Too many NGOs or too little classification

India has about 31lakh registered NGOs and less than 10% have complied with filing of annual returns according to the CBI


New Delhi: Finally, we have a number. The Central Bureau of Investigation (CBI) has said that there are close to 3.1 million non-governmental organisations (NGOs) across 26 states in India. The data was part of the affidavit presented before the Supreme Court on 31 July as part of the ongoing hearing to a public interest litigation (PIL), according to a report in The Indian Express dated 1 August.

The petition was filed by advocate M.L. Sharma against the government of Maharashtra at the peak of the anti-corruption movement. Sharma had then sought a CBI probe on Anna Hazare, alleging financial irregularities in the trust run by him. Over the years, under the directive of the apex court, the ambit of the petition has expanded to include all NGOs.

The CBI collected data from the registrar of societies of various states. The CBI affidavit said that Karnataka, Odisha and Telangana are yet to share the information and also noted around 82,000 NGOs are registered in the seven Union Territories.

If the number is correct, it implies that there is one NGO for every 400 people in this country. But the number doesn’t look comprehensive enough.

There are two issues. According to the affidavit, the CBI has only looked at NGOs registered under the Society Registration Act,1861. However, there are two other umbrella laws—Trusts Act and Section 8 of the Companies Act—under which non-profits may register themselves. As of now, the CBI has not considered the organisations in each state under these two Acts.

The second problem is with the definition of the term NGO, which in itself is subjective.

For most people, NGO is a term used to describe the social and the development sector. However, as per the laws governing the non-profit sector, the scope of the term NGO or non-profit is wide. A religious charitable organization like the Brahma Kumaries, a promotional platform like the Ice Skating Association of India or a cause related organization like Greenpeace India, are all deemed NGOs. There is no specific classification for NGOs working specifically in social development.

According to the director of the Asian Centre for Human Rights, Suhas Chakma, the information that the CBI has submitted is flawed. “There appears to be a lack of understanding on what comprises an NGO; what you and I may think to be an NGO, those organizations which fight for human rights, promote development of the backward classes etc are not the only entities registered as societies. There are too many others: five housewives if they get together and want to open a boutique can also register as a society,” he said.

“The classification of societies is very generic and that is why there is no centralized data base,” says Premtosh Mishra, a Delhi-based advocate who helps people register entities like Resident Welfare Associations and Co-operative Housing Societies. According to him every state has different requirements, both at the time of registration as well as compliance.

Mishra said that it is hard to come up with the total number of active and fully functional non-profits. “An NGO is determined based on the objectives it declares when registering with the registrar of societies,” he said.

If a society while registering declares that its purpose is to serve the public at large and that it will not be making profits or distributing the profits among its members, it is deemed as an NGO.

The CBI affidavit also says that less than 10% of these ‘NGOs’ have complied with filing annual returns to the Registrar of Societies.

“Filling of annual returns is applicable to all but is enforced only on a few,” said Mishra. Trusts have no reason whatsoever to follow any financial laws and are not accountable to anyone.

“Most entities who are seeking exemption under the Income Tax Act, 1961 or wish to receive foreign funds under Foreign Contribution (Regulation) Act, 2010 have to be regular in this regard to avoid penal action by the authorities. But mostly, not-for profit entities, unless known in the public domain, lack compliance,” adds Mishra

The voluntary sector for long has demanded that laws governing them be updated.

“The Societies registration act is anarchic. It was made by the British and does not take into account for the realities of today,” says Harsh Jaitli, CEO of Voluntary Action Network India (Vani).

He adds the only way to effectively govern the sector is first to distinguish between “resident welfare associations, temple trusts, promotional platforms and development or voluntary organisations”.

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