Nonproft organizations, ,

Nongovernmental organizations (NGOs),

Voluntary associations, ,
Community Based organizations
Charitable organizations,
Benevolent societies ,
hird sector !" #$
Civic societies "% &
!olitical parties
"outh association
Cultural #ssociations ($eligious and literature%#rt)
!ro&essional #ssociations #'( )*"
'abour #ssociations
rade #ssociations
The essence of voluntary action is that it is not directed or controlled by the State and that in the main
it is financed by private, in contradistinction to public, funds. It embodies the sense of responsibility of
private persons towards the welfare of their fellows; it is the meeting by private enterprise of a public
need.
!athan, "#$%, p"%&
Thomas Wolfs definition:
'ust have a public service mission 'ust be organised as a non(for(profit or charitable
corporation
)overnance structures must preclude self(interest and private financial gain
'ust be e*empt from paying ta*
'ust possess the special legal status that stipulates gifts made to them are ta* deductible
Suppose you asked someone, What is an elephant? and the person answered, An elephant is a nonhorse.
You would probably find the answer unsatisfactory. Yet, the term nonprofit organiation des cribes
something that is not something else!it suggests a business enterprise not organied to make a profit. "ut it
tells us #ery little about the essential characteristics of this type of entity.
!on(+rofits
Toward a ,efinition from -'anaging a !onprofit .rgani/ation0 by Thomas 1olf
-The term nonprofit organi/ation refers to those legally constituted, nongovernmental entities
incorporated under state law as charitable or not(for(profit corporations that have been set up to serve
some public purpose and are ta*(e*empt0.
2ll non(profit organi/ations must have these four characteristics3
". They must be granted legal status that allows gifts to be ta* deductible +# ,-.!/0
%123 4. 5 +/# /!/ // -6%
%. Their role and mission must be above any self(interest or financial gain( #&7% 8
9!:6%(
4. Ta* e*emptions must be granted although not every non(profit organi/ation elects to file for them&
4. ;"< &! -6%
5. They must serve the public +# #&7% -6%
Non-profit organizations provide a central role in economic growth. Their role in education (schools,
research, training, consultation) and community services (health services, social services, recreation,
libraries, arts) are instrumental in supplying access to capital for certain community populations. Non-
profits affect and contribute to the community by stimulating employment, income, creating a more
skilled workforce and introducing new technology. hamber of om-merce and tourism councils are
e!amples of non-profit organizations whose missions promote economic growth.
"#ove to mankind$ practical benevolence towards men in general$ the disposition or active effort to
pomote the happiness and well-being of ones fellow-men.%
-&!ford 'nglish (ictionary.
Non-profit organization uses its e!tra funds for the purpose of the organization, rather than dividing it
between the shareholders and the owners of the organization. '!amples of N)&s are public arts
organizations, trade unions and charitable organizations.
These organi/ations remain dimly understood, ma6ing it difficult to determine what their capabilities
One o& the di)culties is that 'civil society' itsel& is discussed through a variety o& terms
*hose partial e+uivalence has not been e,ectively e-plored( hese include.
nongovernmental organizations (NGOs), voluntary associations, nonproft sector, not/&or/
proft sector, charitable organizations, benevolent societies and third sector( 0epending
on *ho uses these terms, they may, or may not, include bodies such as labour unions,
trade associations, pro&essional societies, or legally unrecognized (and even illegal)
bodies such as cartels and crime rings(
The term 7non(profit organisation !+.& popular in the 8S2 and increasingly internationally, is not
well recognised in the Indian conte*t so far , though its use is beginning to gain currency. India has also
been the site for growth of co(operatives and trade unions in the nineteenth century. Thus associational
life in India is diverse, rich and comprehensive.
