Socio Research & Reform Foundation

Home Ministry has now come with a notice requiring all registered NGOs to update all changes in office bearers. Till now Rule 17A required that any change shall be intimated electronically online, within fifteen days, The Rule covered several aspects of information about the NGO registered or having prior permission including changes in key members of the association if at any point of time such change causes replacement of fifty percent or more of the original key members as reported in the application for grant of registration/ prior permission/ renewal of registration under the Act [in Form FC-6E].

However now the Home Ministry’s new Notice states that all changes must be updated ‘online’ in real time. That means one needs to update all changes as and when the change occurs. It may be noted that earlier it was required only when more than 50% change happens from the date of position as included in the application submitted for registration / prior permission. In fact, earlier online Form did not have option to make this change if changes were less than 50%. Earlier the Rule 17A was for intimation, but now the Notice states that it has to be ‘approved’. This makes a marked change.

Notice requires the NGOs to submit applications for addition/ deletion/change of details about office bearers/ key functionaries by 7^th July 2019, failing which penal action will be initiated against them. Although presently the Form is not updated for individual changes, we hope it will be soon amended to allow the NGOs to update necessary changes.

One clarification, which was not their earlier has also come that in case Chief Functionary is not a Trustee / member, still his/her details should be intimated, since the applications are required to be signed by Chief Functionary only.

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Socio Research & Reform Foundation (NGO)
‎512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

I had attended one workshop on NGO conducted by your organisation.

I have a Charitable trust registered under Bombay Public Trust Act. It is from Pune. We are 3 trustees all Hindu.

Kindly let me know how I can convert my trust into minority trust? 

Thanks in advance.

Kind regards,

Adv Nandini Shahasane

DONATIONS

In the 2nd part on this series of Resource Mobilisation, lets focus on Donations, second most (if not the first) popular form of income of NGOs. One can say donations are birth right of a non-profit and hence should be one of the mainstay for resource mobilisation. In a way, success in raising donations also indicates the popularity of the non-profit or acceptability of the causes that it espouses for. Donations can be raised in several ways.

Using persoanl influence: Any promoter of a non-profit would start raising resources from its area of influence, i.e. well-wishers, friends, relatives, and of course own funds, etc. However there would always be limitation in such kind of resource mobilisation, one, due to limitation of such contacts; second, same persons may not wish to contribute again and again. Hence a better way would be to try to make your friends a stakeholder in the work that you propose to do. If convinced, not only will they contribute with more zest, but also bring in more persons.

Raising Funds online: In today’s time raising of funds online has to be most efficient. This mode can be adopted in different ways. Non-profits can develop online site for raising of funds, on their websites, social media, through apps, etc. One could also consider posting its activities, e-journals  regularly on social media. As the saying goes, if you are in their mind, people will remember you when they wish to donate.

Crowdfunding: Most recent example of crowdfunding is raising of Rs 77 lakh (as allowed by ECI) by Kanahyia Kumar as his election funds through Crowdsourcing.

There are several platforms in India, which allow you to raise resources through crowdfunding, such as  https://www.ketto.org/, https://www.impactguru.com/. More can be found through google search. Crowdfunding is cost efficient. Infact you may not need to pay initially on some of the sites and pay only certain percentages when funds are collected. Several crowdfunding sites have large database / subscribers, thus enhancing the reach even for smaller non-profits. Crowdfunding is found to be effective only if your campaign has certain emotional appeal. Thus packaging of the campaign is quite important. Second you need to respond quickly to any queries that potential donors may have. Best way forward is to contact such crowd-funding sites, understand their terms. Also do contact others who may have raised funds using such sites and who can share their experience and help you avoid pitfalls.

SPONSORSHIPS

One of the flaw of donation, as a resource mobilisation, is that it focuses on raising funds from an individual only once. Sponsorship is the instrument which has built-in instrumentality of repeated donations. Traditionally sponsorship was undertaken for causes of children, where an NGO working on Child Rights, could offer a bouquet of sponsorships. For example, for health of a child, for education of a child, for complete growth of a child, etc. Generally a fix amount is offered. It is upto a non-profit to innovate and develop sponsorship instrument for other causes.

