Introduction

Non-Governmental Organisations, Non-profit organisations or Voluntary Organisations (NGO/VOs henceforth referred to as NGOs) have existed in one form or the other in India, and in other parts of the world, for a number of years. They seek to provide much needed services to their respective communities and otherwise help in attempts to alleviate and remove exploitation, poverty, deprivation and inequality. There are various steps in starting an NGO, and although the process could sometimes be painstakingly slow and time-consuming, systematic planning, a consistent approach and proper guidance in the process and implementation can minimize the difficulties and smoothen the process. A thorough planning during the start-up process is crucial to develop an effective and professional organisation that is able to meet the stated objectives and make a difference with respect to the challenges faced by the world in general and the targeted community in particular. The process described here is specific to India, but is also generic to most other parts of the world. The organisation will need to adhere to the specific guidelines as applicable to the location and country in which it is set up and wants to operate. For an international NGO, while the basic procedures should be as that applicable in the country of its principal place of business, the local branch or office in another country will have to also ensure that it complies with all regulations that are applicable at this country in which branch or office operates. Some organisations to avoid running into local difficulties with centralized documentation, set up local associate organisations in each country in which they operate. These local organisations are then incorporated or registered according to the local laws of the country in which they operate. There are many classifications of NGOs as determined by individual country's laws and regulations, including co-operatives, credit unions, societies, people's organisations, community groups etc. The classifications can also designate the NGO as a religious, charitable, educational, scientific, literary or other organisation. Starting an NGO primarily requires a strong vision, or a need, for people to come together as a group and work to satisfy that need. The size can range from 1-2 persons working on a single local issue to an international NGO network with thousands of members working globally on a range of issues. Key Elements of an NGO

The key elements that make an NGO are its objectives, programmes and projects. This includes the issues and themes that the NGO addresses, the target areas or communities, funding available and the activity's partners

 the felt needs of target community, i.e. the real problems faced by the community, how the NGO can identify and tackle them or create a forum where it can be expressed by the community, staff expertise and skills available, availability and quality of full-time or part-time staff and volunteers, the funding strategy including sources of funding identified and tapped, whether such sources are local or international and approvals obtained, how the funds for short-term and long-term activities can be mobilized etc.
While it is critical that a new NGO ensures that it is properly registered with the public authorities of the country, it is of even more importance to 'register' with its target community - in terms of ensuring acceptability, building trust, chalking out effective programmes and projects and being the harbingers of real and measurable change. Identifying the Type of Organisation and Board of Management Before a process of incorporating or registering an organisation can be gone through, it is necessary to first establish the type of organisation and a Board of Management/ Directors or an Advisory Board, and arrive at the organisation's vision and mission. The members of the management, as a group, have trustee and legal responsibility for the actions and operation of the organisation. There are minimum levels of involvement required of board members in organisational and operational management Governance, Planning and Programme formulation and implementation, Financial management and resource development or fund raising, Human resource and information management and Marketing and Public Relations A primary step in this process is to draft the bye-laws or the trust deed as the case may be (in the case of incorporation it is called memorandum and articles of association). The type and style of these documents will depend on whether the NGO is being set up as a society (Bye-laws), trust (Trust Deed) or incorporated entity (often called a Sec 25 company in India because of the section of the Indian Companies Act, 1956 under which such non-profit corporations are incorporated - Memorandum and Articles of Association). There are standard formats available for adoption with any competent chartered accountant or even online on the internet. These documents need to be

approved and signed by all members of the Board before submission to the registering authority with supporting forms and documents as required also similarly signed. Drafting the Bye-laws There is no prescribed format for bye-laws, the set of rules under which the organisation will operate. However, they typically include such items as (a) number of members, term length, nomination process, committees, and meetings; (b) fiscal year/accounting cycles, committees, and officers' responsibilities; (c) methodologies, tools, and strategies, monitoring and evaluation etc.; and (d) how to amend the bylaws themselves. Typical bye-laws of an NGO will contain the following information:

A suitable preamble The chosen and approved name of the Organisation The basic or primary aim and purpose of organisation and any supplementary aims and objectives The mission statement Membership types, conditions/qualifications of members, status, length of service, procedure to become members, rights and obligations, termination Management and/or Advisory board including but not restricted to the role and functions, qualifications of board members, prescribed authority, voting rights, method of elections, membership etc

Organisation functions and structure Raising of Finance, property and membership fees, if applicable etc. Legal status Trust, Society, Corporation etc. Location and Contact address Rules for Dissolution of NGO if needed Method for amendments, modifications, revisions of bye-laws

The bye-laws will generally be applicable to a society. In the case of a trust, the trust deed will also have generally the same information as stated above (bye-laws) but in addition will also have the name of the settler who creates the trust, the trust property details and trustees names and addresses, responsibilities etc. and some details specific to a trust functioning. In the case of an incorporated entity (Sec. 25 company), the Memorandum and Articles of Association will need to adhere to the format prescribed in the Indian Companies Act, 1956 and other applicable laws in force. Register the NGO

The NGO's name: Check to see if the proposed name of the organisation is already in use. Check with the local government registry or similar agency/board to see if your proposed name is already taken. It may be necessary to provide two or three optional names for the NGO! This also applies to the logo of the NGO, if you plan to use one. Registering or incorporating with the local authority: It will be necessary to incorporate the organisation within its given local government/agency by writing and filing the necessary forms. In larger cites and towns in India, there could be and normally are separate authorities for registrations of Societies (Registrar of Co-operative Societies, trust (Charity Commissioner) and Companies (Registrar of Companies). However, in smaller towns and district headquarters, there could just be one Registrar who is common for all of these duties. So you will need to find out the local authority responsible for registration of your type of organisation at your location. In most other countries also, there are specialized departments or officers within local governments that deal with registering an NGO (which may also be called by other different names: non-profit organisation, voluntary organisation, people's organisation, etc.) There are several documents that need to be submitted, and these differ from country to country and also on the type of organisation. Information on the NGO Board, its mission statement, purpose, programmes and projects information, staff members, funding sources etc. will be necessary in all cases, whatever the type of organisation. A typical set of documents to be submitted to the appropriate authority for registering an NGO includes - Memorandum of Association, Bye-laws or Trust Deed, including applicable rules and regulations; report of annual activities, financial reports/audit reports; sources and pattern of income and expenditure; minutes of the Board or General meeting of members that endorses the setting up of the NGO; funding sources, letters of support etc. Funding and Fund-Raising Even if a 'donation' is made to a programme or activity, it is done with an objective in mind - sometimes simply to feel good. It is therefore critical to understand when we approach a potential sponsor, why is he be donating. Many donations are made with the intention of availing of the tax advantages that go with it, some companies will look for PR mileage, sometimes the donation can be anonymous with no other motive except to help. The exercise in fund-raising needs to asses the possible reason for each sponsor.

It is equally important to maintain professionalism, within the NGO, to build adequate trust with the potential sponsor or donor. Transparency, accountability, communication etc. should be an integral part of the NGO. The implementation team, or the management of the organisation should be methodical in its approach. It may also be a good idea to not always depend on external or large sources of funding, sometimes, it can come from surprising sources in your own backyard. Tax exemption An application for Income Tax exemption can be made only after an organisation has been registered and the registration number and certificate have been obtained. In India, as in most other countries, many of the institutional and some individual donors look for a tax exemption in whole or in part for their donations, when making a donation. In India, all registered non-profits, set up for a charitable purpose, are eligible to apply for an exemption under Section 80 (G) of the Indian Income Tax Act, 1961. The local Income Tax authorities need to be approached for this purpose, and these authorities generally need the following: A description of the organisations purpose and programs, including who the organisation serves and why, location and area covered, examples of training materials, workshops, and other services, etc. Financial information, sources of funding, financial statements (revenue and Proof that even if the organisation undertakes any commercial or revenue raising expense statement and balance sheet) for two or three projected years activity to sustain itself, the purpose is only for fund raising and no part of such profits would be distributed as profits to members, trustees etc. In India, exemption under 80 (G) is generally given such that 50% of the donation amount is eligible for tax exemption. However, in some cases, such as for donations to the Prime Ministers Relief Fund, and some other such entities, as also some select nongovernment organisation, 100% of the donations are eligible for exemption from Income Tax for the donor. It is important that the NGO take advantage of any such provisions to ensure that maximum available exemptions are available to a donor so as to encourage greater response in the form of donations. There is also a separate provision Section 35 (AC) in the Indian Income Tax Act, 1961, under which an organisation, through a specific application for the purpose made to the Central Income Tax authorities in Delhi, gets specific projects cleared and approved for a specific period for higher exemption. In general, a company in India making a donation may avail of a Sec 80(G) exemption upto 10% of its profits after tax. However,