9owever, Indian society today represents a mosaic of contradictions. It simultaneously e*ists in the
%"st century as well as in the ":th century Tandon, "##4&. This contradictory nature of Indian society
is also reflected in the co(habitation of a wide array of voluntary initiatives. Traditional associations co(
e*ist with modern associations. 'any traditional associations ta6e the form of caste associations, ethnic
associations, and 6inship associations as well. 2mong tribal and indigenous populations of India,
traditional associations in tribal society continue to e*ist even today for a wide array of social and
cultural purposes. ;i6ewise, modern associations have also sprung up in the %<th century. These
include professional associations of lawyers, doctors, engineers, nurses, etc. They also include
development organisations which provide services to the needy and the poor. =esides, public advocacy,
research and support organisations e*ist in their myriad forms and manifestations in India today. There
is no field of human endeavour where associational activity is not present in India today.
,espite this vast array of voluntary initiatives and associations, India does not have a sense of a
voluntary or non(profit sector as yet. The identity of a sector is yet to emerge. ,ifferent components of
the sector, and different sub(sectors do not relate with each other or see themselves as a part of the
whole. Therefore, any attempt to provide singular and comprehensive definition of the meaning and
characteristics of the voluntary and associational sector in India is fraught with a variety of
comple*ities and ambiguities. In this conte*t, attempting to provide meaningful terminology to define
7the sector is li6ely to be difficult as well as inherently contradictory at times.
The current terminology describing activities and associations of this sector have several themes. In the
Indian conte*t, most prevalent term used to describe initiatives of this 6ind as noted above is voluntary.
7>oluntary initiatives, 7voluntary associations, 7voluntary agencies, 7voluntary organisations, etc.
describe a wide array of voluntary action which has the most prevalent usage in the Indian conte*t&.
+redominantly, this usage describes grass(root level initiatives. It includes community based
organi/ations C=.s& and peoples organisations +.s& which may be very micro and local in their
actions. It also includes individual initiatives which may not mature into an organi/ed entity. Individual
voluntary action is a significant part of the Indian terrain and has been so throughout history. 2 ma?or
impetus for the use of this terminology derives from the inspiration of 'ahatma )andhi. 9is call for
constructive social wor6 as a part of struggle for independence from =ritish colonial role had a ma?or
impact in cataly/ing voluntary action in India, particularly in the early part of the %<th century.
India has a vast array of community based organisations, many of whom have emerged on their own by
the aspirations of local communities and families. Community based organisations C=.s& are also
those which have been motivated by the wor6 of other development agencies, in particular social
development programmes of the government and other intermediary level voluntary organisations. In
the "#:<s and "#@<s, many government programmes were the catalyst for village based groups around
issues of health, education, drin6ing water, forestry, womens development, etc. ;i6ewise, voluntary
organisations promoted 'ahila 'andals womens groups&, youth groups, farmers group, sanghas and
sanghatanas unions and organisations& of the poor in rural and urban areas Aernandes, "#@"&.
2nother common phrase used in describing such activities is charity. ,erived from its =ritish colonial
roots, a charity is an organisation which seems to imply 7doing good for the poor and the needy.
Charitable initiatives include provision of welfare and social services; health, education, drin6ing water,
fodder, etc. are more common. Charity also includes provision of institutionalised care ( for orphans,
street(children, destitute women, elderly, and other neglected segments of Indian society. The wor6 of
rich individuals and philanthropic minded industrialists for the benefit of some needy, poor sections of
Indian society has also been subsumed under the title of 7charity.
2 more common definition today, one that has gained ascendancy in the past three decades is 7non(
governmental organisation !).&. 1hile the usage of !). was first made in the conte*t of the
8nited !ation system, its usage, both internationally and in India, has changed over time Salamon and
2nheier, "##%&. In the Indian conte*t, !). includes a wide array of institutions which are outside the
government and may include voluntary grassroots organisations, community based organisation,
intermediary voluntary development organisations, private consultancy and research groups, academic
institutions, parts of the media, and even some institutions from the private for(profit business sector.
This is a negative term, which does not help e*plain the sector and confuses the definition and identity
of the sector by including all types of organisations.
