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Comrades Editorial · 23 Sep 2026 (PDF)

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In this edition

  1. Strengthening NGOs in India Polity & Governance

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Polity & Governance

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Strengthening NGOs in India

Source This editorial is based on “India’s NGOs at a new funding crossroads” published in the Hindu on 21/09/2026. The article highlights that stringent regulations and funding deficits challenge Indian nonprofits, urging a shift toward domestic philanthropy, risk-based compliance, and enhanced institutional capacity to sustain their vital grassroots developmental roles. The proposed Foreign Contribution (Regulation) Amendment Bill, 2026 seeks to tighten state oversight over Non-Governmental Organisations (NGOs) receiving foreign funds, sparking intense debate. While the government cites national security risks and opaque funding networks, critics warn it threatens civil society autonomy and essential welfare institutions. Ultimately, balancing regulatory safeguards with democratic freedoms remains vital for inclusive national development. What are Non-Governmental Organizations?
  • About:
    • Non-Governmental Organizations in India are independent, non-profit entities that operate outside of government control to address social, environmental, cultural, or economic challenges.
    • They play a vital role in nation-building by bridging the gap between marginalized communities and government welfare schemes.
  • Key Characteristics & Functions:
    • Non-Profit Motive: Any surplus generated is reinvested back into the organization’s mission rather than distributed to owners or shareholders.
    • Grassroots Impact: They work directly at the community level, tackling issues like rural education, healthcare access, women’s empowerment, child rights, and environmental conservation.
    • Advocacy & Rights: Many NGOs act as watchdogs, raising awareness about human rights, legal aid, and policy reforms.
    • Disaster Relief: They often act as first responders during natural disasters, providing immediate relief supplies, food, and rehabilitation support.
What are the Key Regulatory Frameworks Governing NGOs in India?
  • Constitutional Framework:
    • NGOs derive their foundational legitimacy from Article 19(1)(c), which guarantees citizens the right to form associations, while Article 19(4) permits reasonable restrictions in the interests of sovereignty, integrity, public order and morality.
    • However, the Supreme Court in Noel Harper v. Union of India (2022) held that receiving foreign contributions is not a fundamental right.
  • Societies Registration Act, 1860 and State Society Laws:
    • Membership-based NGOs are commonly registered as societies under the Societies Registration Act, 1860 or corresponding State enactments.
    • The Act covers literary, scientific and charitable societies and generally requires a governing body, memorandum, rules, member records and annual filings.
  • Public Trust Laws:
    • Asset-based charitable organisations may operate as public charitable or religious trusts, governed primarily by applicable State laws such as the Maharashtra Public Trusts Act, 1950, along with general trust principles.
    • Such laws regulate trustees, trust property, accounts, audits, alienation of assets and change reports, generally through a Charity Commissioner or similar authority.
    • Importantly, the Indian Trusts Act, 1882 principally governs private trusts; it is not the principal statute for public charitable and religious endowments.
  • Companies Act, 2013:
    • Professionally structured NGOs (non-profit organizations (NPOs)) may be incorporated under Section 8 of the Companies Act, 2013 for promoting education, social welfare, environment, research, charity or similar objects.
    • Profits must be applied to stated objectives and dividends cannot be distributed to members.
    • Section 8 companies face stronger corporate-governance requirements, including maintenance of statutory registers, board meetings, financial statements, audit and annual filings with the Registrar of Companies.
  • Foreign Contribution (Regulation) Act, 2010:
    • NGOs accepting foreign donations must obtain either FCRA registration or project-specific prior permission from the Ministry of Home Affairs.
    • The FCRA Amendment Act, 2020 requires foreign contributions to be received initially through a designated account at the SBI New Delhi Main Branch, prohibits transfer of foreign contribution to another person, caps administrative expenditure at 20%, and permits greater verification of office-bearers.
  • Companies (CSR Policy) Rules, 2014 and CSR-1 Registration:
    • NGOs implementing corporate social responsibility projects under Section 135 of the Companies Act, 2013 must satisfy prescribed eligibility conditions.
    • Eligible implementing agencies generally include Section 8 companies, registered public trusts and registered societies possessing the required income-tax registration; independent entities ordinarily require a three-year track record.
    • Filing Form CSR-1 generates a CSR Registration Number, enabling the NGO to receive CSR funds. Companies must undertake board-level monitoring and impact assessment in specified high-value projects, thereby making NGOs accountable not merely for expenditure but also for outcomes.
  • NITI Aayog NGO-DARPAN and Government-Grant Regulation:
    • An NGO seeking grants from Union Ministries must obtain a Unique ID on the NGO-DARPAN Portal, disclose its PAN, registration particulars and office-bearers, and periodically update its profile.
    • Government grants are generally routed and monitored through the Public Financial Management System (PFMS), with audited accounts and Utilisation Certificates required under the General Financial Rules, 2017.
    • The Government has made NGO-DARPAN registration mandatory before any Union Ministry releases grant assistance, creating a common layer of digital identity, grant traceability and institutional due diligence.
  • Right to Information Act, 2005 and Public Accountability:
    • Under Section 2(h), an NGO that is substantially financed, directly or indirectly, by government funds may qualify as a “public authority” and become subject to RTI obligations.
    • In D.A.V. College Trust and Management Society v. Director of Public Instructions (2019), the Supreme Court clarified that substantial financing need not mean majority financing; the assistance must be material enough to support the institution’s functioning.
  • Sector-Specific and Cross-Cutting Compliance:
