Donate without doubts

Jun 09, 2012, 08:23 IST | Saloni Dutta

You may have your heart in the right place, but, how can you ensure that your money reaches the right cause too? A system of checks and balances can iron out doubts about how NGOs are using your money

Do you feel skeptical before donating to an organization? Do you have doubts that your money won’t reach the people concerned? There is a lot of confusion and lack of trust amongst people when it comes to making a donation to a Non Governmental Organization (NGO). “We see so many cases in the news where the organization is run on paper and the donations contribute to the personal accounts of the trustees. It is difficult to judge the authenticity of an NGO, especially the ones who have just begun or are not that popular,” said Sachin Sarkar, Manager at a telecom firm, who wants to do his bit for humanity but is confused about which NGO to go for.

Illustration/Amit Bandre

In an estimate by the Central Statistical Organization, in September 2009, India had 3.3 million non-profit organizations registered with it. While in actuality only 1 lakh of them are active. This was visible through the data from Income Tax department, of the organizations filing their returns. While numerous laws and authorities regulate the NGO sector, most stakeholder groups question its reliability.

Donation intermediaries: Tarika Vaswani at GiveIndia office. Pic/Bipin Kokate

“Self accountability and evolving good organizational practices, is the need of the hour. However, the voluntary sector is not supported with adequate framework and guidelines for various desirable practices. Hence operating in such situations carries a lot of responsibility and accountability. A proper balance between the two is very essential for the sector,” said S P Selvi, Executive Director of Credibility Alliance, a certifying organization for NGOs.

Voluntary organizations in India are presently facing a crisis in building confidence. “The biggest hurdle faced by NGOs is the lack of ability to showcase the good work done by them, as most NGOs do not have adequate resource allocation for this purpose,” added Selvi. “The need of the hour is for NGOs to build trust and confidence in our minds. It is very difficult for me to contribute to an NGO when I don’t know anything about the work they have done,” says Pummi Petkar, a Tupperware Consultant from Vashi. NGOs are constantly in search of support in the form of money, material or people. They spend much of their time and energy in reaching out to potential sources of support. However, they are either not aware of or not equipped to provide the required information in the appropriate form so that resource providers could help them accordingly. Unlike in the corporate sector, where the Corporate Governance law is very strong and has been strengthened from time to time, this is not the case with the voluntary sector. There is no accountability mechanism under any of the laws pertaining to the voluntary sector of India. They are outdated and hence there is no way to establish the credibility of an organization through them.

Joy of giving: Sachin Tendulkar feeding kids from a NGO

“The rules that were set up for formation of NGOs are quite old and have not been amended in accordance with present needs of the sector,” says Pushpa Singh, CEO of Guidestar India. A Non-Profit Organization (NPO) can be established under different acts like The Bombay Public Charitable Trust Act of 1950, The Societies Registration Act of 1860 and The Companies Act of 1956; none of which has been amended in recent times. It becomes easier for people to find a way around these Acts and establish organizations for their personal interest. Also there is lack of information and awareness about these non-profit organizations amongst the public. “Many people are not even aware of the fact that NGOs have to pay income tax,” says Tarika Vaswani, Senior Manager at GiveIndia.

Low credibility: It is difficult for people to ensure that their money reaches the cause

“If a political party does not perform, it gets voted out during the next round of elections. If an industry doesn’t perform, it gets rejected by the consumer and is also punished by capital markets. But in the case of the voluntary sector, the challenge is what could be the mechanism to identify good practices. This creates a lot of problem for potential donors in identifying a good organization,” says Selvi.In a measure to provide visibility to NGOs and hence build trust and accountability quite a few organizations have been set up. Credibility Alliance, GiveIndia, Guidestar India, CharityZ, Samhita, Dasra are some of the organizations that either accredit or profile an organization or act as donation intermediaries. They help people in making an informed decision when contributing towards any non-profit organization. They enlist the different accreditations that an NGO has after cross checking. “The transparency and accountability that these organizations help an NGO with in turn helps a layman donate his/her hard earned money, with confidence that it is going for the cause,” says Singh “Various NGOs came together and formed Credibility Alliance (CA). It works towards the accreditation of NGOs,” says Selvi. CA created a set of norms to classify NGOs and accredit them. It has developed an accreditation system whereby NGOs voluntarily apply for getting accredited. The norms of CA are under two categories: 1.Minimum Norms and 2.Desirable Norms 

Profiling: Pushpa Singh from Guidestar India, which helps NGOs with their profile development Pic/Ashish Rane

Similarly, there are organizations that help profiling NGOs and enlist their credentials, to help people decide causes to donate to. GiveIndia is one such organization. “We have reviewed over 3,000 NPOs from all over India to identify over 200 organizations that have met with our listing criteria,” said Vaswani. Guidestar works in a comparable attempt to profile NGOs across India. “Guidestar India acts like Facebook for NGOs as it helps them developing their profiles. It lets them add details and document their work,” says Singh.

“Most NGOs work in rural areas. This makes their visibility to the urban public quite low. So it is necessary for the NGOs to have a certain amount of visibility in terms of a website or newsletters,” says Singh. “Taking small steps is the key for people who want to start contributing towards an NGO. Donate small amounts, check the accreditations of the organization, check if they file income tax, are some of the steps that a person can take to make sure that his/her money or efforts are going to the right cause,” adds Singh. Apart from CA, which is the pioneer for accreditations of NGOs in India, support of certain organizations also adds to the credibility of the NGO. “Mumbai Mobile Creches, an organization that works in the field of education for children of migrant and construction workers in Mumbai, has been accredited by CA. It is also supported by The British Asian Trust and been listed by GiveIndia for donations. This increases the reliability of the organization,” explains Singh. People should check for an organization’s registration documents, audited accounts, annual report, returns filed with statutory authorities and pictures, which serve as supporting reference. Tarika Vaswani believes in a more proactive approach in identifying a genuine organization and says, “One can also be upbeat about checking the work done by an organization by validating it themselves. A person can visit the NGO and see the work they do first hand. Also volunteering is another option as it gets one involved in the cause.”

Demanding a detailed personalised feedback is another way in which people can ensure proper allocation of their funds. “If I donate for the education of a child in a village in Andhra Pradesh, I can demand my NGO to send me a personalised feedback. They can send me pictures, report cards, work done by the child to keep me updated about the developments in the child’s education,” adds Vaswani. Online donation portals should have a clear track of the money that was donated. One should make sure that you get a feedback report, enlisting details of how your money was spent. The crux of the matter is that one should ensure that the NGO they are contributing towards should be accredited and should file income tax returns. The organization should be able to show you their work in form of pictures, documents, videos etc. One should ensure that they take the tax receipt of the contribution they made. One can also be proactive and volunteer with the organization.

As an individual donor, one should ensure that
The donation is made in the name of the organization and not in the personal name of any trustee or individual.
If the donation is substantial, the donor may also state in the letter of donation, the purpose for which the donation is being made.
The donor should look into details of the organization's governing board.
One could look into the past work of the NGO and implementation of its projects.
The individual donor should be issued an official receipt for the amount donated.
The donor needs to ensure that the organization is duly registered under the existing provisions of the legal framework.
The donor may also ask for a written commitment from the organization, that the donation so received will be spent only for the purpose for which it was given. 
The credibility of the organization can be assessed by visiting the website of that organization and ensuring that there is no lack of legal compliance. 

Go to top