Some other terms or labels have been evolving which are uniBue to the Indian conte*t. The e*amples
that follow seem to describe important sub(components of the wider array of entities described by
voluntary and !).. In the late "#:<s and early "#@<s, during the rise and fall of the Canata regime
after political emergency, -non(party political formation0 gained currency as a label to describe
peoples organisations and social movements Sethi and Dothari, "#@5&. The struggles and debates
surrounding the process of enforcement of a common 7code of conduct by the )overnment of India in
"#@E generated several labels li6e ).!). )overnment !).s&, =i!).s =ig !).s&, statist !).s,
2ction )roups, >.;2)S, etc. 'any writings of this period capture the essence of this debate,
particularly in relation to the autonomy of the sector vis(F(vis the state.
Tax & regulatory definition: an organi/ation that
( Gn?oys special ta* status
( Aaces a non(distribution constraint profitH<&
Functional definition: an organi/ation that forms to
( +erform -public tas6s0
( Gnvironmental protection,
( Social service provision
( +erform tas6s for which there is demand but no supply from for(profits
or governments
( Ieligious activity, art museum
( Influence the direction of public policy
( +olitical party, issue organi/ation
( !ot conducted or maintained for the purpose of ma6ing a profit.
( !ot commercially motivated
( 2 nonprofit organi/ation is one that has committed legally not to
distribute any net earnings profits& to individuals with control over it
such as members, officers, directors, or trustees. It may pay them for
services rendered and goods provided.
India
In India, NPOs are known commonly as Non-Governmental Organizations (NGOs).
They can be registered in four ways:
The Societies Registration Act, 1860
The Indian Trusts Act, 1882
The Trade Union Act, 1926, and
Section 25 of the Indian Companies Act, 1956.
$he following laws or %onstitutional Articles of the &epublic of 'ndia are rele#ant to the ()*s+
Articles 19(1)(c) and 30 of the Constitution of India
Income Tax Act, 1961
Public Trusts Acts of various states
Foreign Contribution (Regulation) Act, 1976
Religious non-profit organizations:
". Ieligious Gndowments 2ct, "@E4
%. The Charitable and Ieligious Trust 2ct, "#%<
4. 'ussalman 1a6f 2ct, "#%4
5. 1a6f 2ct, "#$5
$. +ublic 1a6fs G*tension of ;imitation& 2ct, "#$#
Indian Classification of Third ector: Types of !"#s$
1( culture and recreation
2( education and research
3( health
4( social services
5( environment
6( development and housing
7( la*, advocacy and politics
8( philanthropic intermediaries and voluntarism promotion
9( international activities
1:( religion
11( business and pro&essional associations, unions
Tax-exemptions:
2ll other types of voluntary non(profit organisations have to adhere to the provisions of section "" and
"% "%2& of the Indian Income Ta*, "#E" in order to secure a ta*e*empt status.
In addition, the 2ct provides for e*emption under section @< ) to a non(profit organisation which
enables the contributions of the donors to be ta* e*empt under certain conditions. In order to secure
such e*emption, the organisation has to apply regularly to the appropriate authority.
In its broad definition of a charitable purpose, the Income Ta* 2ct essentially includes the following
provisions3
relief of poor
education,
medical relief and
advancement of any other ob?ect of public utility.
". 2 8niversity or other educational institution e*isting for educational purposes Section "<(%%&.
%. 2 hospital or other such institution for treatment of illnesses including mental illness and
rehabilitation e*isting only for philanthropic purposes Section "<(%% 2&.
4. 2n income of an association notified by the government in the field of sports and games
Section "<(%4&.
5. Income of a professional association li6e law, medicine, accountancy, engineering, architecture
or that specified by the government Section "<(%4(2&.
$. 2n institution registered with Dhadi and >illage Industries Commission D>IC& promoting
6hadi and village industries and registered under Societies 2ct Section "<(%4(=&.
E. 2n institution registered for the purposes of religious Trust Section "<(%4(==2&.
:. Income of a housing association Section %< 2&.
