Managing an NGO can, in many ways, be like managing a corporation. Here is how to start an NGO in India and all steps to take before it becomes operational.
As conscientious people of our nation, we have both rights and responsibilities that we must fulfil. Volunteering for a non-governmental organization, or even starting one, is one of the most humane ways to go about it.
An NGO is formed with the primary purpose of aiding our fellow beings or maintaining our natural resources, with no intention of making a profit.
It is an unselfish deed that has today become a catalyst for change in environmental protection and the welfare of the underprivileged. So, if you want to ensure social justice, you may start your own NGO dedicated to an issue that is important to you.
What is an NGO?
A non-governmental organization (NGO) is an organization dedicated to philanthropic causes. An NGO is dedicated to the advancement of the arts, science, sports, education, research, social welfare, religion, charity, and other causes. In India, there are several different forms of NGOs that are established under the Trust Act, the Society Registrations Act, and the Companies Act.
Under the Companies Act of 2013, the NGO is formed under a Section 8 Company. All not-for-profit and charity trusts are required to register under this legislation. What separates a trust or a society from an NGO is that the latter is registered with the Ministry of Corporate Affairs (MCA).
Types of NGO
Their primary responsibility is to guarantee effective communication between ministries and stakeholders. They frequently participate in demonstrations and other forms of social dissent. Individuals can use them to launch a campaign against oppression. CRY, which works with children, is an example of such an organization.
These are organizations that seek to make sure that the impoverished and underprivileged have access to basic necessities such as food, medication, and other necessities. Funds and donations are used to guarantee this. HelpAge and Goonj, for example, are two non-governmental organizations that serve certain groups.
Volunteers make up the majority of this group. The World Wildlife Fund and Animal Aid, Jaipur are two organizations that are good examples of this.
Eligibility to start an NGO
- If the NGO is sought to be incorporated as a private limited company, then it should have a minimum of two directors.
- If it seeks to be registered as a public limited company, then it should have a minimum of three directors.
- An NGO registered as a private limited company can have a maximum number of 200 members.
- There is no member limit in the case of a public limited company
- There can be a fee charged if an entity registers as an NGO
What to do before applying for registration of the NGO?
Obtain Digital Signature Certificate (DSC)
The nominated directors must supply digital signatures since the registration documents must be digitally authenticated before being filed online.
Digital Signature Certificates are issued by certifying bodies under the Indian government. Applicants must receive a DSC in either the Class 2 or Class 3 category. The cost of getting a DSC varies and is determined by the issuing organization.
Obtain a Director Identification Number (DIN)
Applicants must request a DIN for each of the prospective organization directors. The submission of Form DIR-3 facilitates the assignment of a DIN number.
Together with the application form, digitized documents such as self-attested copies of PAN, identification, and proof of address of directors must be furnished.
You can navigate to the Ministry of Corporate Affairs (MCA) website to find the online application form. A practising chartered accountant, company secretary, or cost accountant is necessary to attest to the documents.
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How to start an NGO in India?
Define the purpose and build a team
Establish the objective by which the NGO will serve. You will need like-minded folks to join you as a team that isn’t looking for financial benefit from this endeavour. Professionals can also be found here.
Now it is essential to address the logistics. To begin, develop a memorandum or statement that outlines it all from the NGO’s objective to the team’s specifics. It should also provide the NGO’s location and source of funding.
Establish a board of directors
The next step is to form a board of directors (founders). All of the members who were the driving force behind the concept of an NGO should be considered founders, and then you may recruit others who are eager to contribute to the betterment of society.
Pick a name
Choose a name for your non-profit organization. The name should convey the NGO’s mission and should not be too lengthy or tricky to pronounce. Understand that you can’t use a name that sounds like a government agency.
Articles of Association
Every NGO in India needs to have an MoU (Memorandum of Understanding). It should include the following details:
- Name of the NGO
- Address/Location of the NGO
- Vision and Mission
- Details of the governing body
- Workforce and employee information
- Rules & Regulations
- Administrative procedures
Register your organiZation
- A DSC of the potential Directors of an NGO must be obtained by the application. After gaining a DSC, submit Form DIR-3 to the ROC to receive a DIN.
- Following DIR-3 acceptance, the ROC will assign a DIN to the nominated directors.
- The applicant must next submit Form INC-1 to the ROC in order to register for a business name. A preference list of six names can be submitted, from which ROC will choose one subject to availability.
- After receiving ROC clearance, submit Form INC-12 to apply for an NGO licence.
- The NGO licence will be granted in Form INC-16 when the Form has been approved.
- After receiving the NGO licence, the registrant must file SPICE Form 32 with the ROC for the organization. The ROC grants a Certificate of Incorporation with a unique Corporate Identification Number after checking and verifying the paperwork.
Start working on the sources of funds
Now that your NGO has been established, it’s time to start raising funds because you will surely need income to keep it running.
Donations are the most efficient and convenient method of raising finances. Meet individuals, explain your plans, and ask for donations. You can also get money from the government, other non-profits, and even sources from abroad.
