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Fund raising methodology for running a NGO / NPO

An NGO may draw its funds from internal as well as external sourcesJustify Full
(a) Internal Sources

(i) Membership contribution,
(ii) Sponsorship Fees,
(iii) Sales (such as sales of greeting cards, candles, handicraft items, homemade foods items, books, etc.).
(iv) Interests,
(v) Community Philanthropists (patron members, life members, etc.), and
(vi) Individual Donations.

Besides, an organisation can save resources by using services of volunteers rather than paid staff.

(b) External Sources

Within India:

(a) Grant in aid (from Central or State Government). Various funding schemes operated by different Ministries of the Central Government;
(b) Donations in kind, such as, medicines, books, food items, etc.;
(c) Private institutional or grants from:
(i) Parent NGOs,
(ii) Corporate Bodies,
(iii) Industrial houses
(iv) Sponsorship for an ticket collections from fund raising events such as charity shows, musical nites, etc.
(v) Advertisements,
(vi) Souveniers,
(vii) Other trusts/organisations,
(viii) Individuals,
(ix) Box Collections
(x) Tourists/Visitors
Outside India (Foreign Sources)

(a) Bilateral funding;
(b) Multilateral funding;
(c) Private institutional funding;
(d) Overseas non-resident communities.

The purpose for which, and the account of foreign contributions received are regulated by Foreign Contribution Regulation Act, 1976 (FCRA). Further the institutions receiving such funding are required to submit necessary documents and returns.

However, certain foreign donations are exempt from the provisions of FCRA and in respect of them the requirements of documentation and returns are not applicable.

Eligibility Condition

Generally for receiving funding from either Indian or foreign sources, the following are essential conditions:

1. Legal Status: NGO should have a legal status 9i.e. should have been registered as a Society or a Trust or a Company under Sec. 25)
2. Constitution and Working Rules: The NGO should have proper constitution and objectives framed in the form of Memorandum and Articles of Association/ Byelaws/ Trust Deed.
3. Management: It shall have a governing body with authority to conduct the affairs to achieve the main objectives
4. Non profit Character: It should do its activities not for any profit but with an objective to serve the targeted population. Even if it carries on some auxiliary business in the interests of development of its target audience, such profits shall not be distributed by way of dividend to any of its members
5. Involvement: It shall consist of such people who are voluntarily involved in rendering the services to the target society and also shall be able to attract volunteers
6. Not to discriminate: It shall not indulge in discriminating the target group nor use the resources mobilized for furtherance of interests of any political party or involve in creating communal disharmony.
7. Part record: Normally the existing NGO with past record of good service and non discriminating in nature are funded.

Application for Financial Assistance

Application for grant in aid/financial assistance shall be made in the prescribed form or by furnishing, amongst others, the following information/ details:

General Profile for the NGO:

(a) Name, address, legal status (along with details of Registration like Certificate of incorporation/registration no., etc.) and thrust area.
(b) Name(s) and address(es) of Chief/other functionaries of the organisation.
(c) Main activities and sources of funding generally for last three years. Bank details are also required in some cases.
(d) Evaluation of the achievements, if any, carried out by any independent agency along with the report thereof.

Project Profile:

(e) Title of the project.
(f) Aims and objectives along with estimation of targeted beneficiaries, expected qualitative improvement, etc.
(g) Strategy/action plan, details of training required, availability of volunteers and their skills, etc.
(h) Financial requirement, sources of funding and financial assistance required from Govt. under the respective program.
(i) Duration of the project and sustainability after support is completed
(j) Monitoring and evaluation indicators

Documents to be furnished

Generally, the following documents are required to be furnished alongwith the application:

(i) Copy of Registration Certificate
(ii) Memorandum of Association & Bye-laws
(iii) Latest Annual Report
(iv) Audited Accounts along with auditors report/certificate
(v) List of important functionaries and employees

To avail financial assistance under the Central Government Schemes, the organisation/ institution has to follow the general terms and conditions of grants-in-aid as mentioned below:

  1. The grant receiving agency will be required to confirm in writing that the conditions contained in the grant-in-aid rule are acceptable to it an will execute a bond in favour of the President of India to the effect that in the event of its failure to abide by the same, it will refund the whole or such part of the grant as the Government of India may decide.
  2. The organisation in receipt of financial assistance shall be open to inspection by an officer of the concerned Department/ Ministry of the Government of India or concerned State Department/ UY administration or a nominee of these authorities.
  3. The accounts shall be maintained properly and separately and submitted as and when required. They should be open to a check by an officer deputed by the Government of India or the State Government. They shall be open to a test check by the Comptroller and Auditor General of India at his discretion.
  4. The audited accounts together with the utilization certificate in the prescribed form duly countersigned by the chartered accountants are required to be furnished within six months in respect of a preceding year or after expiry of the duration for which the grant was approved.
  5. The agency shall maintain a record of all assets acquired wholly or substantially out of the government grant and maintain a register of such assets in the prescribed Performa (if any). Such assets shall not be disposed off, encumbered or utilized for purposes other than those for which the grant was given, without prior sanction of the government of India. If the agency ceases to exist at any time, such properties shall be reverted to the Government of India.
  6. The programmes of the organisation/institution receiving support under any scheme shall be opened to all the citizens of India without the distinction of being utilized for the approved purpose, the payment of grant may be stopped and the earlier grants be recovered.
  7. The organisation/ institution must exercise reasonable economy in the working of approved project.
  8. If the concerned ministry is not satisfied with the progress of the project or it finds that there has been a breach or violation of any of the terms and conditions, it reserves the right to terminate the grant-in-aid.
  9. The grantee organisation shall implement orders in regard to the reservation of posts for SCs and STs.
  10. An organisation organizing a seminar/ conference or a workshop under any scheme shall not invite foreign delegates without the prior approval of the Government of India.
  11. In case of grants for building, the organisation must complete the construction of the building within a period of two years from the date of receipt of the first installment of the grant unless an extension is granted by the Government of India.
  12. If it is found at a later date that the organisation has withheld or suppressed information regarding grants from other official sources, the grant of the Central Government may be cancelled, reduced or the organisation may be asked to refund the grant already paid to it.
  13. Equipment purchased out of the grant-in-aid will be the property of the concerned Department/ Ministry, which will decide about its disposal on the completion of the project. The organisation may submit a proposal in this regard before the completion of the project.
  14. The orgnaisation will submit to the concerned department/ ministry, six monthly progress reports of the project along with a certified statement of expenditure actually incurred and an estimate of expenditure for the next six months period in the prescribed form. The release of subsequent installments will be subject to a satisfactory progress of the project.
  15. The organisation shall furnish to the concerned Ministry such information as the Ministry may require from time to time.
  16. All other conditions of the grant shall be as prescribed under General Financial rules, 1963, as amended from time to time.

Acceptance and utlisation of foreign contribution and hospitality by associations whether incorporated or not, is regulated by the Foreign Contribution (Regulation) Act, 1976.

Association Eligible to receive foreign Contribution

For the purpose of acceptance of foreign contribution and hospitality, associations have been divided into three categories, viz.:

      1. Associations registered with the Central Government
      2. Associations not registered with the Central Government
      3. Organisations of political nature
Registration / Prior Permission

Any society, trust or charitable company, carrying on educational, charitable, religious, economic, cultural or social welfare activities, and desirous of receiving any foreign contribution from a foreign source, is required to obtain registration under Section 6(1) of the Act. Any such association which is not registered or which has been denied registration, can receive foreign contribution only after obtaining prior permission from the Central Government under Section 6(1A) of the Act.

An organisation cannot receive project grants from foreign countries through another organisation registered under FCRA, unless the former organisation has obtained either registration or prior permission.

An organisation cannot receive foreign funds on mere filing an application for registration/prior permission, foreign contribution can be received only after the registration/ prior permission is actually obtained.

Operation of Bank Accounts in respect of Foreign Funds covered under FCRA

Only one bank should be maintained and operated exclusively for receipt of foreign contribution. The details of such a bank account should have been informed to the FCRA Division while making the application for registration or prior permission and it should have been specified in the Registration letter or Prior Permission order.

If the organisation wants to change the designated bank account then a fresh application in appropriate form must be made justifying the reasons necessitating such a change.

Special Thanks to: NPO Online


Nandan said...

Thank you very much for providing the quality informations. I have come to know few important responsibilities of NGOs.
Nandan Kandpal
Srajan Spastic Society
Haldwani (Nainital) Uttrakhand

NGO Jaipur said...

Join NGO India
Support Social Development in India

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