So you want to go back to the world. Bravo! But wait, do not start your philanthropic activities without a solid legal basis for your Non-Governmental Organization (NGO). Startupflora, your startup buddy, is here to make the decisions easy: Trusts, Societies, and Section 8 companies. Which one of these is appropriate for your mission? Let's learn.
Finding the Fundamentals: What is the Purpose of Your NGO?
First, priorities: what's the mission of your NGO? Are you going to work on national social transformation, or local community improvement, or in between? That will make an enormous difference about whether you should or shouldn't register.
1. Trusts: The Local, Flexible Alternative
Think this is as group of friends making a donation for a cause among a small neighborhood. That is the straightforward premise behind a Trust.
Creation & Structure
The Trust Deed is the master instrument, indicating the object, trustee powers, and beneficiary rights.
Indian Trusts Act, 1882, provides general principles, and state legislation will apply.
Flexibility:
Operational flexibility is enormous where trusts are utilized.
They will be most effective for specialized and localized schemes.
Restrictions:
Fund-raising can be problematic, especially with big projects.
Lack of national acceptance will limit grant opportunities.
Example:
A city trust providing food and shelter to street people in one city.
2. Societies: The Power of Collective Action
Societies are all about association and congregation of like-minded individuals for a cause.
Membership-Based:
Societies are membership-based and have democratic management.
The Societies Registration Act, 1860, governs their formation, except at the state level.
Key Documents:
The Memorandum of Association contains the objects of the society.
The Rules and Regulations govern its internal administration.
Advantages:
Democratic framework ensures member participation.
Most appropriate for joint ventures, community-based organizations.
Drawbacks:
Handling a vast number of members is tough.
Fund raising at the national level is not easy.
Example:
A society for creating awareness among masses through conducting neighborhood workshops and cleanliness drives.
3. Section 8 Companies: The Professional, Nationwide Approach
For all those NGOs wanting to have national penetration as well as professional respectability, the most appropriate one is a section 8 company.
Legal Structure:
Regulation under section 8 of companies act 2013, section 8 companies are governed by a strong legal framework.
Licensing & Objectives:
Permission to conduct business is given by Ministry of Corporate Affairs.
Object should be with a view to the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any other such object.
Trust & Raising Funds:
Section 8 companies are highly trustworthy to government departments, funding organizations, and public.
Section 8 company registration certificate provides more credibility.
It is not an issue to receive the grants and donations from the foreign countries as well as locals.
Governance & Compliance:
They are required to maintain due books of accounts, annual audit, and some reporting necessities.
Knowledge of section 8 company companies act 2013 needs to be familiar.
Registration Process:
A section 8 company registration is intricate with numerous steps.
Obtaining DSC and DIN, Reservation of name, MOA and AOA draft, license application, and ROC filing.
facility for section 8 company registration online.
fee attracts section 8 company registration.
sectction 8 company introduction to be taken carefully.
Advantages:
National acceptability and prestige.
Increased scope for raising funds.
Professional management set-up.
Indian section 8 companies are reputed.
Things to Keep in Mind:
Compliance according to the Companies Act is mandatory.
Finances and cost of doing business transparency is mandatory.
Professional management is necessary for a section 8 company.
Example:
A section 8 company offering quality education with all-India coverage to disadvantaged children.
Making the Informed Decision: Key Questions to Ask
What are your NGO operations goals?
What do you require in terms of funding?
What kind of governance would you like?
Do you require a section 8 registration?
Do you know the experience with company section 8?
Startupflora: Your NGO Formation Partner
It's not always clear which route to choose. Relax, Startupflora is available to help, providing specialist knowledge and guidance. We can discuss the requirements for each pathway in detail, facilitate all the procedures as specified in statute, and register your NGO for success.
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