How to create an NGO in your grandfather's name

I am a 30-year-old woman, and I have recently inherited a considerable sum from my grandfather. He was a passionate supporter of education-related causes, and in his will, he urged me to set up a non-governmental organisation in his name and memory using some of the funds he left me. I want to create this NGO, manage these funds myself, and ensure that they are utilized properly. How do I do this legally?

—Name withheld on request

In order to establish a charitable entity (also described as a non-governmental organization (NGO) or foundation) in your grandfather’s name to carry his legacy forward, you must first identify the legal vehicle for forming this entity.

The options available are: you can start a public charitable trust, or a company with charitable objects (known as a Section 8 Company under the Companies Act, 2013), or a charitable society. Each structure has unique features, and the appropriate choice depends on various factors, including degree of control, confidentiality, liability, number of members and the state in which you wish to operate.

A public charitable trust is managed by trustees for charitable purposes set out in the trust deed. You can serve as a trustee, but it is advisable to have at least one other trustee. Some states (including Maharashtra, Gujarat and Rajasthan) regulate such trusts through a Charity Commissioner or equivalent office, so an entity based there would need to comply with the applicable state statute. Elsewhere in India, in the absence of such legislation, public trusts are governed by general principles of trust law.

A Section 8 Company is a company which has obtained a licence from the Registrar of Companies under Section 8 of the Companies Act, 2013, to undertake charitable activities. Unlike other companies, a Section 8 company must apply its income solely towards promoting its charitable objects and must not distribute profits as dividends to members. You may be a shareholder/member as well as a director of the company, but you will need at least one additional member and one additional director.

A society may be formed for any literary, scientific or charitable purpose and must be registered with the local Registrar of Societies. Like public trusts, compliance requirements for societies differ from state to state. As society requires a minimum of seven members, it may not be well-suited to your purpose unless you can organise six other individuals who are willing to participate in this entity and are aligned with your objectives.

Once you decide on the entity, the constitutional documents must be carefully drafted to reflect your grandfather’s philanthropic vision as well as your other objectives. Thereafter, once the entity is formed and registered with the relevant authority (if required), it may apply for registration under the Income-tax Act, 2025, to claim tax exemption on its income.

If you are not an Indian citizen, the Foreign Contribution (Regulation) Act, 2010, will apply to your donations to the entity, even if you are an Overseas Citizenship of India (OCI) cardholder.

Bear in mind that setting up and running an NGO is a significant, ongoing commitment, so ensure that you have the time, infrastructure and professional support required before proceeding.

Shaishavi Kadakia is a partner, and Sachi Shah, senior associate at Cyril Amarchand Mangaldas.