NGO

10 Reasons to Register an NGO

calendar29 Feb, 2024
timeReading Time: 5 Minutes
Reasons to register an NGO

An NGO is a non-profit organization working in the country for the betterment of the general public, animals, the environment, and other social matters. An individual, company, or group of people can proceed with NGO registration in India. One of the reasons to register an NGO is to attract donations for the cause since, without registration, no one will think of it as a non-profit entity, and without funding, the cause of an NGO would be very hard to meet. NGOs are regulated by the board of directors who look into the policies and their deployment in work for the societal cause.

Process of NGO registration in India

The process of NGO registration in India involves the following steps –

  • Firstly, the applicant has to decide the name of the entity to be registered as an NGO and under which law it will be registered. The chosen name should not be in line with the provisions mentioned in the Emblem and Names Act of 1950.
  • The memorandum of the organization should be prepared by the applicant, and all the rules and regulations of the organization should be highlighted. It should contain the signatures of all the members giving their consideration. These should be witnessed by the oath commissioner, an Advocate, a Chartered Accountant, a Notary Public, a gazetted officer, or the 1st Class Magistrate with their address and the official stamp. 
  • Duly signed documents like the name of the organization, its official address, proof of identity of all the members of the organization, including that of directors, two copies each of the memorandum and articles of association.
  • These documents need to be submitted to the registrar with the fee which is prescribed from time to time to complete the process of NGO registration in India.
  • If the registrar is satisfied with the reasons to register an NGO and the documentation, the registration certificate will be granted to the applicant.

10 Reasons to Register an NGO

Here are the top ten reasons to register an NGO are –

Legal Status

As soon as we register an NGO under the applicable laws, it gets legal status from the government. Getting legal status is one of the most important reasons to register an NGO. Even if the management of the NGO changes, it will create no effect on the NGO since it has to be run by the laws. Also, the management or any other person is not personally liable if there is any legal dispute arising out of the functioning of an NGO. It is important to get the NGO registered as without registration, it cannot take any benefit from the schemes that the government initiates from time to time.

Funding

The need to register an NGO is getting financial aid from various governmental, non-governmental, and philanthropic organizations. These organizations check the registration to be sure of the work which the NGO is proposing to do, as it enhances the trust factor and this is also one of the reasons to register an NGO. These institutions can provide financial aid to motivate and propagate the agenda of the NGO, which helps in the functioning and the motive of the registration of an NGO.

Credibility

When the NGO is registered, it provides credibility and legitimacy to the cause that will be served by the organization. Registration of an NGO shows the intention of the applicant and his/ her/ its desire that the NGO foundation is taken seriously, the goals of the organization will be met in the future, and it is not a scam to avoid taxes. It attracts investors as well since they have faith in those registered NGOs to meet the goals they set.

Tax Exemption

One of the other reasons to register an NGO is that it may claim exemption from taxes and other benefits from the government as per their rules and regulations for the sector of services they are catering to in the country. The donors making donations to the organization also benefit from this as that donation is also exempted from taxation up to a certain limit. Under Section 12A & 80G of the Income Tax Act, the organization can claim the tax exemption from the government. The savings from the tax can be well put for organizational purposes and a larger audience to cater to the goals of an NGO.

Growth

The applicants need to register an NGO so that the growth rate of the organization increases. The registration of an NGO will attract more investors, social workers, philanthropists, etc, to come and contribute to the work. With the active participation of these communities and individuals, the growth will increase multi-fold. There would be more events and conferences to serve the cause that will attract the public at large to view the work.

Networking

One of the reasons to register an NGO is to gain market access and reach. If the NGO is registered, it attracts people from multiple sectors nationally as well as internationally. It increases the chances of collaboration, which in turn increases the market reach. While collaborating, the organizations tend to share the market, resources, expertise, and objectives that help them reach their goals more efficiently and quickly. Collaboration of two or more entities decreases the risk of failure as the expertise of the firms negates any weakness of one enterprise.

Sustainability

The registered NGOs are more sustainable in the market in comparison to non-registered ones. They get a lot of support from the outside world, like government and non-government entities, philanthropists, investors, social workers, and other registered NGOs, which helps them sustain themselves in the market. One of the reasons to register an NGO under the applicable laws is that they can get the chance to make the strategic implications on how to run the NGO, which helps them follow the government protocols and regulations and work in the country for a longer period.

