Can you help me with this inquiry regarding our registered charitable trust under the Indian Trust Act since year 2000? We’ve 80G permanent approval.
IS IT POSSIBLE TO HAVE VARIOUS PROJECTS IN DIFFERENT NAMES UNDER THE TRUST PROPERLY INITIATED BY RESOLUTIONS AND COLLECT DONATIONS IN THE NAMES OF THOSE PROJECTS, CREDIT THOSE FUNDS DIRECTLY IN THE MAIN TRUST ACCOUNT AND THEREBY ALLOW THE DONORS THE 80G FACILITIES? THIS QUERY HAS TWO INTRINSIC POINTS: ONE, REGARDING THE BANK ALLOWANCE OF THE PROPOSED SYSTEM & TWO REGARDING THE IT RULES TO THIS EFFECT.
Grateful for your advice,
Asit Ghosh
Very valuable suggestions both Mr Sriraman & Ms Soma. Thanks a ton!
Dear all,
80G is given to the Trust and not to projects. Trust can give 80G to the donors irrespective of the projects.
Best regards,
Shekar
Dear Mr. Asit,
Your query seems to be a bit complicated but none the less, let us try to get some answers:
1. When a Trust has multiple projects, it implies that “various projects in different names under the Trust”. Also, for any new project the management has to take the approval of the Board of Trustees as they are the Trustees of the Trust and need to know if all the projects being sought by the management are as per the vision, mission and objectives of the Trust.
2. Even if you go ahead and open separate bank accounts for all the projects, the accounts have to be in the name of the Trust but may be suffixed by the name of the project for easy identification. Banks will have no problems in opening multiple accounts for your organization provided the application is supported by authentic supporting documents.
3. Also, since the Trust is implementing the project, I see no problem is collecting donations for the projects but you have to ensure that the donations collected are identified separately and used for the purpose for which they were received.
4. The 80G certificate will be common for all the project but again the name of the project can be mentioned on the receipt for better accountability and transparency. You may have to produce these documents in case the IT department, wants at any stage, to scrutinize your records/books.
I hope all the points raised by you have been addressed to the extent that I could. I hope others will also throw some light on this.
Thanks and regards,
B V Soma Sastry
Dear Asit
Bank accounts are opened these days, after thorough scrutiny of the documents as per KYC norms. One of the basic requirements to open a bank account is that the account has to be in the name of an “individual” or a “legal entity” (or, an ‘artificial person’ – to use a legal jargon!). Projects, per se, are not legal entities. The legal entiry is the Trust. Therefore, all your accounts, will have to be in the name of the “Trust”. As your query is regarding 80G, I am safely assuming that this is pertaining to “local” funds. You do not have a restriction on the number of bank accounts that you may open and operate to receive local grants. You may, therefore, open as many bank accounts as you may require, IN THE NAME OF THE TRUST, to receive funds. To distinguish the accounts, you may use name or acronym of the projects as “suffix” – like “XYZ Trust – Project abc”.
That said, I would encourage you to explore possibility of using “cost centers” in the accounting software for tracking income and expenses project-wise. This is much more efficient way of managing your accounts, rather than opening very many bank accounts, track so many bank statements, do so many BRS at the end of each month, keep little little balance in each account, which may add up to a huge amount, etc. etc.
From the point of view of expense tracking also, tracking expenses through cost centers is far better, than trying to create separate expense ledgers for each of the projects. Just a suggestion for you to explore…..
Best regards
Sriraman
Sriraman, Your suggestions are valuable and thanks a ton for your thoughtful response.
Regards
Asit