How to Start Your Own NGO or Social Enterprise

Starting your own NGO can be a lengthy, tedious as well as a confusing procedure, one which will require a long if not a lifetime commitment.

You need more than money, enthusiasm and motivation to start your own NGO. There are many other legal as well as official procedures to follow.

The desire to make a change in the world can become overwhelming because of unending official documentation and registration processes, but that should not demotivate you. Once you have your own NGO, the satisfaction in trying your best to make an impact in the real world will be all that matters.

Maybe you might want your NGO to focus on child rights, education, health, animal welfare, gender or even refugee issues. Just pick an issue that you are passionate about and feel deeply for, so that the cause can keep you going even in the most trying of times.

Types of NGOs

NGOs can be classified in a number of ways, they could be business friendly international like Red Cross or environmental NGO like World Wildlife Fund (WWF). There are government organized NGOs as well as quasi autonomous NGOs, which aren’t very prevalent in India. In the Indian context, NGOs can be classified on the basis of size- how large or small the NGO is and the size of the paid full staff. They can also be classified according to the multinational operations and bodies, branch offices abroad, geographic scope which could be both global and local and the thematic scope of the NGO. NGOs can also be classified based on the sector they work on, which could be anything and everything ranging from agriculture and rural development to urban and community development. NGOs in India can also be classified according to the way it was registered; it could be a Society, a Trust or a Section 8 Company.

Although the all three fall into the broad category of an Indian NGO, the difference between the three lies in the formation, registration and management. A Society is formed by the Societies Registration Act, a Company by the Companies Act and a trust by the Indian Trusts Act. While a company takes 3-6 months to form, a Society takes 1-2 months. A trust, on the other hand, takes only 2-7 days to form. A Company requires that its name is approved by the ROC before registration. A Society, on the other hand, can have any name as long as another registered NGO does not have it. A Trust requires no such name approval. Anybody can be a director of a Company but members of the same family cannot be members in a Society. There is however, no restriction in the formation on a Trust with members of the same family. A Company can have minimum 2 Directors whereas minimum eight members from 8 different states of India are required in a national level Society. Similarly, there could be only two minimum trustees. A Company and a Trust can operate throughout India while only a Society registered as a national level Society can operate throughout the country, state level Societies cannot. Companies can have funding possibilities but Societies and Trusts can get funding only if they are eligible according to the terms of the funding agencies or Ministries. 

Registration process, Rules and Regulations

  • The first step in managing or starting an NGO is to be sure of the idea, running an NGO is almost similar to running a company but requires a lot more transparency than the former, a lot more patience and a lot more perseverance. The important thing to keep in mind is to be sure of the motive and mission of the NGO, this could be either a women’s right issue or an environmental issue. The objectives and the target group have to be appropriately thought of with a name that suits the cause and the vision of the organization. The name should reflect the cause of the organization and it carries a great deal of responsibility. 
  • Once the above things are clear, the next step is to prepare a Memorandum of Understanding containing the name and address of the NGO, the mission and objectives, details of the governing body members, human resource and staffing information, rules and regulation and administrative staff and procedures. This is the starting of the documentation part. A legal NGO Consultant can come handy in this regard and will make the work a lot easier. Before the submission of the application for registration of an NGO, it is important to mention the bylaws that represent the rules, regulations, operation modes, working pattern, working area, responsibilities and objectives of the NGO.
  • Once all the documents are submitted, the official procedure of Memorandum done with and the required fee submitted, the NGO now needs to be registered. This is very important. In India, the registration of NGOs is done under three acts- the Societies Registration Act, Indian Trusts Act and Companies Act. Non-profit NGOs that are registered under Section 8, erstwhile Section 25, of Companies Act, 2013, are referred to as Section 8 Companies (formerly, Section 25 Companies) and dedicate all their incomes and profits towards the fulfillment of their aims and objectives and do not pay any dividend to their members. Section 8 companies are managed by the Ministry of Corporate Affairs through the offices of Registrar of Companies (ROC) in each of the state of India. They usually promote research, social welfare, religion, charity, commerce, art, science, sports, education, and the protection of the environment or any such other objective. The Indian Trusts Act, 1882 defines what would lawfully be called as a trust and who can be legally its trustees. Trusts are either public or private, depending on its target or focus group. The Societies Registration Act, 1860 is involved with the registration of entities related to work that benefits the society.  

