How Does an NGO Get Funding in India?

A Non-Governmental Organisation (NGO) is a non-profitable charitable organisation. In India, NGOs established under Section 8 of the Companies Act are governed by the provisions of the Companies Act, 2013, while the NGOs established as a trust or society are governed by the state governments. 

All NGOs work for the betterment of society and to help people in need. Since NGOs are non-profitable organisations, they need to raise funds to earn money for doing their work. This article provides how to get funds for NGOs in India.

Types of NGOs

Many international NGOs are transnational federations of national organisations, including Amnesty International, the International Federation of Red Cross and Red Crescent Societies, Save the Children, Oxfam International, World Wildlife Fund and CARE. In India, there is CRY (Child Rights and You), Care India and Smile Foundation.

The World Bank has identified two broad groups of NGOs, i.e. advocacy NGOs (organised to promote a particular cause) and operational NGOs (focused on development projects). NGOs can also be classified according to their orientation and operation.

The orientation-based NGOs are further classified as follows:

• Charitable orientation: A charitable orientation NGO is an endeavour with minimum involvement from the beneficiaries. It includes NGOs running campaigns to meet the requirements of the underprivileged, such as providing food, clothing, medication, shelter, transportation and education. They play an active role in supporting people in need of basic requirements.

• Service orientation: Service orientation NGOs run campaigns to advance health, family planning and education. The activities of these NGOs are divided into programmes and ask for the active involvement of people to ensure smooth execution.

• Participatory orientation: Participatory orientation NGOs take up self-help projects. They involve residents who give resources, such as land,  money, labour, equipment and materials, in deploying a project.

• Empowering orientation: Empowering orientation intends to help those in need by understanding the political, social and economic elements affecting their life and creating awareness to control those circumstances.

The operation-based NGOs are further classified as follows:

• Community-Based Organisations (CBOs): CBOs are established due to the effort of people’s own initiatives. Some CBOs cultivate awareness amongst the needy or boost their understanding concerning their right to access basic services, while others are engaged in rendering basic services. They encompass sports clubs, women’s, neighbourhood and educational organisations.

• Citywide organisations: Citywide organisations are NGOs established across cities and include entities such as the Lions Club or Rotary, associations of community organisations, chambers of commerce and industry, and coalitions of business and ethnic or educational groups. Some are established to serve the poor, while others are involved in supporting needy people.

• National NGOs: National NGOs work nationwide and include entities such as the YMCAs/YWCAs, Red Cross, professional organisations, etc. Some of them have state and city duties and provide support to local NGOs.

• International NGOs: International NGOs work globally and encompass secular institutions, such as CARE, Oxfam, Ford and Rockefeller Foundations, etc. They create awareness amongst groups, and their undertakings vary from funding local projects, NGOs and agencies to deploying the project.

Ways to Raise Funds for NGOs

• Raising funds through events.
• Network fundraising.
• Personal solicitation.
• Online fundraising.
• Volunteering.
• Periodic donation through the adoption of a project.
• Raising money from young people and in schools.
• Donations in kind.
• Collections.
• Corporate partnerships.
• Product sales.
• Crowdfunding.
• Raising money from corporates under CSR.
• Raising money under government schemes.
• Fundraising from social media.
• Fundraising from abroad, in the case of NGOs holding FCRA (Foreign Contribution Regulation Act) certificate.

How are NGOs Funded in India?

NGOs are non-profit organisations relying on various financing sources to fund their operating expenses. The funds are crucial because they support the NGO’s short and long-term aims. Thus, fundraising activities are necessary for the continuation and success of NGOs. 

NGO funding is done by getting membership fees, selling goods and services, grants from other charitable foundations, state governments, municipal and private donors, donations from affluent individuals, etc. Despite their autonomy, many NGOs depend substantially on government subsidies and money for funds. Some government financing for NGOs could be considered contentious since it may promote political aims instead of a nation’s development.

NGOs are authorised to receive contributions from for-profit corporations, private citizens, non-profit foundations and governments, including state, local and foreign ones. NGOs can offer services and goods and collect membership fees as non-profit organisations.

NGOs can also get financing through gifts and donations, especially from unofficial groups or private individuals. Micro-enterprises, micro-insurance and micro-finance are some non-traditional resources for NGO funding.

NGO DARPAN Portal

In India, the government has put efforts into encouraging NGO financing. The government created an online portal, NGO DARPAN, to promote and create a healthy partnership between NGOs and the Government of India and speed up the financing process. The NGO DARPAN portal serves as an interface between NGOs and other government departments.

The portal facilitates the exchange of crucial information between government agencies, volunteer organisations and NGOs. NGOs can get vital information about government programmes and funds by signing up on the NGO DARPAN portal.

The government mandated NGOs to complete the NGO DARPAN online registration as of December 2019. NGOs require an NGO certificate to qualify for FCRA registration and apply for additional government permissions. Below is the NGO DARPAN portal’s registration process:

• Visit the NGO DARPAN portal.
• Click on the ‘Login/Register’ button and click on the ‘Sign Up’ button.
• Enter the name of the NGO, mobile number, and email and click on the ‘Submit’ button.
• Enter the PAN of the NGO and password and submit it.
• After logging into the portal, enter the registration information. 
• Choose the company sector, enter the address and click on the ‘Submit’ button.

The following documents are required for the NGO DARPAN registration:

• Copy of the NGO registration certificate. 
• Pan card of the NGO.
• PAN and Aadhaar cards of three members who exist in the NGO’s executive committee.

Tax Deduction on NGOs Donations

Donations made to NGOs are deductible under Section 80G of the Income Tax Act, 1961. NGOs must register under Section 80G and obtain the 80G certificate. When individuals or organisations contribute to an NGO, having a Section 80G certificate, the contributions are deductible up to 50% of their taxable income.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice. It should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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