Sponsorship is both a challenge and an opportunity. A repeated donation indicates a satisfied donor, while a donor who does not repeat a donation could indicate ‘a failed opportunity’ to satisfy a donor. Developing Sponsorship program requires several strategies, developing & packaging the product, engagement & effective communication with the donors. Developing a sponsorship program which has impact on resources of the non-profit is not easy, it requires planning & perseverance. However once developed, such a program will help organisations become relatively free to undertake programs according to your own plans and do not have to depend on donors. Major advantage of sponsorships is that funds would not be slashed just because one donor decides to move away. Thus there is stability.

HelpAge, as stated by Mr Mathew Cherian, in his Memorial Lecture receives 60% funds from individuals. This is a huge achievement. There have been other organisations, who worked to develop their own sponsorship models, which helped them achieve stability in their programs. Deepalaya is one such example.

Late Mr Vijay Sardana, was one big advocate of sponsorship and he believed that sponsorship model must be integral to each non-profits resource mobilisation program. His initiatives helped SRRF to organise a Training Program for helping set-up a Sponsorship Unit within a non-profit. SRRF still believes in utility of such a program, and if there is sufficient demand could consider organising the same again.

Tax Aspects

Most non-profits would be registered under S.80G, thus providing tax benefit incentive to the donors of upto 50% of the amount donated. There are certain nationally recognized funds, which get 100% deductions, like PM Relief Fund, National Defence Fund, National Sports Fund, National Children’s Funds, etc.  

Donations made to specified institutions undertaking scientific & statistical research and approved under (S.35(1)(ii))  (S.35(1)(iii)) respectively would attract 100% deduction under S.80GGA.

Please note, do not take cash donations above Rs 2,000/-, person giving such cash donations would be denied tax exemption. Tax authorities, could treat such donations as anonymous donations in the hand of non-profits and tax them, unless PAN or some other KYC identification can be provided.

FCRA Aspects

In case of online donations, please be careful, that you have sufficient details of donor. In case of foreign donors, donation should be accepted only in FCRA designated account. All donations rec’d in local accounts must be only from Indian citizens.

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Socio Research & Reform Foundation (NGO)
‎512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Taking a cue from Mr Mathew Cherian’s Vijay Sardana Memorial Lecture, we start a series of short discussion points on Resource Mobilisation for Non-Profits. We start with one of the most popular resource, GRANTS.

I don’t need to discuss much about grants, all of us know Grants are basically tied funds, which can be used to fulfil a non-profit’s objectives.

On the Pro side, grants help a Non-Profit get much-needed funds, which can help it meet salary & admin costs, and hence are always welcome. They help you gain experience of implementing projects. It gives NGOs exposure on how to deal with large development organisations. Also lets not forget Grants attract grants. Thus getting grants could be a multiplier effect on resources.

On the flip side, grants create uncertainty. In case a big grant goes missing from an NGO’s portfolio, unless replaced with another, it creates gaping hole in the NGO’s income. The organisation would immediately need to cut down. If too much micro-management by grantor, it can reduce a NGO’s own originality in execution of the projects. Methodology for implementation, although in theory is to be mutually decided between grantor and grantee, but more often, grantee basically ends up doing what the grantor wants to be done with its money. There would be exceptions, but generally this is the situation. Grants can make a non-profit complacent, as it is tied up in servicing those grants and has little time to explore or develop other resource avenues.

On available sources of grant funds, there are still a few funding agencies in India which give grants. There are several websites which provide such information. Lists available on these websites, would never be upto date and NGOs would need to ascertain the current status.

Let’s also acknowledge perception of difficulties in FCRA has reduced interest of foreign funding agencies in India, however these funds are still available, and networking with right organizations and a lookout for such organizations still can help.