@. 2 scientific research association as notified by government Section %"&.
#. 2 mutual fund or public financial institution Section %4 =&.
"<. Trade unions Section %5&.
"". 2 provident fund or pension fund appropriately set up Section %$&.
.b?ectives of !+.s3
"%.
;ealth
<nvironment.
<ducation.
Child !rotection.
#/VO, N!O, NGO, CBO, <O, ;O, Civil =ociety, Charity Org, hird =ector(
NGO vs Non-Profit Organizations
*any people do not understand the principles of, and the differences between, N+& and Non-profit
organizations, even though they are well-known terms in the ,-st century. .irst of all, to clarify, N+&
stands for a non-governmental organization, and a non-profit organization can also be referred to as a
N)&.
Non-governmental organizations are created by legal persons who are not part of the government.
/lthough N+& funds are mostly raised by the government, they maintain a non-governmental
position, and eliminate the need for a government council. This type of organization is also known as a
civil society organization. There are forty thousand international N+&s in the world, with the most
organizations found in 0ndia.
0n -123, after the establishment of the 4nited Nations &rganization, the non-governmental
organizations became e!tremely popular. /lthough, before this time, there were other organizations,
such as the famous 5otary 0nternational, that began its operation in -162. 7y the end of the year -1-2,
there were one thousand and eighty three N+&s in e!istence. 0nternational N+&s played a vital role in
the anti-slavery movement, as well as in the movement for women8s suffrage. The official definition of
international N+&s was defined on .ebruary ,9, -136, by the resolution ,:: (;) of the '&<&.
=arious types of Non-governmental organizations include>
70N+& ?" 7ig 0nternational N+&
<& ?" ivil <ociety &rganization
(&N+& ?" (onor &rganized N+&
'N+& ?" 'nvironmental N+&
+&N+& ?" +overnment-operated N+&s
0N+& ?" 0nternational N+&
@4/N+& A @uasi-autonomous N+&
T/N+& ?" Technical /ssistance N+&
+<& ?" +rassroots <upport &rganization
*/N+& A *arket /dvocacy &rganization
&n the other hand, the non-profit organization does not divide its e!tra funds between its
shareholders, or owners, but uses them for the organization8s purposes. '!amples of these
organizations are public arts organizations, trade unions and charitable organizations. They
offer services and programs through federal, local or state entities. Non-profit organizations
hire management personnel, and aim to raise substantial funds. These organizations are service
organizations or charities that are established for co-operative, trust or purely informal reasons. N)&s
are also known as endowments, or foundations that have huge stock funds. / supporting organization
is similar to a non-profit organization, and also operates as a foundation, but they have more
complicated structures.
To summarize, the differences between a non-profit organization and NGOs are:
-.The N+& is a non-governmental organization. 0ts funds are raised by the government, but it
maintains a non-governmental position, with no need for a government council. They are also known
as civil society organizations.
,./ non-profit organization uses its e!tra funds for the purpose of the organization, rather than
dividing it between the shareholders and the owners of the organization. '!amples of N)&s are public
arts organizations, trade unions and charitable organizations.
>N!O? as @# corporation or an association that conducts business &or the beneft o& the general public *ithout
shareholders and *ithout a proft motive(A
Nongovernmental organizations (NGOs) are independent, nonproft, private
organizations *ith humanitarian goals, *hich may be local, national, or transnational and
have &ormal or unstructured management(
he term NGO seems to be deceptively simple( No standard defnition can include all
organizations *orBing at present under the title/NGO, originally voluntarism *as a
doctrine *hich held that the *ill is a dominant &actor or it *as a principle relying on one?s
o*n &ree *ill &or an action(
# voluntary organization *as a conglomeration o& volunteers Coined together *ith shared
values o& concern &or a specifc goal( Valuntarism in association is Bey to all NGOs(
# nongovernmental organization is a legally constituted entity created by private
organizations or people *ith no participation in or representation o& any government(
Dhen an NGO is &unded totally or partially by a government or governments, it maintains
its nongovernmental status only as long as it e-cludes government representatives &rom
membership(
En some countries NGOs and N!Os are one in the same( Both the companies o&ten *orB &or the beneft o&
human *el&are and to better the society( he maCority o& the di,erence lies in small details such as N!Os are
e-empted &rom ta-, *hile NGO?s do not allo* government representatives to become members o& the
organization(
Non-governmental organizations are created by legal persons who are not part of the government.
