How is an NGO, a Trust and a Foundation Different?


Posted On : December 20, 2019
How is an NGO, a Trust and a Foundation Different?
Listen to this article

Table of Contents

From a legal standpoint, there is hardly any difference. An NGO or a Foundation cannot be registered. The legal viewpoint is that an NGO has one of three entities; its either a Public Trust or a Society or a not-for-profit organization or foundation. Under the Income Tax Act, all 3 entities are tax-exempt entities.


Trust and Society

Both trust and society alike are two types of a non-profit or non-government organization in India. Therefore if anyone intends on doing social work and for this purpose needs a legal entity, then either a trust or a society can be registered. One can also register a company under section 25 but in most cases, a registered is a norm or society for benevolent work.


Trust

Trust is a comparatively simpler entity and can be easily registered and operated. Such organizations are fundamentally rooted in trust. Donations are purely based on trust that the donated funds would be fully utilized to serve the purpose mentioned in one’s trust deed. Trustees do not owe any explanation to anyone other than the Charity Commissioner and the applicable laws. Any tax breaks u/s 80g and 12a can be revoked if trustees do not abide by the rules, laws, and regulations of the Income Tax department.


NGO

Analyzing NGO Registration people seem to think that even with lack of funds if NGO registration is done then their goals and objectives can be attained. Truth is as quickly as some NGOs are being registered they are also winding up quickly or even leaving it in the middle.

If NGOs are registered with the intention or mindset of obtaining external grants and donations then such NGOs would not be sustainable in the long run. A company donating a chunk of funds to charity on a regular basis, then in such cases an NGO can be registered with enhanced sustainability planning.  


In India, there are many registered NGOs only on paper and only about a little over half of NGOs are actually working for the betterment of society. NGOs can be formed in no time at all. However, when project funds from local government schemes or contributions from foreign countries are on hold indefinitely then the entire NGO comes to a screeching halt. Rather than looking for easier options for forming an NGO, for NGO registration its imperative to analyze the actual requirement and the strength to form, manage and maintain such NGO is far more important.


Call 7604047601 for consultation with a registered expert Trust and Society NGO lawyers on Vidhikarya.

Written By:
Avik  Chakravorty

Avik Chakravorty


Recommended Free Legal Advices
question markLand alloted by Collector cancelled 4 Response(s)
Yours is complicated and serious matter a through reading and study is required before imparting advice. It is better to consult a High Court/supreme court senior Lawyer to guide & help you further defend in supreme court.
question markTrust minimum members. 3 Response(s)
Dear Sir, You have some complicated questions needs personal legal counseling and without verification of documents advise may lead to otherwise meaning.
question markBreach of Agreement On settlement from partnership exit 2 Response(s)
Dear Sir, The description given by you is so lengthy, please make it short and re-submit, as experts have no time to spare as this is free and charity work.
question markHow to start a foundation or and NGO ? And their differences in legal terms. 2 Response(s)
Dear Client, Non-profit foundations and NGOs (Non-Governmental Organizations) are distinct legal entities, though they share the common goal of working towards the welfare of society. Foundations are typically established to provide financial support to charitable activities, while NGOs engage directly in various social, cultural, environmental, or humanitarian activities. To start a foundation or an NGO, consider the following guidelines: 1.Define Your Mission:Clearly outline the purpose and objectives of your organization. Identify the social or community issue you aim to address. 2.Legal Structure:Choose the legal structure based on your goals. Common structures include Trusts, Societies, or Section 8 Companies (under the Companies Act in India). The choice depends on the nature and scale of your activities. 3.Board of Trustees/Directors:Assemble a dedicated and diverse group of individuals who share your vision. They will be responsible for overseeing the organization's activities. 4.Registration:Register your foundation or NGO with the relevant authorities. This may involve filing documents, such as a Memorandum of Association, Articles of Association, and other required paperwork. 5.Compliance:Understand and adhere to local laws and regulations governing non-profit organizations. This includes obtaining necessary licenses and approvals. 6.Funding:Identify potential funding sources, including grants, donations, and fundraising activities. Develop a sustainable financial plan to support your initiatives. 7.Operational Plan:Create a detailed plan outlining how your organization will achieve its objectives. This includes a budget, timelines, and key milestones. 8.Transparency and Accountability:Establish mechanisms for financial transparency and accountability. Maintain accurate records and regularly communicate your activities to stakeholders. 9.Networking:Build partnerships with other NGOs, governmental bodies, and community stakeholders. Collaboration can enhance the impact of your initiatives. 10.Awareness:Create awareness about your organization's mission and activities. Utilize social media, events, and other platforms to engage with the community and potential supporters. It's recommended to seek legal advice and consultation to ensure compliance with specific regulations in your jurisdiction. Additionally, tailor your approach based on the specific needs and challenges related to the cause you're addressing. Thankyou
question markdifferent between ngo and foundation 2 Response(s)
Dear Sir, Both will be registered mostly under the provisions of Society Act. You can know the difference only when you go through the bye-laws of such NGO and foundation.