Fund raising methodology for running a NGO / NPO

An NGO may draw its funds from internal as well as external sources
(a) Internal Sources

(i) Membership contribution,

(ii) Sponsorship Fees,
(iii) Sales (such as sales of greeting cards, candles, handicraft items, homemade foods items, books,
etc.).
(iv) Interests,
(v) Community Philanthropists (patron members, life members, etc.), and
(vi) Individual Donations.

Besides, an organisation can save resources by using services of volunteers rather than paid staff.

(b) External Sources

Within India:

(a) Grant in aid (from Central or State Government). Various funding schemes operated by different
Ministries of the Central Government;
(b) Donations in kind, such as, medicines, books, food items, etc.;
(c) Private institutional or grants from:
(i) Parent NGOs,
(ii) Corporate Bodies,
(iii) Industrial houses
(iv) Sponsorship for an ticket collections from fund raising events such as charity shows, musical nites,
etc.
(v) Advertisements,
(vi) Souveniers,
(vii) Other trusts/organisations,
(viii) Individuals,
(ix) Box Collections
(x) Tourists/Visitors
Outside India (Foreign Sources)

(a) Bilateral funding;

(b) Multilateral funding;
(c) Private institutional funding;
(d) Overseas non-resident communities.

The purpose for which, and the account of foreign contributions received are regulated by Foreign
Contribution Regulation Act, 1976 (FCRA). Further the institutions receiving such funding are required to
submit necessary documents and returns.

However, certain foreign donations are exempt from the provisions of FCRA and in respect of them the
requirements of documentation and returns are not applicable.

Eligibility Condition

Generally for receiving funding from either Indian or foreign sources, the following are essential
conditions:

1. Legal Status: NGO should have a legal status 9i.e. should have been registered as a Society or a Trust
or a Company under Sec. 25)
2. Constitution and Working Rules: The NGO should have proper constitution and objectives framed in
the form of Memorandum and Articles of Association/ Byelaws/ Trust Deed.
3. Management: It shall have a governing body with authority to conduct the affairs to achieve the main
objectives
4. Non profit Character: It should do its activities not for any profit but with an objective to serve the
targeted population. Even if it carries on some auxiliary business in the interests of development of its
target audience, such profits shall not be distributed by way of dividend to any of its members
5. Involvement: It shall consist of such people who are voluntarily involved in rendering the services to the
target society and also shall be able to attract volunteers
6. Not to discriminate: It shall not indulge in discriminating the target group nor use the resources
mobilized for furtherance of interests of any political party or involve in creating communal disharmony.
7. Part record: Normally the existing NGO with past record of good service and non discriminating in
nature are funded.

Application for Financial Assistance

Application for grant in aid/financial assistance shall be made in the prescribed form or by furnishing,
amongst others, the following information/ details:

General Profile for the NGO:

(a) Name, address, legal status (along with details of Registration like Certificate of
incorporation/registration no., etc.) and thrust area.
(b) Name(s) and address(es) of Chief/other functionaries of the organisation.
(c) Main activities and sources of funding generally for last three years. Bank details are also required in
some cases.
(d) Evaluation of the achievements, if any, carried out by any independent agency along with the report
thereof.

Project Profile:

(e) Title of the project.

(f) Aims and objectives along with estimation of targeted beneficiaries, expected qualitative improvement,
etc.
(g) Strategy/action plan, details of training required, availability of volunteers and their skills, etc.
(h) Financial requirement, sources of funding and financial assistance required from Govt. under the
respective program.
(i) Duration of the project and sustainability after support is completed
(j) Monitoring and evaluation indicators

Documents to be furnished

Generally, the following documents are required to be furnished alongwith the application:

(i) Copy of Registration Certificate

(ii) Memorandum of Association & Bye-laws
(iii) Latest Annual Report
(iv) Audited Accounts along with auditors report/certificate
(v) List of important functionaries and employees
Terms and Conditions of Grant-in-Aid from Govt.
To avail financial assistance under the Central Government Schemes, the organisation/ institution has to
follow the general terms and conditions of grants-in-aid as mentioned below:
1. The grant receiving agency will be required to confirm in writing that the conditions contained in
the grant-in-aid rule are acceptable to it an will execute a bond in favour of the President of India
to the effect that in the event of its failure to abide by the same, it will refund the whole or such
part of the grant as the Government of India may decide.
 2. The organisation in receipt of financial assistance shall be open to inspection by an officer of the
concerned Department/ Ministry of the Government of India or concerned State Department/ UY
administration or a nominee of these authorities.
3. The accounts shall be maintained properly and separately and submitted as and when required.
They should be open to a check by an officer deputed by the Government of India or the State
Government. They shall be open to a test check by the Comptroller and Auditor General of India
at his discretion.
4. The audited accounts together with the utilization certificate in the prescribed form duly
countersigned by the chartered accountants are required to be furnished within six months in
respect of a preceding year or after expiry of the duration for which the grant was approved.
5. The agency shall maintain a record of all assets acquired wholly or substantially out of the
government grant and maintain a register of such assets in the prescribed Performa (if any). Such
assets shall not be disposed off, encumbered or utilized for purposes other than those for which
the grant was given, without prior sanction of the government of India. If the agency ceases to
exist at any time, such properties shall be reverted to the Government of India.
6. The programmes of the organisation/institution receiving support under any scheme shall be
opened to all the citizens of India without the distinction of being utilized for the approved
purpose, the payment of grant may be stopped and the earlier grants be recovered.
7. The organisation/ institution must exercise reasonable economy in the working of approved
project.
8. If the concerned ministry is not satisfied with the progress of the project or it finds that there has
been a breach or violation of any of the terms and conditions, it reserves the right to terminate the
grant-in-aid.
9. The grantee organisation shall implement orders in regard to the reservation of posts for SCs and
STs.
10. An organisation organizing a seminar/ conference or a workshop under any scheme shall not
invite foreign delegates without the prior approval of the Government of India.
11. In case of grants for building, the organisation must complete the construction of the building
within a period of two years from the date of receipt of the first installment of the grant unless an
extension is granted by the Government of India.
12. If it is found at a later date that the organisation has withheld or suppressed information regarding
grants from other official sources, the grant of the Central Government may be cancelled,
reduced or the organisation may be asked to refund the grant already paid to it.
13. Equipment purchased out of the grant-in-aid will be the property of the concerned Department/
Ministry, which will decide about its disposal on the completion of the project. The organisation
may submit a proposal in this regard before the completion of the project.
14. The orgnaisation will submit to the concerned department/ ministry, six monthly progress reports
of the project along with a certified statement of expenditure actually incurred and an estimate of
expenditure for the next six months period in the prescribed form. The release of subsequent
installments will be subject to a satisfactory progress of the project.
15. The organisation shall furnish to the concerned Ministry such information as the Ministry may
require from time to time.
16. All other conditions of the grant shall be as prescribed under General Financial rules, 1963, as
amended from time to time.
Grant-in-aid from Foreign Agencies

Acceptance and utlisation of foreign contribution and hospitality by associations whether incorporated or
not, is regulated by the Foreign Contribution (Regulation) Act, 1976.

Association Eligible to receive foreign Contribution

For the purpose of acceptance of foreign contribution and hospitality, associations have been divided into
three categories, viz.:
1. Associations registered with the Central Government
2. Associations not registered with the Central Government
3. Organisations of political nature
Registration / Prior Permission
Any society, trust or charitable company, carrying on educational, charitable, religious, economic, cultural
or social welfare activities, and desirous of receiving any foreign contribution from a foreign source, is
required to obtain registration under Section 6(1) of the Act. Any such association which is not registered
or which has been denied registration, can receive foreign contribution only after obtaining prior
permission from the Central Government under Section 6(1A) of the Act.

An organisation cannot receive project grants from foreign countries through another organisation
registered under FCRA, unless the former organisation has obtained either registration or prior
permission.

An organisation cannot receive foreign funds on mere filing an application for registration/prior
permission, foreign contribution can be received only after the registration/ prior permission is actually
obtained.

Operation of Bank Accounts in respect of Foreign Funds covered under FCRA

Only one bank should be maintained and operated exclusively for receipt of foreign contribution. The
details of such a bank account should have been informed to the FCRA Division while making the
application for registration or prior permission and it should have been specified in the Registration letter
or Prior Permission order.

If the organisation wants to change the designated bank account then a fresh application in appropriate
form must be made justifying the reasons necessitating such a change