There is a popular belief that "A Rolling stone gathers no moss". The trend is perceptible in the legally incorporated NGO's in India. Our first impression of a NGO is a charity which is always not the case in 21st Century.
In this article we will analyze the pillars for the failure of most of the NGO's and shall highlight the countermeasures to overcome it and revamp its true glory of the charitable activities.
The following are the points for failure:
The government of India has provided for three means of incorporation of NGO which are: TRUST, SOCIETY, SECTION 8 COMPANY. The latter one is the safest and involves the highest level of compliance but is ignored at large by the stakeholders. The Trust and Society are less transparent and belongs to State subject and are relatively easier to Wind up which provides for the room not to carry on the activities so designated. Failure to file audited balance sheet shall not involve strike off the entity in case of Trust & Society.
We do fundamentally agree that The Founding Members of the NGO do believe in society welfare and in their own research have identified the targeted area's to be worked on but mere VISION WITHOUT EXECUTION IS A DAYDREAM. The remarkably fail to incorporate proper idea's and step plan to begin and clear targets to achieve with and reduce themselves to a DORMANT NGO.
This may sound controversial to patriots of the professional bodies but they act as a backbone to all the illegal and fraudulent activities by tendering wrong and unethical consultancy and tax evasion transactions. A Financially illiterate person may have the intentions for tax evasion but the decentralized authority is with the professionals which are further promoted by the spineless policies of the Professional Bodies for such misconduct.
A. HONEST INVESTORS
The honest investors play a loose role in the activities of the NGO. They Donate their hard earned money but fail to follow up the activities carried on from such money. The Investors need to be vigilant about the donation so made and shall pursue for the audited balance sheet from the NGO at regular intervals.
B. DISHONEST INVESTORS
To reduce the tax liability often such high net worth individuals target the NGO's to claim exemptions and carry out tax evasion activities by showing fraudulent donations and claiming exemptions on it.
MEASURES TO COUNTER THE DAMAGES DONE:
Recently the NDA Government cancelled Foreign Contribution License of atleast 18000 NGO's which received a foreign funding of NGOs in the past four years witnessed a significant decline. “NGOs received Rs 6,499 crore in 2016-17, as compared to Rs 17,773 crore in 2015-16. The amount received during 2014-15 was Rs 15,299 crore,” for failure to submit returns of the money so spent.
II. AUDITED BALANCE SHEET
A Regulation shall be enforced which provides for maintaining a functional website which shall show the last audited balance sheet.
The Income Tax Authorities shall monitor the exemptions so granted to the NGO's and failure to carry on charitable activities for more than six months shall be deemed to cease all the exemptions so granted.
From the above points discussed it is clearly evident that in recent times the NGO's have received a dent in its image because the ultimate beneficiary is poor and marginalized people and the voiceless animals.
The NGO acts as a bridge between donor and the needy and if the bridge is corrupt or non-functional the gap between the poor and rich shall widen as recorded in recent times.