To be considered part of the non-profit sector the entity must be

• Organisational – an institution with some meaningful structure and permanence;
• Non-governmental – not part of the apparatus of government;
• Non-profit-distributing – not permitted to distribute profits to its owners or directors. They are required to be ploughed back in the organisation
• Self-governing – not controlled by some entity outside the organisation; and
• Supportive of some public purpose.

While all organisations that meet these five criteria are part of the generic non-profit sector, they may formally be placed into two distinct categories.

• First category consists of pure member-centric Bodies. While serving some public purpose, they primarily exist for taking care of the interests, needs and desires of their own members.

The examples are social / welfare clubs, business associations, labour unions, Professional bodies and political parties.

• Second category consists of public-serving organisations which are formed to serve the needs of the general public.

The examples are charitable grant-making institutions, religious formations, and a wide range of educational, scientific and other related service organisations whose activities may range from running orphanages and old age homes to managing advocacy groups on current issues.

The Indian Constitution provides a distinct legal space to social capital / civil society institutions:

• through its Article on the right to form associations or unions – Article 19 (1)(c);
• through Article 43 which talks of States making endeavor to promote cooperatives in rural areas;
• through explicit mention in entries made in Schedule 7.

Civil Society as a Major Economic Force

With liberalisation of the economy and globalisation, there has been a phenomenal growth in the number of non-governmental organisations across the world in the last few decades. They are further supported by a large number of unpaid volunteers who have strong individual initiative and commitment to social responsibility.

The presence of NGOs ensures

• depth and resilience in civil society
• expression to citizens’ voices
• enables them to take responsibility for how their society is performing
• allows them to talk to their government in organised ways.

There are more than two million such organisations registered under the Societies / Trusts Acts in the country. This includes a wide diversity of local youth clubs, mahila mandals, private schools, old age homes and hospitals. In recent years, even government organisations like DRDA and District Health Society have been registered as Societies. Such a vast network of socio-economic institutions has the potential to play an important role in many key governmental policy objectives:

• It can help to scale up productivity and competitiveness.
• It can contribute to inclusive wealth creation.
• Enhance the people centricity of the government.

Civil society organisations promote cooperation between two or more individuals through mutual cohesion, common approach and networking. Democracies inherently encourage such cooperative behaviour. In the current model of economic growth, the voluntary/ civil society sector has been recognized as a key player in achieving equitable, sustainable and inclusive development goals.

Both the State as well as the market-led models of development has been found to be inadequate and there is an increasing realisation that active involvement of the voluntary sector is needed in the process of nation building. They are now viewed as partners in progress.

Civil society organisations function outside the conventional space of both State and Market, but they have the potential to negotiate, persuade and pressurise both these institutions to make them more responsive to the needs and rights of the citizens. Voluntary Organisations can offer:

• alternative perspectives
• committed expertise
• an understanding of the local opportunities and constraints
• capacity to conduct a meaningful dialogue with communities, particularly those that are disadvantaged.

It is therefore essential that the Government and the Voluntary Sector work together. Based on the law under which they operate and the kind of activities they take up, civil society groups in our country can be classified into following broad categories:-

• Registered Societies formed for specific purposes
• Charitable Organisations and Trusts
• Local Stakeholders Groups, Microcredit and Thrift Enterprises, SHGs
• Professional Self-Regulatory Bodies
• Cooperatives
• Bodies without having any formal organisational structure
• Government promoted Third Sector Organisations

The voluntary sector has contributed significantly to finding innovative solutions to poverty, deprivation, discrimination and exclusion, through means such as awareness raising, social mobilization, service delivery, training, research, and advocacy. The voluntary sector has been serving as an effective non-political link between the people and the Government.

National Policy on Voluntary Sector 

Encourage, enable and empower an independent, creative and effective voluntary sector, with diversity in form and function, so that it can contribute to the social, cultural and economic advancement of the people of India. Objectives of the policy are:

• To create an enabling environment for VOs that stimulates their enterprise and effectiveness, and safeguards their autonomy;
• To enable VOs to legitimately mobilize necessary financial resources from India and abroad;
• To identify systems by which the Government may work together with VOs, on the basis of the principles of mutual trust and respect, and with shared responsibility
• To encourage VOs to adopt transparent and accountable systems of governance and management.

