Socio Research & Reform Foundation

As many of you know that FCRA Dept has come out with a public notice requiring all NGOs who are registered under FCRA or have prior permission to update details of its office bearers/key functionaries online by 7th July 2019. While earlier this updation was required only when more than 50% of the Board was changed, however latest Notice requires that it should be updated within 15 days of the change. While many NGOs tried to update the same, however it was found that the NGOs could not update it, if the change was less than 50%.

However you have to now be a bit more innovative or should we say jugadu, that famous Indian characteristic to get inside the Form FC6. First all go to FCRA Home Page and select Online Forms. Or you could directly click on the link https://fcraonline.nic.in/Home/fcra_onlineform.aspx to reach online Forms. Choose Form 6E. Question will be asked is change more than 50%, lie a bit and say No, choose option Yes (even if not applicable in your case), otherwise you cannot enter Form 6E. Once you say yes, Bingo, you will be able to access the Form 6E.

Once you enter Form 6E after login, the very first screen appears will be of Existing Key Members. This screen shows the registration details along with current key members list, alongwith their particulars. Scroll down to the page till the question “is there change in original key members” and select option “Yes”. Also fill up the communication details and click on Update Data. Now you able to navigate to the next screen i.e. Change of Key Members. Here you have to update member details.

If the member listed is no longer on your Board, choose DELETE Option. If the person concerned’s particulars are to be changed, use EDIT option. If a new member is to be added, choose ADD option.

Once the Form is updated, verify and authorize the Form by attaching signature File of authorized signatory. Normally authorized signatory would be Chief Functionary. Also attach the file of firm’s seal.

In case of any problems, you must write to FCRA Dept at fcra-support@nic.in, explaining why you are not able to submit the details.

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

Our organization is a trust registered under Foreign Contribution (Regulation) Act 2010.

We received funding from an organization outside India for a specific project. Actual expenditure was less than projected, and the said organization outside India requires that all unutilised fund needs to be returned by us to that organization in USD. We have the entire project account Audited by an External Auditor.

We approached our Banker for the refund, but they advised us to seek prior approval from the Ministry of Home Affairs (MHA).

Our query here is that we are refunding unutilized amount of foreign remittance to the same organization from which we have received it, in this case do we need to seek special approval from MHA. What can be the best way to process this earliest possible as per applicable laws.

Best

Amit

Amit K. Tripathi
Director
Ananta Aspen Centre

Dear Friends,

Prior permission letters specify number of and amount of each instalment to which Bank Managers decide to stick. Project holders seek funds based on action plan dictated by the seasons and community preparedness and convergence possibilities Bank’s insistence on instalments as defined in the prior permission letter.

What is the NGO supposed to do!

Udayashankar

MHA has now brought separate Forms FC6 for different aspects. These are FC-6A (Change of Name & Address), FC-6C (Changes in Designated bank account), FC-6D (Addition / Changes in Utilisation bank account) & FC-6E (Changes in Trustees / key functionaries). No Form has come out for changes in Objects of Trust. Earlier there used to be a consolidated Form FC-6, which one had to use for all these functions however now separate forms have been given for each of the functions. One practical advantage of this is that earlier, if one filled up one aspect of the form then one could not update any further change till the same was updated on the FCRA portal. Sometime this non-accessibility of the Form extended to months. However with separate form for each function, it will ease things a bit.

However problem in the updation still continues.  As the Form FC6E, which is meant for changes in Trustees still does not allow changes of less than 50%, thus defeating the purpose of the Notification that the FCRA Dept has come up with.

So the wait continues for most organisations to update the changes in the Trustees to comply with FCRA Dept’s own Notice, hopefully it would not be too long.

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

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…..