Build a network
The basic goal of an NGO is to benefit humanity, which can only be accomplished by connecting to as many people as possible.
As a result, the final but not insignificant slightest step is to develop a large community. To reach the highest number of people, you will need a large network. Partnerships are the greatest method to do this. Join forces with other non-profits and spread the word about yours.
Why is it smart to register your NGO?
Registering your NGO under the NGO of Companies Act, 2013 can be really beneficial.
By registering your company as a non-profit organization (NGO) under the Companies Act of 2013, you may take advantage of many tax benefits for the organization’s directors.
Low Share Capital
To run flexibly, all businesses require a minimum share capital. This is not the scenario for NGOs, because they may be directly sponsored through donations.
Subscriptions can also be used to fund the organization’s legal activities. As a result, NGOs do not require a larger percentage of cash to operate autonomously.
The majority of businesses are required to disclose their limited liability status. Entities registered under the Companies Act are not subject to this rule.
The use of titles is prohibited for certain registered businesses. They can operate without disclosing their limited liability status to the public, which saves the firm money on the capital it has to raise.
Transfer of Ownership
Companies that are classified as non-profit organizations (NGOs) under the Income Tax Return Act of 1961 are not limited in their ability to transfer ownership or claim to earn interest.
Most businesses, on the other hand, are unable to transfer ownership as easily, which helps NGO-registered businesses.
Exemption from Stamp Duty
All firms that are registered as NGOs under the Income Tax Act of 2013 are excused from stamp duty, allowing the organization to save money on taxes.
All of the taxes saved by avoiding stamp duty are then used to promote the company’s new mission statement. Exemption from stamp duty preserves finances for the organization, allowing it to operate more smoothly and increase production.
What are the types of NGO registration in India?
In India, trust as an NGO can be established as a private or public trust. Public trusts are organized in accordance with current regulations and function in the fields of healthcare, education, and underprivileged help.
The State Trust Acts govern the trust registration procedure. If a state does not have its own trust law, it will be governed by the Central Indian Trusts Act of 1882.
The Society Registration Act of 1860 governs the formation of non-governmental organizations. They are formed only for the purpose of promoting the arts, science, literature, or any other non-profit endeavour.
These are non-governmental organizations that are based on membership. In India, the society NGO Registration Procedure involves a minimum of seven members.
Section 8 Company NGO
The Companies Act of 2013 regulates the Section 8 company registration process in India. They are not permitted to pay any dividends to their stakeholders.
Because all non-governmental organizations are created for benevolent reasons, any revenues gained are re-invested in the organization to enable it to execute extra responsibilities. In India, a minimum of two directors is required to form a Section 8 Company NGO.
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What are the benefits of starting an NGO?
- It serves as a link connecting citizens, stakeholders, and the country’s administration.
- It is a reliable catalyst for change since it is not a part of the governmental structure and hence is significantly more independent.
- NGOs carry out the tasks that look forward to upholding those who are working in the most difficult conditions or are oppressed under a harsh work regime
- They have a stronger affinity to India’s rural areas and they have significantly increased the value of India’s human resources.
- They are unrestricted and have the potential to push a variety of causes in the right direction
- They are very inclusive of communities and encourage residents to take part in the process.
- They serve the poor and the underprivileged.
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Non-governmental organizations (NGOs) are non-profit entities that aim to improve people’s lives via cultural, social, educational, scientific, and artistic endeavours.
This article discussed the broad steps to undertake if you want to start an NGO of your own. If you are interested in forming an NGO but find it difficult to keep track of all the necessary paperwork and procedures, we are here to assist you.
I hope this article helps you understand the process and answers all your questions related to starting an NGO in India.
Frequently Asked Questions (FAQs)
How to Choose the Best Model for Registering an NGO?
When it comes to securing an NGO Registration certificate in India, the first thing that comes to mind is whether to go with a society, a trust, or a section 8 company. When selecting an NGO model for yourself, keep these elements in mind:
– Orientation, vision, mission, future goals
– Level of operation, whether local, state or national
– Compliance requirements
When is a Non-Profit Organization eligible for Government Funding?
After three years, an NGO becomes qualified for government funding. However, in circumstances where an NGO’s idea is approved, it may be eligible for government funding even after one year.
What is CSR?
CSR (Corporate Social Responsibility) is a term that refers to a company’s voluntary efforts done in order to function in a way that is economically, socially, and ecologically sustainable.
According to a new CSR legislation adopted in 2013, every firm that produces a profit of at least 500 crores must contribute a portion of its profits to poverty alleviation, education, and societal benefits.
How many Members are Required Minimum to Register an NGO?
If it is a Trust, the minimum number of members necessary to register an NGO is three.
It is not required that all three members come from separate states. If you want to register a society, you must have at least seven members from seven distinct Indian states.
What are the Major Positions of Responsibility involved in an NGO?
The President, General Secretary, and Treasurer are the three most important positions in an NGO. You can also have a Vice President in some instances.