Different types of civil society organizations

1. Civil rights advocacy organizations: to promote human rights of specific social groups e.g. women, migrants, disabled, HIV, sex workers, Dalit people, tribal people, and the likes.
2. Civil liberties advocacy organizations: to promote individual civil liberties and human rights of all citizens, rather than focusing on particular social group.
3. Community based organizations, citizens’ groups, farmers’ cooperatives: to increase citizen’s participation on public policy issues so as to improve the quality of life in a particular community.
4. Business and industry chambers of commerce: to promotion policies and practices on business.
5. Labour unions: to promote the rights of employees and workers.
6. International peace and human rights organizations: to promote peace and human rights.
7. Media, communication organization: to produce, disseminate, or provide production facilities in one or more media forms; it includes television, printing and radio.
8. National resources conservation and protection organizations: to promote conservation of natural resources, including land, water, energy, wildlife and plant resources, for public use.
9. Private and public foundations: to promote development through grant- making and partnership.
10. Also the Civil society includes – Political Parties; Religious Organizations; Housing cooperatives, slum dwellers and resident welfare associations.

Non-Government Organisation

NGOs are legally constituted organizations, operate independently from the government and are generally considered to be “non-state, non-profit oriented groups who pursue purposes of public interest”. The primary objective of NGOs is to provide social justice, development and human rights. NGOs are generally funded totally or partly by governments and they maintain their non-governmental status by excluding government representatives from membership in the organization.

In a democratic society, it is the state that has the ultimate responsibility for ushering development to its citizens. In India, through the progressive interpretation of the Constitution and its laws and policies, the scope of development has been significantly broadened to include not just economic progress for citizens, but also promotion of social justice, gender equity, inclusion, citizen’s awareness, empowerment and improved quality of life. To achieve this holistic vision of development, the state requires the constructive and collaborative engagement of the civil society in its various developmental activities and programs. Non-governmental organisations (NGOs) as the operational arm of the civil society therefore have an important role in the development processes.

Interaction and relationship between the Indian state and NGOs

In India the state policies have significantly influenced the formation of NGOs and their activities. The government sponsored and aided programmes provided financial assistance to NGOs either as grants or as matching grants to support the implementation of social development projects. The need for the involvement of voluntary organizations has been acknowledged by a number of official committees dealing with development.

1. Balwant Rai Mehta Committee, 1957: Today in the implementation of the various schemes of community development, more and more emphasis is laid on NGOs and workers and on the principle that ultimately people’s own local organisations should take over the entire work.
2. Rural-Urban Relationship Committee, 1966: Local voluntary organisations can be very helpful in mobilizing popular support and assistance of the people in the activities of local body. It is possible to maintain constant and close contact with the people through these organizations.
3. Ashok Mehta Committee: Of the several voluntary organisations engaged in rural welfare, a few have helped the PRIs in preparation of area development plans, conduct feasibility studies and cost/benefit analysis, explore ways and means to induce local participation in planning and implementation.
4. In the Sixth Five Year Plan (1980-1985), the government identified new areas in which NGOs as new actors could participate in development.
5. The Seventh Five Year Plan (1985- 1990), envisioned a more active role for NGOs as primary actors in the efforts towards self-reliant communities. This was in tune with the participatory and empowerment ideologies, which was gaining currency in the developmental discourse at that time.
6. Government support and encouragement for NGOs continued in the Eighth Five- year plan, where a nation-wide network of NGOs was sought to be created.
7. The Ninth Five-year plan proposed that NGOs should play a role in development on the public-private partnership model. Also, the agricultural development policies of the government and its implementation mechanisms provided scope and space for NGOs. A case in point is the watershed development program, which has led to the growth of NGOs working for rural development.
8. In March 2000, the Government declared Planning Commission as the nodal agency for GO-NGO interface. The message was clear- government has to and will work with the voluntary sector. A ‘Civil Society Window’ was started in 2004, in the hope that it would enable people to engage with the Planning Commission and offer the benefit of their field experiences.
9. During the 11th Five Year Plan process a regional consultation was organised to get civil society feedback. Participation of Civil Society (CS) had thus already become a strong and robust element in the preparation of the Plan Consultations with citizens on the Approach Paper to the 12th Plan began on many platforms, including the internet.

Members of Planning Commission travelled across the country attending Public Meetings called by CS around various sectoral issues to gather inputs for the 12 Five Year Plan National Policy on the Voluntary Sector, 2007:

Recognizes the contribution of the voluntary sector and the need for Government- Voluntary Sector partnership and that project grants are a useful means for both the Government to promote its activities without its direct involvement and a valuable source of support to small and medium Voluntary Organizations.

It highlights the need for Government to encourage all Central and State Government agencies to introduce pre-service and in-service training modules on constructive relations with voluntary organizations.

It recognizes the difficulties faced by the voluntary sector in accessing government schemes and suggests ways to tackle this.