CSR Grants have certainly become far more prevalent today, and contacting CSR Depts of large companies could help. Also keep a lookout for big companies active in your area and contacting them should be on all NGOs agenda. There could be ticklish issue with CSR Grants, where corporates may deduct TDS on the grants. This could be due to misconceptions in the corporates understanding of taxability issues of NGOs or even inflexibility of their payment systems, which only recognize contract agreements which are subjected to TDS. In case you cannot convince corporate not to deduct TDS, at least get a lower Tax deduction certificate under S.197. This would help you minimize cash flow issues. In case corporate asks you to raise invoice with added GST, this is strongly advised to avoid, it could create future taxability issues for the NGO.

Govt grants are other major areas of avenues, which NGOs should consider. These do come with negative perceptions, but they do contribute to the society. All good work done by NGOs in such schemes goes towards betterment of society.

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Socio Research & Reform Foundation (NGO)
‎512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

Summary of the lecture by Mathew Cherian

Is financial viability of the Voluntary Sector a mirage? The way forward

PART-III

ACCOUNTABILITY AND TRANSPARENCY

We need to open our financials to scrutiny to the smallest donor, reporting bodies and to be accountable to the last penny. There is no escape from frugality and public inspection. I will give you a personal anecdote. In HelpAge or doors are open to all from IB inspectors to small donors.  One day as I came in the morning, I was pleased to see a well dressed gentleman waiting in the morning. He said his wife had given a donation cheque and she had requested him to drop it by. It was none other than the past SAIL chairman Mr Rungta. Something must have impressed him about helpage that he called me to his office a week later to give a CSR grant. It is very important that your reception is kept efficiently  and that even your peons/ staff know about your work. It is said that Mahatma Gandhi the best non profit fundraiser sat next to a window facing the gate both at Sabarmati and at Sewagram in Wardha. It gave a transparency to the leader to the public.

This brings me to the next point of admin costs to programme costs. While framing minimum standards for Credibility Alliance we have debated this ad nauseum. Most people are willing to fund projects but not to fund administrative overheads.  Even corporates who are used to high salaries will not give any funds for non profit salaries. You are supposed to live on love & fresh air! This is an area which needs donor education and is an area we all need to work at.

 Corpus is an area which all small and big non profits need to work on to improve their long term viability if the organisation needs to survive through bad times. Corpus in my experience needs to be built brick by brick and will serve the organisation in the long run. It is another tool for not just viability but independent functioning.

We have seen big companies like ILFS  go bust and so have many others. If we do not build up our internal viability based on internal fundraising and good governance then please do not expect to grow and prosper.

GOOD GOVERNANCE

Governance within the non profit sector has to also be strengthened.  Ensure good governance,transparency, grievance redressal mechanisms, open house sessions, regular audit and whistle blower provisions including prevention of sexual harassment.  It is also pertinent that Vijay Sardana in the last few years before he passed away was working on Governance standards along with Subash Mittal. It is probably his clairvoyance in non profit matters.

There is no magic mantra or a magic wand  for financial viability. It is simply hard work 

HOWEVER COMMITMENT TO A MISSION, ACCOUNTABILITY AND TRANSPARENCY ALONG WITH GOOD GOVERNANCE WILL TAKE YOU ON THE PATH OF VAIBILITY (CAG- COMMITMENT, ACCOUNTIBILITY AND GOVERNANCE)

I can offer you all a talisman “ Be good to your big donors who sometimes can be terrible as they can support large infrastructure and the other needs but be equally good to small donors and even the smallest donors , our school children, and some of them become future CEO’s and leaders and will remember your organisation with fondness. Small donors can be your most  committed regular donors and their money is most important.

I am often met by people from all walks of life who tell me proudly that they have fundraised for Helpage india as school children and still treasure a trophy or a certificate we have given them. Acknowledging all donors and keeping them informed about work achieved is critical.