MoA and AoA

Two other important concepts that are important in forming an NGO are Memorandum of Association (MoA) and Articles of Association (AoA). MOA is a document that contains all the fundamental data which are required for the company incorporation. AOA is a similar document containing all the rules and regulations that govern the company. But there are differences. MOA must be registered at the time of incorporation. The AoA may or may not be registered. The Memorandum is the charter, which characterizes and limits powers and constraints of the organization. It is a supreme document. The AoA demonstrate obligations, rights, and powers of individuals, who are endowed with the responsibility of running the organization and administration. It is subordinate to the memorandum. The memorandum cannot give the company power to do anything opposed to the provision of the Companies Act. The articles are constrained by the act, but they are also subsidiary to the memorandum and cannot exceed the powers contained therein. The memorandum contains the objectives and powers of the company. The articles provide the regulations by which those objectives and powers are to be conveyed into impact.

Processes across States

The Income Tax Act gives equal treatment to a trust, company or society. However, different states in India have different Trust Acts in states, which govern the trusts accordingly. In absence of any trust act, the Indian Trust Act is followed. For instance, there is the Maharashtra Public Trust Act under which trusts can be registered in Maharashtra and Gujarat, with certain variations in the provisions. Additionally, it is necessary to register a society as a trust under the Societies Registration Act of 1860 if the society is registered in Maharashtra and Gujarat. Private trusts can register under Indian Trusts Act in the states that do not have a state trust act, which are formally treated as for-profits entity and the beneficiaries are often closely linked to the members.

Fundraising

Once the NGO is registered, it’s time to start collecting funds to run the NGO. Raising fund is one of the most requirements of running an NGO. It can be done through various ways-

  • Internal sources like membership fees, individual donations, subscription charges form the most basic form of fundraising.
  • There are also options of external sources like grants in the form of aid from the Government, private organizations like Companies under Corporate Social Responsibility or foreign funding agencies.
  • Sources like the MacArthur Foundation or funding donor organizations also provide fellowships, given you have a strong proposal and target group.

A strong fundraising plan is needed. A good set of objectives and surety of the vision and mission of the organization becomes quite important here. A good proposal and research on fundraisers who work on similar domains are needed. One needs to be sure of the budget as well. Transparency is the most desirable way to proceed with activities.

The final steps would comprise of hiring staff and volunteers and interns. Social media content creation is extremely important here. Creating marketing and reaching out is required, advertisements for volunteers and interns should be made public. Official supplies like machineries and furniture, computers and infrastructure should be taken care of. The NGO also needs to be insured, proper financial and annual reports to be made and analyzed to get better with time. 

Here are a few tips to keep in mind-

  • Starting an NGO is a lot more than just a job, it becomes a lifestyle, try to keep yourself motivated. Be prepared for the difficult times, things won’t always be rosy, but do come back even when things may not seem to go the right way.
  • Do not start an NGO without much extensive research. It is important to feel for the cause, but it is also important to know about the existing organizations on the cause. The importance of research can also be understood while writing the proposal for funds and fellowships.
  • Finances and fundraising may seem difficult, start from the basic source- the internal source. You can then slowly proceed to the external and the bigger sources. Keep the things transparent.
  • Marketing. The present age is the age of social media, make a strong social media presence- recruit interns and volunteers, advertise as much as one can.
  • Be sure of how to measure your results. Donors require constant updates, it is after all nothing but an investment for them. You need to know how to calculate your impact and changes.


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