Before starting an NGO and going for NGO registration, you need to know how NGO works. NGOs endeavours to work on various causes, in the same way as administrations. Another feature associated with NGOs is that they have to look after resource management on their own. Even though they receive funds from the government, they enjoy the liberty of not having the influence of the government.
What is NGO and How NGO Works?
There are various factors that determine how NGO works. An NGO is an independent entity in which institutions, as well as a group of people, join hands to work for the well-being along with exhilarating the lives of underprivileged people living in less developed societies. An ideal NGO is one that performs its charitable work without even thinking about profitability. NGOs can put their energy into various causes at the same time, such as women empowerment, widow support, education for necessitous ones, health check-ups, etc.
Non-governmental Organizations utilize the available resources in employing diverse forms of work. All this depends on the cause for which they have decided to work. Most of the NGOs keep their eyes on a local community[1] serving underprivileged people living in poverty-stricken areas with making necessary resources available to them or by other means like spreading knowledge and advice. On the other side, several NGOs are there which dedicate themselves to the international arena and extend support on the ground outside the geographical boundaries. It would be better for NGOs to specify their extent of action. Furthermore, they need to deploy their human resources along with the material that they would have to carry out.
Types of NGOs
There are two types of NGOs on the basis of activities they perform-
NGO’s of this category helps the society in transforming in a better manner by providing services like distribution of foodstuffs along with rendering healthcare support, free of cost classes for economically backward ones, services related to relief work and more. These NGOs provide selfless service to the disadvantaged ones living in poverty-stricken zones. By starting an NGO in India or other developing countries, you would turn out to be a valuable asset for mankind. NGOs are beneficial for the nation, along with its citizens.
Benefits of NGOs
NGOs come ahead for supporting grass roots initiatives as they help in sorting out the issues of poor and helpless individuals and societies. Sometimes, NGOs receive the support of the government, and even when they don’t get it, they keep on doing their job for the welfare of the necessities-deprived people.Now, take a look at the benefits of NGOs.
How NGO Works- Financing of NGOs
When you address about how NGO works, you must understand how NGOs get financed. Financing of NGOs is possible in two ways- Private Funds and Public Funds.
Private Funds
- Many people sharing their special interest for the common purpose of making a contribution to the betterment of the poor and actively participate in noble deeds are financing these Non-governmental organizations.
- Raising of private funds would take place through periodic donations and conducting events through which required money for activities can get obtained.
- Contribution of private organizations can boost up the cause by making donations as per their wish.
Public Funds
- A Non-governmental organization can make a request to both Local Administrations or Central or State Authorities for providing specific funds in case of the cause that requires huge funds.
- Non-profit making institutions receive grants or subsidies in the form of public funds to perform their activities.
- Various national, as well as international programs, are there to meet these public funds requirements.
Read our article:How to approach NGO Registration in India? Forms & Features
Why NGO get Exemptions?
NGOs get exemptions because of the following reasons-
- Since NGO fulfils all the required formalities after going through the registration process, they get the tax exemptions.
- NGO’s get tax exemptions as all the activities they are engaged in is not for the profit motive and they are serving the people living in marginalized communities as a charitable deed only.
- NGOs get the tax exemptions as all the activities that they are performing on a regular basis are benefitting the public.
Eligibility Criteria to Acquire 12A and 80G Certificate
The eligibility criteria that would help NGOs in acquiring 12A and 80G certificate are-
- The formation of NGO must not take place with the aid of a particular community, caste or religion.
- The utilization of income, as well as assets of the Non-governmental organization, must be in case of charitable use only.
- The central goal of the non-profit making organization must be charity, and the overall income needs to come from donations.
- Proper maintenance of books of accounts comprising all receipts as well as expenditures is essential.
- The trustee of the NGO needs to maintain separate books of accounts in order to make sure that the donations won’t get diverted in the matter of NGO having a business income.
Wrap Up
If you are spotting scope in starting an NGO in India, you must have the knowledge about how NGO works, how NGOs get financed as well as benefits of NGOs. Furthermore, if you want to enjoy the benefits concerning 12A and 80G certificate, you must follow up with the eligibility criteria. At Corpbiz, our team would get immense pleasure in assisting you with NGO registration, guide you on how NGO works as well as help you in getting 12A and 80G certificate.
Read our article:A Detailed Guide For Obtaining 80G Registration