Vijay Sardana showed a way both in financial sustainability and in governance and perhaps even had a price to pay for his stand.  I will never forget his birthday August 13 which he shared with my partner Amita and  we used to wish him regularly . I miss his soft spoken gentle presence and friendship and hope some of you will make the effort  to bring in transparency, good governance and accountability as civil society organisations viability financial and otherwise will follow if we are responsive, innovative and responsible recepients of public funds for public causes in a country where 30 % of our brethren still go to bed hungry in our villages and cities and live without basic amenities. May a 1000 thousand  flowers bloom in the non profit civil society space in India led by those who choose to stay idealistic, perhaps even hungry and foolish….. 

Summary of the lecture by Mathew Cherian

Is financial viability of the Voluntary Sector a mirage? The way forward

PART-II

The common thread is LOCAL vs INTERNATIONAL FUNDING. Out of the 3.1 million organisations, merely 50,000 organisations are the struggling ones (just  UNDER 2 percent).  The common thread among them is that they are all based on EXTERNAL grants. In my opinion it is local volunteers, local products, local markets or local fundraising, is the Key to the Viability of the sector.  They have proved that they can grow to scale. They also prove that solutions need not be small. It is not just  the corporate sector which can create jobs and when it does so it wrests major concessions from the Govt unlike non profits.

Yet, can smaller organisations working on critical issues for disability, the destitute, rehabilitation of beggars, homeless, manual scavengers, children exist, scale up and survive? Or is there a time when they too must call it a day? The dilemma for many organisations is whether to scale up or stay small & beautiful.  It is between the devil, in this case the regulating authorities, and the deep blue sea, which is freedom to work according to your passion “azadi”. We need to assess our true strengths and weakness, that is each one of us who run organisations in the sector on how we can become viable. The idea of freedom and “azadi” is very attractive but to make the organisation viable is hard work and a clear strategy is needed. There are no short cuts!

Assessment of real strengths and weaknesses of NGOs in  financial viability

Financial viability is perhaps the aspirational need of many organisations but it is also a strategic thinking for the future.  One has to be first viable and focussed in the work, COMMITMENT TO A VISION AND A FOCUS  THEN programmes and strategies WILL FOLLOW  to solve a developmental problem , There may be a need to reinvent , Take the case of HelpAge , which has just turned 41, It runs India’s largest mobile medical service and serves 2 million elderly in rural areas in a country, carries out 35000 cataract operations. About 15 years ago we started elderly self help groups as the country offers very little pensions in old age. These groups have now started Elders for Elders which is a viable organisation. To fight for pensions we have joined forces with pension Parishad with Aruna Roy,  Baba Adhav to advocate for  an universal pension for all the elders of this country and a minimum pension of 3000 Rs per month . Further acting as amicus to the Supreme court in a PIL for the elderly rights , we cannot work any more in silos and need to network, join associations push for change. There is strength in greater numbers than fighting it alone. All of our advocacy work is done through Indian funds.

The choice is in raising small amounts of resources both from local sources and the internet. Today we raise funds from 250,000 individual donors small to big. From children like my daughter who contributes 100 rs to a stockbroker who gives a crore for the homeless programme or the quiet Dr.Chottani who will quietly walk into my office and write out a cheque for 55 lacs. Crowdfunding like the Obama campaign is the way forward. Individuals contribute 60 percent of our 100 crore income in HelpAge India and foreign funds is under 1 % of the income. Local funding is the way forward as it connects us to local stakeholders and keeps us grounded.

Individual philanthropy in the country is more than 500 million USD and apart from it there are the big philanthropists like Azim Premji who have contributed into their foundations 400 million USD and companies such as HCL as well that gives large grants in a transparent manner.  There is a potential of 1000 million USD ( 7000 crores) available.

Corporate funding is about 10000 crores through the CSR route per annum.  I have some concerns on this form of funding though the 2 % CSR is an opportunity and also a threat to the viability of the sector, apart from the fact that it tends to co-opt the sector so that we are not a threat to destructive policies on environment, displacement and on energy and extraction/mining , land grab etc. Gandhiji famously said “Co-operate when you can, resist when you must”

However while looking for local funds, integrity and transparency are paramount. While raising funds on the internet either through crowdfunding sites your kite mark on credibility has to be recognisable. In the last 15 years I have spent time with others in founding Credibility Alliance, the first accreditation organisation and Guidestar the first transparent database of NGOS on the net with a set of minimum standards for the sector which can restore its credibility, Without transparency there can be no local funding.