The main objective of the National Policy on the Voluntary Sector is to identify systems by which the Government may work together with the Voluntary Organizations on the basis of the principles of mutual trust, respect and shared responsibility. It also recognizes the importance of independence of voluntary organizations, which allows them to explore alternative models of development. The National Policy on the Voluntary Sector is just the beginning of the process to evolve a new working relationship between the government and the voluntary sector without affecting its autonomy and identity. There are many areas in which help of the voluntary sector is sought- for social audits, behaviour change, good governance and increasingly even for better service delivery.

Benefits of India from NGOs

India has a long history of civil society based on the concepts of “daana” means giving and “seva” means service. Voluntary organizations were active in cultural promotion, education, health, and natural disaster relief as early as the medieval period. During the second half of the 19th century, nationalist consciousness spread across India and self-help emerged as the primary focus of socio-political movements. The early examples of such attempts are Friend-in-Need Society (1858), Prathana Samaj (1864), Satya Shodhan Samaj (1873), Arya Samaj (1875), the National Council for Women in India (1875), the Indian National Conference (1887) etc. The Society’s Registration Act (SRA) was approved in 1860 to confirm the legal status of the growing body of non-governmental organizations.

1. The NGOs focus on the search for alternatives to development thinking and practice
2. it creates an atmosphere of participatory research, community capacity building and creation of demonstrable models.
3. Many NGOs have worked hard to include children with disability in schools, end caste- based stigma and discrimination, prevent child labour and promote gender equality resulting in women receiving equal wages for the same work compared to men.
4. During natural calamities they have played an active role in relief and rehabilitation efforts, in particular, providing psycho-social care and support to the disaster affected children, women and men.
5. NGOs have been instrumental in the formation and capacity building of farmers and producers’ cooperatives and women’s self- help groups.
6. NGOs have implemented the Jeevan Dhara programme for creation of wells for safe drinking water; promoted community toilets for total sanitation, and supported the public health programs on immunisation and for eliminating tuberculosis and malaria.
7. NGOs have significantly influenced the development of laws and policies on several important social and developmental issues such as the right to information, juvenile justice, ending corporal punishment in schools, anti-trafficking, forests and environment, wildlife conservation, women, elderly people, people with disability, rehabilitation and resettlement of development induced displaced people to name a few.
8. NGOs can and should play the “game changer” to pro-poor development through leadership on participatory research, community empowerment and search for development alternatives.
9. Further, the industrial policies have influenced the formation and relations between the businesses and NGOs.
10. The emphasis of industrial policies on the promotion and development of small, cottage and village industries has also lead to the formation of agencies such as the Khadi and Village Industries Commission, Small Industries Associations and likes.

Profiling NGOs:

India has possibly the largest number of active non-government, non-profit organizations in the world. There has been a sharp increase in the number of new NGOs in the past decade in India.

According to a government study, there were only 1.44 lakh registered societies till 1970. The maximum increase in the number of registrations happened after 2000. A recent study commissioned by the government showed that there are about 3.3 million NGOs in India by the end of 2009 i.e., one NGO for less than an average of 400 Indians. Even this staggering number may be less than the actual number of NGOs active in the country.

This is because the study, commissioned in 2008, took into consideration only those entities which were registered under the Societies Registration Act, 1860 or the Mumbai Public Trust Act and its variants in other states.

It can be noted that a great majority of the NGOs are small and about three-fourths of all NGOs are run entirely by volunteers. About 13 percent of the NGOs have between 2 to 5 employees; about 5 percent have between 6 to 10 employees and only about 8.5 percent NGOs employ more than 10 people.

According to a survey conducted by society for Participatory Research in Asia (PRIA), 73.4 percent of NGOs have one or no paid staff, although across the country, more than 19 million persons work as volunteers or paid staff at an NGO.

More often NGOs are registered as trusts, societies, or as private limited non-profit companies, under Section- 25 of Indian Companies Act, 1956. They also enjoy income tax exemption. Foreign contributions to non-profits are governed by Foreign Contribution Regulation Act (FCRA), 1976.

Challenges facing NGOs

In view of the emergence of a new paradigm of scaling up, in which NGOs are seen as catalysts of policy innovations and social capital; as creators of programmatic knowledge that can be spun off and integrated into government and market institutions; and as builders of vibrant and diverse civil societies, it’s imperative to critically analyze the role of NGOs in the process of development and understanding the challenges facing the sector.