Social Cause

One of the most important reasons to register an NGO is to serve a societal cause. With registration, there are many ways through which an NGO can serve its purpose. It sets the platform to serve the ones who are in dire need of any help, be it in clothing, food, shelter, or sometimes even justice. The scope of an NGO is very wide, and it covers the whole society and not only the humans or living organisms. From animals to historical monuments, these cover the important aspects of our lives to make them better.

Organizational Structure

NGO registration in India provides these NGOs with the basic framework that they have to comply with and the structure that they need to maintain for their sustainability. Registered NGOs are more properly functional both strategically and financially which is among the best reasons to register an NGO. They have the individuals deployed for each type of work who have the expertise over the matter, which helps them meet their goals systematically. The NGOs have the director/s who help in making the important decisions of where to take investments from, who to collaborate with, etc.

Differentiation

When an NGO is registered, it has to state its objective and the way it will achieve those objectives. It is a proper process that they follow, while an unregistered NGO doesn’t specify it. With these objectives, it is easier to differentiate between various registered and unregistered NGOs. One of the major reasons to register an NGO is that this helps them achieve their goals, unlike unregistered NGOs, which are confused amongst themselves about what to do and what not to do.

These are the basic reasons to register an NGO under the applicable Indian laws that make the working of these NGOs quite easy since they reap many benefits after getting the registration process done.

Conclusion

There are many good reasons to register an NGO in India. They are registered to serve the purpose of social work and serve the underprivileged. Their work is to raise the issues in the country that are being curbed either by someone or ignorance by the government. Their work has given many positive aspects to society and its people. The government has also helped in their registration by asking for minimal registration fees, and some positive policies and aid given to them from time to time have also helped in their work. But, the government also has to look at these registrations and find whether they are done to cater to the public needs or to evade tax.

Corpbiz can provide expert guidance to the people or organizations to register an NGO and see whether the policies set up by the government are met or not. We guide setting up an NGO to its functionality and compliance post registration. We will help you understand the reasons to register an NGO in detail. It will make you less worried about compliance, and you will be able to focus on the purpose of NGO formation.

Frequently Asked Questions

  1. Under which acts can we register an NGO?

    An NGO can be registered under the following acts –
    ·         An NGO can be registered under Section 8 of the Companies Act, 2013.
    ·         According to the Society Registration Act 1860, an NGO can be registered as a Society.
    ·         According to the Indian Trust Act 1882, an NGO can be registered as a Trust.

  2. What is the prime objective of the NGO registration?

    The prime objective of an NGO registration is to help people at large. It is generally created to help the social cause and help the people who are underprivileged and require support to live and sustain in society.

  3. Is there any Tax levied from an NGO?

    No, as per the Income Tax Act 1961, section 11, an NGO doesn't have to pay any income tax.

  4. What is MGNREGA?

    MGNREGA stands for Mahatma Gandhi National Rural Employment Guarantee Act, which is a government program issued to employ rural people who are in the poor section of society. NGOs can partner with the government to deploy the employment plan successfully.

  5. What does section 80G of the Income Tax Act state?

    Section 80G of the Income Tax Act states that people making donations to specific relief funds or an NGO can file for a deduction in their Taxable income. However, all donations are not covered under the act. Only specific funds that are prescribed by the government are allowed for deduction, while donations to an NGO can be a subject of deduction.

  6. How many directors are required in an NGO as per the Companies Act?

    As per the Companies Act, if an NGO has to be registered as a Private Limited Company, it needs to have a minimum of 2 directors. Apart from the directors, there can be a maximum of 200 members in an NGO registered under the said act.  

  7. Is it possible to run an NGO without registration?

    Yes, an NGO can be run without getting it registered under the applicable acts. However, these unregistered NGOs tend to face a lot of problems in their functioning. Since they are not registered, they do not get the benefit of government subsidies and policies, investments from various sources, public trust, etc. Getting recognised in order to avail of benefits is one of the reasons to register an NGO.

  8. Do the employees of an NGO get salaries?

    Yes, the employees of the NGO get a salary, but it may not be very high. Since they are dependent on funding from various sources and exist for societal work, the employees may get comparatively lower salaries. 

  9. Is it possible for a company to partner with an NGO?

    Yes, a company and an NGO can collaborate to meet the common objectives related to social work. The companies need to perform CSR (Corporate Social Responsibility) Activities every year, and for that, they usually collaborate with an NGO.

  10. Is it possible for an individual to register an NGO?

    No, an individual alone cannot register an NGO since the minimum member requirement to register an NGO varies for trust, society, and Section 8 Company. But, it is clear that a single person cannot register an NGO.

Read Our Article: How To Claim Tax Exemption For NGO

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