It also takes a track record of the NGO for people to donate and you need to establish this on your website with a five year record of balance sheets and accounts on the public domain, the credibility or the impact you are making in your area of work.

Summary of the lecture by Mathew Cherian

Is financial viability of the Voluntary Sector a mirage? The way forward

PART-I

To begin with I would like to thank SRRF for the honour of inviting me to deliver the first Vijay Sardana Memorial Lecture.  I would like to remember Mr. Vijay Sardana, a gentleman and a noble soul, a fellow traveller whom I met 27 years ago when I was with Oxfam and he was with Plan International and a warm friendship we shared. I acknowledge the presence here of Mrs Sardana and family.

In his own quiet way, Vijay Sardana began by experimenting with an important area of financial viability by promoting “KOSH” in ASSEFA, Tamil Nadu, which was one of the big forerunners of the SHGs.  The KOSH savings movement predates Grameen Bank and other models which are popular now. Not much is written about it but is a working model. I am glad that Bunker Roy founder of SWRC Tilonia and my hero in the sector from my younger days is present in the audience. He should have been delivering this lecture.

Vijay Mahajan who set up BASIX said “he learnt all about microfinance from ASSEFA’s KOSH and its learnings”. This was about 30 years ago and the world was yet to know of the Grameen Bank model but it was done in India.  ASSEFA was one of the few organisations which reached viability and still continues its work in southern Tamilnadu around Madurai.

Vijay Sardana was a forerunner in his thinking on the viability of the sector much before his time.  I would like to commend him on his contribution and it is appropriate  that this memorial lecture is dedicated to viability of the sector.

Let us acknowledge the contribution of the voluntary sector which has grown from small beginnings into a huge sector in the new millineum. Indian freedom movement in 1857 got support from in the Indian gangetic plain from civil society as we know it, religious organisations both Muslim and Hindu. Societies Registration Act 1860 was formed to regulate these organisations.

I quote from my book on the non Profit sector “A million missions” “The sector has grown from these small beginning to 3.1 million NGOs and an annual income of Rs 72,792 crores and employs 2.7 million paid workers. The total workforce exceeds 18.2 million workers bigger than the entire public sector workforce in India. Civil society sector has benefitted from private philanthropy”. This data is from the Government’s study of Non profit establishments carried out in 2012 by the Ministry of Statistics and Programme Implementation.

While over a larger time-frame, the bulk of the sector continues to grow, but my observations over the last decade & case studies, point to the fact that non-profits are facing tremendous problems and the last 5 years of NDA rule it has been particularly distressing.

I quote 5 major news items to illustrate this point in the last five years.

1. Removal of 100 % tax exemption to NGO’s though the revenue foregone was a meagre 31.6 crores in a 3.1 trillion dollar economy which demonstrated the small minds of the present ruling dispensation.
2. Cancellation of 10,600 NGOs from the FCRA list in 2014 and another 5000 plus in 2017 .
3. 21 foreign donors placed on the banned list and an additional 15 of them on the watch list. RBI has become stricter than ever before on any foreign transfers to NGO’s. As a aside I think RBI should focus equally on banks & companies!
4. A Supreme Court case on stricter regulation and audit of the voluntary sector. It also relies on  some facts which are based on an ill informed PIL with little or no resistance from the non profits. There is a clear lack of advocacy by the sector which lacks the skill & PR of chambers of commerce like CII or FICCI.
5. The amendment brought in by a money bill that foreign company’s donations are no longer foreign money but Indian money that granted retrospective remedy to donations to political parties that recd these donations. I ask whether these rules could have similarly come to the rescue of non-profits? Clearly a case of double standards that only a ngo like ADR could challenge & survive.