in case the beneficiary NGO has approval for the project under Section 35 (AC), the company donating funds can get exemption upto 100% of its donation regardless of what percentage of its profits it amounts to. However, exemptions under Sec 35 (AC) are not easy to come by and involves a rigorous screening process.

Office Management
Volunteers, staff secondment, retired advisors etc. help in reducing personnel costs. Bulk purchases, surplus sales, voluntary donations, are also ways to reduce administrative costs. Some common forms of support from corporate and other donors can be in the form of: Consulting services (management, advertising, marketing, promotion, legal, taxation, financial, strategic planning, project design, system development etc.) Financial support (capital costs, feasibility studies, small business start-up costs, credit facilities for purchase of assets, sponsorships, travel grants, deficit finance etc.) Donation of equipments (machinery, furniture, computers, office equipment and other infrastructure) Donation of products (educational, health care, construction, raw materials etc.) In-kind gifts (could be any products other than the companys line of business) Loaned talent/executive sabbatical (paid time off to perform volunteer work) Public relations services (NGO branding through corporate sponsorships) Technical assistance Use of corporate services/facilities (financial and administrative support services, meeting space, mailing services, computer services, printing and duplicating etc.) Extend dealerships of products to NGOs, have marketing partnerships for NGO products Sponsor salaries of NGO professionals for a certain period NGOs may be eligible to receive additional discounts on bulk mailings depending on the local and other rules in force. To receive these discounts, an organisation must apply for a non-profit bulk mail permit. The NGO needs to contact the local post office and request the necessary information for this permit. Some courier companies may also be amenable to allow discount on bulk mailings as part of a donation strategy. Where applicable and feasible, insurance coverage for the organisation, its directors, and officers may be obtained when forming an effective and responsible organisation. Some associations of NGOs offer group purchasing programs for insurance and other services such as supplies, employee benefits, and banking services. Basic insurance coverage should include the following policies: Worker's Compensation

General Liability Director's and Officer's Liability

Networking and Project Management Networking - getting in touch with institutions, organisations, and individuals - anyone and everyone - who can be of help to the policies and programmes is a very critical aspect of an NGO's functioning. Do not hesitate to partner with the private sector - a company, a business, a supermarket chain etc. This partnership should not be for funding purposes alone. Private sector actors can bring many other resources too. (a) NGOs stand to gain by being efficient and productive, engaging the commercial environment in their outreach and influencing companies to be socially responsible, and (b) Companies stand to gain by being seen as socially responsible, actively participating in social development and nation building, enlightened self-interest - poverty eradication benefits the corporate sector in the long run, and also raising employee morale. Besides, one can always learn a thing or two in project/office management from the private sector! Disclaimer: The above suggestions do not constitute a complete list of requirements and procedures for the setting up of an NGO/NPO/VO. They are only an attempt at educating our subscribers and visitors on what the requirements are and what should be done and is submitted here on a best effort basis. All readers are requested to seek professional assistance and guidance where necessary when actually going in for a registration process or contact the local authorise to know the latest requirements. The actual procedures and authorities differ from place to place, and from country to country. The objective is to list out as many ideas as possible, which you can pick and choose depending on your specific need! Suggestions and comments are definitely welcome please address any comments, suggestions, queries etc