A Simple Guide of Starting a Non-profit Organization in India
Starting a Non-Profit Organization in India is an honourable ambition. Here’s 3E Accounting’s quick guide on how to do it.
Starting a non-profit organization (NPO) in India is a fulfilling way to give back to the community. However, being inspired to start an NPO and actually getting it done, are two different ball games.
It requires dealing with the administrative, legislative as well as financial concerns. It is essential to know about the process and steps and not to let it dampen your initial enthusiasm. 3E Accounting is here to help you get the ball rolling and turn your aspirations into realities.
Types of NPOs in India
In India, NPOs are also known as Non-Governmental Organizations (NGOs). NPOs consist of three types:
- Trusts – registered under the Indian Trusts Act. They are public, not private, charitable trusts and require at least two trustees. They must be beneficial to the general public or a section of it. – e.g. poverty or medical relief, or education, etc. Usually irrevocable once set up and are governed by state law as opposed to national legislation.
- Societies – registered under the Societies Registration Act. Considered membership organizations and can include charitable societies, public museums or charities that promote the arts and sciences. They are managed by a council or committee and may be dissolved. A minimum of seven people is required to form a Society.
- Section 8 Companies – registered under Section 8, Companies Act. They are limited or private limited NPO companies, licensed from the Central Government and may be dissolved. They must promote community objectives (such as art, social welfare, etc.) and all profits must go towards these aims, not members. A minimum of two individuals is required for company incorporation.
All NPOs in India must submit annual returns and statement of accounts. These are to be done at both the state and national levels. NPOs registered for charitable purposes can acquire public benefit status and apply for tax exemption.
Getting It All Together
Once you know about the types of NPOs in India, you can focus on other details. First off, get your vision and mission statement done so that you know what issues to champion. Next, you will need a Promoter to act as a go-between until your NPO is up and running. Promoters act as the governing body until your NPO is constituted.
You will also need to get all the legal documentation and registration done. These include trust deeds (for Trusts) or the Memorandum and Articles of Association (for Societies and Section 8 Companies). The NPOs name, address, statement of assets and details of governance are also needed.
Finally, do focus on fundraising. These can be internal (e.g. member donations) or external (e.g. grants). It is also important to socialize, and network as partnerships can make all the difference in how successful you are.
Starting a non-profit organization in India with a partner such as 3E Accounting is a step in the right direction. It’s a partnership tailor-made for success.
Contact 3E Accounting today for all your business needs.