The current discourse is anti civil society and the government increasingly paints the human right defenders as anti national, and coined a new word “Urban Naxal“. This makes working in the area of human rights difficult for many non-profits.  The regulatory environment has become stricter and scrutiny is growing I would say selectively. However my personal opinion is that it has made us much stronger.  

So why is the voluntary sector in India so critical?

We have had so many important achievements in the sector, some of which are ‘Right to Information (RTI ) Act’, in microfinance, in watershed programmes and livelihoods. Little is known that the ASHA worker is born of an NGO experiment, the Anganwadi worker came up from NGO work. The NREGA was a replication of “food for work“ programme organised by NGOs in 70’s and 80’s.  Very little is talked of the contribution of Aruna Roy in RTI and Nikhil Dey in MNREGA, Rajender Singh the waterman of India on improving watersheds in dry land areas and reviving old rivers. I can talk of several and even in Vijay Sardana’s days in AFPRO the India Mark 2 pump for drinking water was developed which is the mainstay in many villages in India, Africa and other SE Asian countries.  The Indian voluntary sector needs to be celebrated rather than be pilloried as being done today which along with democracy has kept our freedoms.

A historical look at the sector to understand the viability of the voluntary sector.

I would like to give four examples to prove my point.

 Lala Lajpat Rai started the Punjab National Bank in Lahore and this year they are celebrating 125 years of the Bank, When He migrated to India along with the Bank large parts of Lajpat Nagar named after him were given as compensation. However he set up a voluntary organisation called Servants of the people society to rehabilitate the refugees who came from West Pakistan and many activities were started. They were joined by Purushottamdas Tandon, Congress President and who served them for many years. The good library there is named after Purushottam Tandon and the Main office is called Lajpat Bhawan.  They raise funds through a Nature clinic, an annual fair, fees from the auditorium and also run a school for underprivileged children and sell products and masalas and have earned a huge branding for their spices.. This society Servants of People Society has survived for 70 plus years and is still serving the community. They also run a retirement home “ Godhuli “ in Dwaraka  which is a another fine institution.

A second example of a thriving non profit is an organisation called SPIC MACAY in the field of art and culture and carries out programmes on classical dance, music and also on specific cultural events. It is an organisation run by volunteers and most of the programmes are run on a voluntary basis. The founder Ashok Seth is a full time Professor in IIT Delhi.

A third example is ASSEFA,  a Gandhian Organsiation which originated from the Bhoodan movement, which was started by Acharya Vinobha Bhave . ASSEFA  runs schools in rural areas, organised several savings and credit organisations federated into Kosh and also a fine dairy plant near Madurai supplying fresh milk to the city.

The fourth example is one of the organisations started by HelpAge India called the “Elders for Elders Foundation” after the Tsunami in 2004 in Tamilnadu. It began with starting elder SHGs of the Tsunami victims and the savings were accumulated to begin livelihood enterprises. Today they are federated into 4 district federations and the EFE runs on viable funding from NABARD and NABFIN. Today it is a 30 crore organisation with no external funding and runs health programmes and micro finance programmes which are completely viable. We have proved that there is a second demographic dividend after 60 and elders can still contribute to the local economy and to the GDP. All the four examples of  organisations which run on internal funds raised within the country and are moving forward in their work including HelpAge India, my organisation

Dear All,

I would like to know about the FCRA Grant receiving before permission,

A organization applied for FCRA permission on July 2018 and received approved on March 2019, Can organization allowed to received FCRA Grant for the period of 1.1.2019 to 28.2.2019, is there any complication or any judgement regarding this matter.

Please suggest your view.

Thanking You,

Kamlesh Barmeda

Dear Members,

We are an NGO registered in Trichy, Tamilnadu. The founder trustee resigned and as a result I (Dr.Uma) ‎became the managing trustee henceforth. The Supplementary Deed was registered in Trichy district Sub-Registrar ‎office. Pl. clarify the following.

• Should I maintain an office in the place of registration (Trichy)
• Should I inform to the Income officials about our supplementary deed
• The trust has 12 a and 80 G validity.

Thanks and regards

Dr. Uma