/lthough N+& funds are mostly raised by the government, they maintain a non-governmental
position, and eliminate the need for a government council. This type of organization is also known as a
civil society organization.
Professor Peter Willetts, Fniversity o& 'ondon Gan independent voluntary association
o& people acting together on a continuous basis &or some common purpose other than
achieving government o)ce, maBing money or illegal activities(G
NGO.org defnes >NGO? as, @# non/governmental organization (NGO) is any non/proft, voluntary
citizensH group *hich is organized on a local, national or international level( asB/oriented and
driven by people *ith a common interest, NGOs per&orm a variety o& service and humanitarian
&unctions, bring citizen concerns to Governments, advocate and monitor policies and encourage
political participation through provision o& in&ormation( =ome are organized around specifc issues,
such as human rights, environment or health( hey provide analysis and e-pertise, serve as early
*arning mechanisms and help monitor and implement international agreements( heir relationship
*ith o)ces and agencies o& the Fnited Nations system di,ers depending on their goals, their
venue and the mandate o& a particular institution(A
India
'n 'ndia, (,*s are known commonly as (on-)o#ernmental *rganiations .()*s/.
$hey can be registered in four ways+
0. $rust
1. Society
2. Section-13 %ompany
4. Special 5icensing
&egistration can be done with the &egistrar of %ompanies.&o%/.
$he following laws or %onstitutional Articles of the &epublic of 'ndia are rele#ant to the ()*s+
Articles 06.0/.c/ and 27 of the %onstitution of 'ndia
'ncome $a8 Act, 0690
,ublic $rusts Acts of #arious states
Societies &egistration Act, 0:97
Section 13 of the 'ndian %ompanies Act, 0639
;oreign %ontribution .&egulation/ Act, 06<9
History
En 1945, a&ter the establishment o& the Fnited Nations Organization, the non/
governmental organizations became e-tremely popular( #lthough, be&ore this time, there
*ere other organizations, such as the &amous $otary Enternational, that began its
operation in 19:4( By the end o& the year 1914, there *ere one thousand and eighty
three NGOs in e-istence( Enternational NGOs played a vital role in the anti/slavery
movement, as *ell as in the movement &or *omen?s su,rage(
En 197:s sa* a great mushrooming o& NGOs &or various reasons( 1( he government *as
encouraging them by giving grants or permitting them to receive &oreign &unds directly( 2(
he corporate sector in partnership *ith the government *as encouraging the supporting
NGOs, especially in the rural areas( 3( Ne* ta- deductions to donors &or providing &unds
&or rural development and social services to NGOs *ere introduced in the Encome ta- #ct(
4( he !ro&essionalization o& the NGO sector provided opportunities to committed and
motivated individuals to maBe up careers in development(
IC$# 1976
En the f&th fve year plane government ecoraged NGOs to taBe role in social service
sector( 198:s period coincided *ith the emergence o& ideas on the centrality o& peoples
participation and empo*erment in poverty alleviation(
En 198: &our de&erent types o& NGOs *orBing in groundJ
1( Del&are
2( 0evelopment
3( <mpo*erment
4( =ocial action
7
th
fve year plan govt provided 1::/15: crores earmarBed &or use in active collaboration
*ith NGOs(
o assist and channel &unds &or this ne* involvement, established >Council &or
#dvancement o& !eople?s #ction and $ural echnology (CP!") in 1986(
Classifcations of NGOs (#argee$arana)
En General.
