Want to make a difference? Start an NGO legally.
Introduction
Starting a Non-Governmental Organization (NGO) is a great way to make a difference. You can work on education, healthcare, protecting the environment, or helping communities. But, starting an NGO in India needs a legal process to follow the law
Many people want to help but don’t know the legal steps to start an NGO. This guide will cover the legal steps, from choosing the right NGO type to registering it and how get funding.
Problem: Navigating the Legal Complexity of Starting an NGO
Starting an NGO sounds simple, but the legal steps can be confusing. You can choose from *Trusts, **Societies, and *Section 8 Companies. Each has its own rules, and without the right knowledge, you might face delays or problems later.
You need to register your NGO with the right government body. You also have to draft the right documents and follow laws like the Foreign Contribution Regulation Act (FCRA) if you get foreign funding.
Agitation: Challenges Faced by Aspiring NGO Founders
Real-Life Impact: Case Study of an Unprepared NGO Startup
Neha Sharma, a social worker, wanted to start an NGO for better sanitation in rural India. She was eager but didn’t know the legal steps. She chose to register as a Trust but faced issues because her deed was incomplete. Her application was rejected several times because of mistakes, causing months of delay.
Neha’s story is common. Without the right guidance, many struggle to start their NGOs because they don’t know the legal rules.
Solution: The Legal Steps to Start an NGO in India
To avoid Neha’s problems, here’s a detailed guide on starting an NGO in India. Knowing the legal steps will help you start successfully and ensure your NGO runs smoothly and openly.
- Decide on the Type of NGO
The first step is to choose the best legal structure for your goals. In India, NGOs can be formed as:
- Trust
- Society
- Section 8 Company
Each type has its own benefits and rules. Let’s explore them.
a. Trusts
A Trust is a long-standing form of charitable organization in India. It’s created for charitable or religious goals, and its assets are protected for the cause.
- *Legal Framework: Trusts are governed by the *Indian Trusts Act, 1882. But, charitable Trusts are mostly registered under state laws.
- Trust Deed: The Trust Deed is the key document for a Trust. It outlines the Trust’s goals, the names of the trustees, and the beneficiaries.
- Registration: You can register a Trust at the local Registrar office in the state where it will operate. You need at least two trustees, and the Trust Deed must be signed on stamp paper as per state rules. b. Societies
A Society is a more democratic NGO with a governing body. Societies are good for groups working on education, culture, or social causes.
- *Legal Framework: Societies are governed by the *Societies Registration Act, 1860. Each state has its own version of this Act.
- Memorandum of Association (MoA): This document acts like a constitution for the Society, outlining its aims, objectives, and rules for management.
- *Registration: Societies must be registered with the *Registrar of Societies in the state where the Society will function. At least seven members are needed to form a Society, and they must submit the MoA and Rules and Regulations for registration. c. Section 8 Company
If you want to form an NGO that has the credibility of a corporate structure but is focused on non-profit activities, a Section 8 Company is the best option. Section 8 Companies are the most regulated and transparent form of NGOs.
- *Legal Framework: Section 8 Companies are governed by the *Companies Act, 2013.
- Articles of Association (AoA) and Memorandum of Association (MoA): These documents are the legal foundation of the company. They outline the goals, management, and rules of the NGO.
- *Registration: Section 8 Companies are registered with the *Registrar of Companies (RoC). You need at least two directors and shareholders for registration.
- Draft the Governing Documents
Drafting the right governing documents is key for any NGO. These documents set the structure, goals, and rules for your organization. Here’s what you need:
- Trust Deed (for Trusts)
- Memorandum of Association (MoA) and Rules and Regulations (for Societies)
- MoA and Articles of Association (AoA) (for Section 8 Companies)
These documents should be clear and concise. They should state the NGO’s mission, how members or trustees are elected, and how funds are used. They also outline the governance of the organization.
- Registration Process
After deciding on your NGO type and drafting the documents, it’s time to register. Each NGO type has its own process, which we’ll cover below.
a. Trust Registration Process
- Visit the local Sub-Registrar office in the area where your Trust will operate.
- Submit the Trust Deed, signed by the trustees and settled on the appropriate stamp paper.
- Pay the applicable registration fees.
- Once the documents are verified, the Registrar will issue a Certificate of Registration. b. Society Registration Process
- Gather at least seven members willing to form the Society.
- Draft the Memorandum of Association and Rules and Regulations.
- Submit these documents, along with a covering letter requesting registration, to the Registrar of Societies in your state.
- Upon verification, the Registrar will issue a Certificate of Registration.
c. Section 8 Company Registration Process
- Apply to the Registrar of Companies through the MCA (Ministry of Corporate Affairs) portal.
- Reserve a name for the NGO by filing Form INC-1.
- Draft the Memorandum of Association (MoA) and Articles of Association (AoA).
- File Form INC-12 to obtain a license for running a non-profit.
- Upon approval, you’ll receive a Certificate of Incorporation and your NGO will be legally registered.
- Obtain the Necessary Licenses and Approvals
After registering your NGO, you may need certain licenses and approvals. These depend on your activities. Here are some:
- *12A and 80G Certificates: NGOs seeking tax exemptions and allowing donors to claim tax benefits must apply for these under the *Income Tax Act.
- *FCRA Registration: If your NGO receives foreign donations, it must register under the *Foreign Contribution Regulation Act (FCRA), 2010.
- Compliance Requirements
Running an NGO in India requires ongoing compliance with legal and financial regulations. Here are the main requirements:
- *Annual Returns: NGOs must file annual returns with the **Registrar of Societies, **Charity Commissioner, or *Registrar of Companies, depending on their structure.
- Audit: An annual audit of the NGO’s accounts is mandatory to ensure transparency in fund use.
- Reporting to Donors: Keeping donors informed is crucial for sustainability. Regular reports on fund use help maintain trust.
- Case Study: Successful NGO Start-Up
Goonj, founded by Anshu Gupta in 1999, is a success story. It focuses on basic needs and changing giving culture in India. Anshu registered Goonj as a Trust, following Income Tax laws and FCRA for donations.
By following legal steps, Goonj has become a global leader, impacting millions. It keeps transparency and accountability high.
- Challenges and Solutions in Running an NGO Challenge: Legal and Financial Compliance
Running an NGO needs careful legal and financial attention. A mistake can cause penalties, suspension, or loss of trust.
Solution: Work with legal and accounting experts in NGOs. This keeps your organization in line with tax laws, FCRA, and other rules.
Challenge: Fundraising
Finding funds for your NGO can be tough, especially at the start.
Solution: Use social media, crowdfunding, and partnerships with companies and donors. Getting tax-exempt status under 12A and 80G also helps by letting donors get tax deductions.
Conclusion: You Can Make a Difference—Legally
Starting an NGO is a great way to make social change. But, it’s key to be legally sound for success. Follow legal steps from choosing a structure to registering and keeping up with rules. This builds a strong base for your mission, whether it’s in education, healthcare, or community development.
Suggested Searchable Subtopics:
- How to Start an NGO in India: Legal Requirements
- Trust vs Society vs Section 8 Company: Which NGO Structure is Right for You?
- FCRA Registration Process for NGOs in India
- Income Tax Benefits for NGOs: 12A and 80G Certificates
- Steps to Register an NGO in India
- Legal Compliance for NGOs in India
- Fundraising for NGOs: Legal Considerations in India