Non-governmental organization

The World Bank defines NGOs as private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development. 

• NGOs are legally constituted organizations which operate independently from Government and are generally considered to be nonstate, nonprofit oriented groups who pursue purposes of public interest.

Characteristics of NGOs

• These are social development organizations
• These are organizations of private individuals who believe in certain basic social principles.
• They structure their activities to bring about development to communities they are servicing.
• An independent, democratic, non-sectarian people’s organization working for the empowerment of economic and/or socially marginalized groups.
• An organization not affiliated to political parties.

Registration of NGOs

• Indian NGOs mainly comes under three segments – Societies, Trusts, Charitable Companies.
  • Societies: Societies have to register under the Societies Registration Act,1860.
  • Trusts: Private trusts are registered under the central government’s Indian Trusts Act, 1882, and public ones are registered under the state legislation concerned.
  • Charitable companies: They are set up according to section 8 of the Companies Act, 2013. For charitable companies, the compliance requirements are high, as loans and advances are easily available to them compared to a trust or a society. They have to even pay Income tax under IT act 1961.

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Constitutional provisions

• Article 19 (1) (c) – right to form association
• Article 43 (b) – The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of [co-operative societies].
• Part IX B – cooperative societies
• State list – entry 32
• Concurrent list entry 10,28 

Role of NGO in development 

• Work where state resources are inadequate: 
  • Two main such areas include education and healthcare. 
  • There are not enough government-run schools or hospitals, especially in rural areas. Even if they are present, they do not have the resources. 
  • NGOs try to complement and complete these initiatives. 
  • The NGO called Kerala Sastra Sahitya Parishad is largely credited for the hundred percent literacy rate in that state.
• Fighting social evils: It is due to the efforts of NGOs that the government has banned sex determination of foetus as it leads to evils like abortion of the female fetus.
• Right to Information: It is because of the efforts of NGOs that RTI has become a reality in India.
• Right to Shelter: NGOs such as YUVA and SPARC in cities like Mumbai have repeatedly opposed the demolition of hutments even as they try to improve the quality of life in the sprawling slum clusters
• Tribal Rights: As witnessed in the Vedanta vs. Posco case, NGOs have raised voice against the discrimination of tribal by the multinationals. Many of these NGOs have partnered with Gram Panchayat in the proper implementation of acts like the Forest Rights Act, CAMPA Act etc.
• Implementation of welfare schemes: NGOs due to proximity to the general public, work as an interface between government and the end-users. Thus NGOs play three roles of implementer, a catalyst and a partner in the implementation of government welfare schemes.
• Rehabilitation: NGOs did a remarkable job post-2004 Tsunami. Besides helping in rescue operations, NGOs also set up vocational training centres.
• Community Development: Local, national and regional NGOs have emerged as major players and partners in development activities in the region. At the community level, they are in the front line in providing assistance in the acquisition of basic needs and amenities; in identifying issues, raising awareness, and in articulating the communities’ problems.
• Role of NGOs in Protection of Environment : 
  • Major campaigns by NGOs:
    • Climate Change
    • Protection of Pristine forests
    • Protection of marine life and diversity
    • Against whaling
    • Against Genetic Engineering/ GMOs
    • Prevention of Nuclear Threat to wildlife
    • Elimination of chemical and biological toxic waste
    • Encouragement of sustainable trade
  • Some major environmental NGOs in India are:
    • Greenpeace
    • WWF
    • Bombay Natural History Society (BNHS)

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Legislations regulating the finances of NGOs

• Foreign Contribution (Regulation) Act (FCRA), 2010
  • Foreign funding of voluntary organizations in India is regulated under the FCRA act and is implemented by the Ministry of Home Affairs.
  • The acts ensure that the recipients of foreign contributions adhere to the stated purpose for which such contribution has been obtained.
  • Under the act, organisations require to register themselves every five years.
• Registration and prior approval under FCRA:
  • In order to be registered under the FCRA, an NGO must be in existence for at least three years and must have undertaken reasonable activity in its field for which the foreign contribution is proposed to be utilised. Further, it must have spent at least INR 1,000,000 over three years preceding the date of its application on its activities.
  • The registration certificate is valid for a period of five years and must be thereafter renewed in the prescribed manner.
  • NGOs not eligible for registration can seek prior approval from FCRA for receiving foreign funding. This permission is granted only for a specific amount of foreign funding from a specified foreign source for a specific purpose. It remains valid till receipt and full utilisation of such amount.
• The Act imposes various conditions on the use of foreign funds and some of them are as follows:
  • All funds received by an NGO must be used only for the purpose for which they were received.
  • Such funds must not be used in speculative activities identified under the Act.
  • Except with the prior approval of the Authority, such funds must not be given or transferred to any entity not registered under the Act or having prior approval under the Act.
  • Every asset purchased with such fund must be in the name of the NGO and not its office bearers or members.

• Foreign Exchange Management Act, 1999
  • Foreign Exchange Management Act (1999) aims to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
  • A transaction under FEMA is called a fee or a salary while the same under FCRA is called a grant or a contribution.
  • In 2016, the powers of the Ministry of Finance to monitor NGOs were placed under the FEMA. The idea was to bring all NGOs, which receive foreign contributions, under one umbrella for better monitoring and regulations. The step was taken to that ensure only one custodian monitors the flow of foreign funds to these organisations.

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Challenges faced by NGOs in India

• Lack of fund
• Corruption and misuse of funds
• Lack of accountability: NGOs are not covered under RTI 
• Inadequately trained personals
• Lack of Volunteerism/Social work among Youth
• Uneven presence of NGOs: ‘fashionable’ locations and sectors were overpopulated with NGOs

Way forward 

• A regulatory mechanism like the National Accreditation Council, to keep a watch on the financial activities of NGOs and voluntary organizations is the need of the hour.
• There should be better coordination between the Ministries of Home Affairs and Finance in terms of monitoring and regulating illicit and unaccounted funds.
• The rules and regulations of grants-in-aid should be liberalized by the government and sanction more grants to NGOs.
• Young graduates from universities, colleges and schools should conduct the public seminars, meetings etc., and use the local media to advertise the importance of volunteerism, success stories of NGOs and encourage people to participate in voluntarism.
• NGOs should bring under RTI