1. Transparency and accountability are key ingredients of Governance in the NGO Sector as these determine operational efficiencies and risk mitigation. Over the years, corporate sector has been able to recognize and implement best governance practices through appropriate institutional framework. However, the NGO sector is yet to evolve any institutionalized framework, which could potentially play an important role in overall development of the nation.
2. Of late, some of the local and national NGOs have been found involved in malpractices and acting irresponsibly, thus undermining the credibility of civil society. It’s a huge concern and poses a great challenge to the development movement spearheaded by NGOs in the country.
3. There is a huge flow of funds into the non-government organization sector and this requires prudence and good practices to maintain accountability and transparency to the benefit of all stakeholders.
4. Although NGOs do internal auditing but for more accountability and transparency, it is advisable to go through external auditing also, especially where public funds are involved. Hence, issues of internal control mechanisms, professionalism, accountability, transparency and financial management must be given impetus.
5. The challenge is multidimensional, and is compounded by the ‘unorganised’ nature of the sector, lack of regulatory frameworks and the fact that India boasts of more than a million NGOs of different roles, structures and sizes.
6. In particular, the Indian voluntary sector urgently needs self-regulatory guidelines and transparency mechanisms to increase the trust and awareness as to how the philanthropic funds are being utilised.
7. The general lack of transparency in the functioning of a large proportion of NGOs leads to aversion in donating funds for charitable causes since the general public is largely cynical about the ‘genuineness’ of the non-profit spirit of the sector.
8. The stringent governance standards of an NGO will facilitate the effective management and increase the accountability to its stakeholders including donors, the government and the community.
9. It is in the self-interest of the NGOs to realize the fact that to implement a structure of ‘corporate governance’ principles would provide the real value to the stakeholders. Also, this would enable to track the potentially dubious sources of funding coming in for the voluntary sector – an aspect which has gained impetus in the wake of the increased number of terror attacks and extremist activities.
10. Recently, the Union Home Ministry has identified some NGOs as security threat to the country. Such security considerations have underscored the rising need of improving the governance practices in the Indian NGOs and exercising better regulatory mechanisms, disclosure norms, and management processes including financial management and budgeting systems as well.

Suggestions

1. The implementation of a strategic framework is essentially important in the management of an NGO. The endorsement of such a framework brings in professionalism and internal control mechanisms, which further makes the organization’s performance more effective.
2. Developing strategies also include establishing a mechanism of consistent monitoring of whether they are being implemented and linking the results to the organization’s goals.
3. There is need to bolster public confidence in the voluntary sector by opening it up to greater public scrutiny.
4. The Government should encourage Central and State level agencies to introduce norms for filing basic documents in respect of NGOs, which have been receiving funding by Government agencies and placing them in the public domain (with easy access through the internet) in order to inculcate a spirit of public oversight.
5. Public donation is an important source of funds for the NGO sector and one that can and must increase substantially. Tax incentives play a positive role in this process. The Government could simplify and streamline the system for granting income tax exemption status to charitable projects under the Income Tax Act.
6. The Government may consider tightening administrative and penal procedures to ensure that these incentives are not misused by paper charities for private financial gain.
7. The Government should encourage all relevant Central and State Government agencies to introduce pre-service and in-service training modules on constructive relations with the voluntary sector. Such agencies need to introduce time bound procedures for dealing with the VOs. These could cover registration, income tax clearances, financial assistance, etc.
8. There must be a formal system for registering complaints and for redressing grievances of NGOs.
9. The Government should encourage setting up of Joint Consultative Groups / Forums or Joint Machineries of government and voluntary sector representatives, by relevant Central Departments and State Governments.
10. It also needs to encourage district administrations, district planning bodies, district rural development agencies, zila parishads and local governments to do so. These groups could be permanent forums with the explicit mandate to share ideas, views and information and to identify opportunities and mechanisms of working together.
11. The Government also might introduce suitable mechanisms for involving a wide cross-section of the voluntary sector in these Groups/Forums.

Conclusion

We are entering into an important phase where there are many targets that the government intends to achieve with the active collaboration of VOs, in the 12th plan. Therefore, it is important to conduct an effective review or report card of the National Policy with specific recommendations.

These recommendations could become an agenda for all Voluntary Organizations, Planning Commission, state governments and national Ministries. Efforts are also needed to further disseminate the information about the policy and its intentions with small VOs as well as government functionaries.

There is a need to solicit commitment from state governments and national ministries. A systematic intervention is also needed to get National Policy approved and adopted by the Indian Parliament. The most serious challenge faced by India today is the conflict between violent and non-violent approach of development.

Needless to say that majority of population of India is still deprived of basic fruits of development, but rather than adopting the approach which is more inclusive and look for solutions within the constitution, India is faced by disturbances in many parts of the country. This not only hampers the development projects but also shrink the space for people’s participation to achieve their goals through peaceful means.

The voluntary sector being present in such locations faces the challenge of delivering the services and even mobilizing people on the development agenda. The need of the hour is to work closely with each other for the benefit of the marginalized people, as even today the dream of Mahatma Gandhi has not been achieved.