illegal structure. ATS officials claimed that Baba changed Neetu's religion and used her name to acquire massive property. Officials confirmed that interrogation is now underway at the ATS headquarters, where both the accused are being questioned separately. Joint questioning sessions are expected in the coming days, and more arrests are likely. "All illegally acquired assets will be seized or demolished, and the full extent of the network is under scrutiny," the ADG, law and order, said.
