Across the world, governments are largely choosing the role of welfare state, i.e. taking case of the well-being of the people at large. Government, with limited resources and limited functionaries, cannot reach the people in every nook and concern of the society. It has to involve groups/associations/organizations at the grass root level to increase its reach since they are the people who know more about the ‘Real Issues’ faced by them. This limitation of the government and the idea of compassion and welfare for public have given birth to the evolution of NGOs and NPOs in the society.
Let us understand functionary based divisions of NGOs. Basically, NGOs categorization is based on its orientation division, cooperation division and structural division.
Orientation Division includes:
Charitable oriented NGOs.
Charitable Orientation often involves a top-down paternalistic effort with little participation by the "beneficiaries". It includes NGOs with activities directed toward meeting the needs of the poor - distribution of food, clothing or medicine; provision of housing, transport, schools etc.
Service Oriented NGOs.
Service Orientation includes NGOs with activities such as the provision of health, family planning or education services in which the program is designed by the NGO and people are expected to participate in its implementation and in receiving the service.
Participatory Oriented NGOs.
Participatory Orientation is characterized by self-help projects where local people are involved particularly in the implementation of a project by contributing cash, tools, land, materials, labour etc.
Empowerment-Oriented NGOs.
Empowering Orientation is where the aim is to help poor people develop a clearer understanding of the social, political and economic factors affecting their lives, and to strengthen their awareness of their own potential power to control their lives.
Cooperation Division includes Communal based NGOs, Community-based Organizations (CBOs) arise out of people's own initiatives. These can include sports clubs, women's organizations, and neighbourhood organizations, religious or educational organizations. There are a large variety of these, some supported by NGOs, national or international NGOs, or bilateral or international agencies and others independent of outside help.
City Wide NGOs.
Citywide Organizations include organizations such as the Rotary or lion's Club, chambers of commerce and industry, coalitions of business, ethnic or educational groups and associations of community organizations. Some exist for other purposes, and become involved in helping the poor as one of many activities, while others are created for the specific purpose of helping the poor.
Nationwide NGOs.
National NGOs include organizations such as the Red Cross, YMCA/YWCA, professional organizations etc. Some of these have state and city branches and assist local NGOs.
International NGOs.
International NGOs range from secular agencies such as Redda Barna and Save the Children organizations, OXFAM, CARE, Ford and Rockefeller Foundations to religiously motivated groups. Their activities vary from mainly funding local NGOs, institutions and projects, to implementing the projects themselves.
Structural Division includes Trust, trust are the oldest and simplest form of organization as far as NPO sector in India is concerned there are minimum number of formalities required for incorporation as well as day to day management of the trust is concerned. There are no statues available for the formation of a charitable Trust. Society, An organized voluntary association of people set up for religious, scientific, cultural, political, or other purposes.
Non-profit Companies. (Charitable Foundations including private & public), the company registered under section 25 of company Act 1956 and now under section 8 of company Act 2013. This type of company don’t have profit motive, and only for public benefits.
No national law (except the broad principles of the India Trusts Act 1882, which governs private trusts) governs public charitable trusts in India, although many states (particularly like Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts.
Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class. In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public. Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption. At least two trustees are required to register a public charitable trust. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity. Legal title of the property of a public charitable trust vests in the trustees.
Societies are membership organizations that may be registered for charitable purposes. A governing council or a managing committee usually manages societies. Societies are governed by the Societies Registration Act 1860, which has been adapted by various states. Unlike trusts, societies may be dissolved.
There are many differential factors between Trust, Society and Company which clears more smog from the mirror. Starting from the minimum number of members required to form NGOs. In Trust and in Company you will need only 2 members as compare to 7 members for Society. Management and Control vest in trust with trustees, in society with Governing Body and in company Board of Directors/Management Committee. Very Nominal Statutory regulations are there in Trust and Limited and Exhaustive in Society and Company respectively. If we talk about the legal status then both trust and society have only limited legal status against company with full legal status. Succession in management is done by elections in trust and in society but in company, it is done by appointment by shareholders. It is impossible to transfer membership in Trust and Society but in Company it is freely transferable.
Important thing to know is that It was the first-ever exercise by the CBI to map registered NGOs has disclosed that India has at least 31 lakh NGOs - more than double the number of schools in the country, 250 times the number of government hospitals, one NGO for 400 people as against one policeman for 709 people(Source via Indian Express).
The authors can also be reached at ca.balram_bansal@yahoo.com; ca.balrambansal@gmail.com
CAclubindia