1( $elie& and Charity
2( 0evelopment
3( Kobilisation and Organisation
4( !olitics
5( !olitical <ducation
%evid &orten'
1( $elie& and Del&are
2( Community 0evelopment
3( =ustainable 0evelopment
4( !eople?s Kovment
O()ectives'
*. +m,o-erment
.. -areness
/. 0ervice delivery
1. +d2cation
3. !eso2rce mo(ilization and
4. !eso2rce 2tilization
5. 0afeg2arding !ig6ts
7. %evelo,ment
8. +radicating social ,ro(lems
*9. Peo,le ,artici,ation
Princi,les ("at-agal2)
NGO C6aracteristics(G2na :a$s6anagal2)
NGOs are fo2nded, develo,ed, and managed (y civilians.
L NGO personnel are highly pro&essional and sBilled, trained or educated in disaster
management,
public health, logistics, technology, *ater sanitation, communications, medicine, geology,
sociology, and psychology(
L =ta, are o& di,erent bacBgrounds, training, nationalities, and cultures(
L Kost NGOs have moved to use all local sta, to build capacity and have large human
resource
databases that Beep emergency personnel and cadres o& career aid *orBers on call(
L NGOs have maCor global procurement capabilities &or relie& supplies, technical and
capital
assets, vehicles, and other material that can be used to respond to humanitarian
emergencies(
NGOs can (e not;for;,roft (non,roft).
L NGOs re+uire &unding &rom e-ternal sources to design, implement, and manage their
programming(
L NGOs obtain &unding &rom numerous sources including government agencies, private
&oundation grants and private contributions or gi&ts/in/Bind &rom companies and other
organizations(
L 0onations o& cash, material, or even services (legal, technological, and the liBe) to NGOs
normally +uali&y as charitable gi&ts and can be used to lo*er ta- liability &or the donor(
L En the Fnited =tates, legal charitable status &or an organization is granted by the &ederal
government under the classifcation o& 5:1(c)(3) that enables the charity to receive
ta-deductible
donations &rom individuals or corporations(
L o become a not/&or/proft organization, an NGO must be charitable in its mission,
managed
and accounted &or by a board o& directors *ith no fnancial interest in the programs or
operations o& the organization, and maintain fnancial accounting methods that are &ully
open
to the public at all times (see chapter 3)(
L NGOs can also be solely &or/proft or have arms *ithin the organization that are &or/proft
(&or
e-ample, Enternational $elie& and 0evelopment)(
NGOs are uni+ue(
L #lthough NGOs *orld*ide number in the thousands, they vary *idely in their
per&ormance,
pro&essionalism, sense o& responsibility, and attention to standards in accordance *ith the
;umanitarian Code o& Conduct(49
L he vast maCority, 95 percent, o& NGO relie& *orB is provided by only thirty/fve to &orty
maCor #merican and <uropean organizations5: that, on the *hole, &ollo* codifed, *ell/
tested
international standards o& care(51
NGOs s6are many c6aracteristics.
L NGOs typically serve the public, benefciaries, needy populations, constituencies, or
target
groups that have been a,ected by some emergency, disaster, or massive reduction o&
livelihood(
L #ctivities are intended to serve needs that a donor &eels appropriate but aid is based on
need
rather than any political agenda(
L NGOs share a relatively small labor pool o& emergency, relie& and humanitarian
assistance
*orBers, and o&ten times share personnel, practices, and customs(
L NGOs have many o& the same donors (especially &oundation, FN, and large government
grant
types), compete &or a limited pool o& &unding, and must be fnancially accountable in
many o&
the same *ays(
NGOs coordinate activities and resources internally and e-ternally (see chapter 7 &or more
detail)(
L Enternal coordination, though not al*ays &ormal, is the most common *ay civilian
sectors
organize in humanitarian emergencies( Dhen more than 1:: organizations are present in
a region responding to a given emergency, the rationale &or pulling together coordination
bodies to manage in&ormation Mo*, proCect locations, shared resources, and combined
e,orts
is clear and immediate(
N( <-amples. En Oosovo, Burundi,