    • Registration as an NGO does not exempt an organisation from laws governing its operational sector.
    • NGOs running child-care institutions require registration under the Juvenile Justice Act, 2015; schools must comply with the Right to Education Act, 2009 and State education laws; healthcare institutions may require registration under clinical-establishment and biomedical-waste rules.
    • NGOs must also comply, where applicable, with the POSH Act, 2013, EPF/ESI laws, minimum-wage and labour codes, child-protection norms, environmental permissions, and the Digital Personal Data Protection framework when handling beneficiary data.
How have NGOs Contributed to the Development of Various Sectors?
  • Last-Mile Delivery of Health Services and Behavioural Change:
    • NGOs bridge the last-mile delivery gap by identifying vulnerable patients, countering misinformation, supporting treatment adherence and linking communities with public-health institutions.
    • For instance, Rotary International, UNICEF and civil-society volunteers assisted India’s polio programme through vaccination booths, door-to-door mobilisation and action against vaccine hesitancy. India reported its last wild-polio case in 2011 and was certified polio-free in 2014.
    • Thus, NGOs contribute to preventive healthcare, community surveillance, treatment compliance and health literacy, particularly among migrants, tribal groups and urban informal workers.
  • Converting Enrolment into Learning:
    • NGOs address gaps in foundational literacy, classroom hunger, remedial education and evidence-based policymaking.
    • Pratham’s Annual Status of Education Report (ASER) is India’s largest citizen-led rural learning survey. It shifted policy discussion from school infrastructure and enrolment towards measurable learning outcomes; ASER findings have been cited by NITI Aayog, Parliament and education-policy bodies.
    • As a PM POSHAN implementing partner, the Akshaya Patra Foundation uses mechanised kitchens and supply-chain systems to provide meals to more than 2.35 million children in 25,768 government schools and Anganwadi centres. In March 2026, it completed the milestone of five billion meals.
  • Women’s Empowerment and Informal Livelihoods:
    • NGOs organise dispersed workers into self-help groups, cooperatives, producer collectives and trade unions, generating social capital and bargaining power.
    • NGOs such as SEWA, Azad Foundation and Educate Girls promote women’s economic empowerment, livelihoods and access to education.
      • Organisations like Snehalaya and Majlis Manch provide shelter, rehabilitation, legal aid and support against violence and exploitation.
      • CARE India works across health, education and livelihoods, particularly focusing on marginalised women and girls.
      • The Mann Deshi Foundation, working with rural women entrepreneurs, operates mobile business schools, financial-literacy programmes and a Rural Chamber of Commerce for Women, helping women formalise and expand micro-enterprises.
  • Agriculture and Rural Development:
    • NGOs translate scientific knowledge into locally usable solutions through farmer field demonstrations, livestock services, watershed development and producer institutions.
    • BAIF Development Research Foundation works in areas such as livestock improvement, agroforestry, water conservation, indigenous-seed preservation and Farmer Producer Organisations. Its programmes have reportedly reached more than 50 lakh families across 1.15 lakh villages.
    • Digital Green pioneered participatory agricultural-extension videos in which local farmers demonstrate practices in local languages.
      • Its newer AI-enabled advisory platform had reportedly reached around 4.6 lakh farmers and extension workers across five countries by 2025.
  • Transparency and Social Accountability:
    • Civil-society organisations create vertical accountability between citizens and elected institutions by simplifying public information, conducting social audits and supporting rights-based mobilisation.
    • The Mazdoor Kisan Shakti Sangathan (MKSS) used public hearings or Jan Sunwais to expose irregularities in muster rolls and public works, helping create the intellectual and grassroots foundation for the Right to Information Act, 2005 and statutory social audits under MGNREGA.
    • The Association for Democratic Reforms (ADR) converts candidates’ affidavits into accessible information on criminal cases, assets and educational qualifications. Its analysis of all 543 winners in the 2024 Lok Sabha election found that 251 MPs, or 46%, had declared criminal cases.
  • Environmental Conservation:
    • Environmental NGOs connect ecological restoration with livelihood security by involving Gram Sabhas and user groups in managing forests, grazing lands, wetlands and water bodies.
    • The Foundation for Ecological Security (FES) facilitates community institutions for protecting common lands, strengthening customary rights and preparing village-level natural-resource plans.
    • FES and partner organisations have empowered 40.38 million lives, by restoring 17.66 million acres of Commons through 64,976 village institutions.
  • Disaster Management:
    • NGOs bring speed, local knowledge and flexible logistics during disasters, particularly where formal systems face access or information constraints.
    • Organisations such as SEEDS India and Goonj undertake emergency relief, shelter reconstruction, livelihood restoration and community-level risk mapping after floods, cyclones, earthquakes and heatwaves.
    • SEEDS, a member of the Government’s National Platform for Disaster Risk Reduction, has worked on flood recovery in Himachal Pradesh and Chennai, Cyclone Michaung response and heat-risk reduction in vulnerable urban settlements.
  • Sanitation and Social Dignity:
    • NGOs have linked sanitation infrastructure with behavioural change, livelihood rehabilitation and human dignity.
    • Sulabh International popularised the low-cost twin-pit pour-flush toilet, reducing dependence on sewerage networks and facilitating safe decomposition of waste.
      • It has constructed more than 1.5 million household toilets and over 9,000 public toilet complexes, while its pay-and-use model created a financially sustainable approach to maintaining public sanitation facilities.
What are the Key Concerns in the Functioning of NGOs in India?
  • Chronic Funding Deficit and Weak Financial Resilience:
    • Indian NGOs frequently receive short-duration, activity-linked grants, while donors remain reluctant to finance salaries, technology, institutional systems and reserve-building.
    • The India Nonprofit Report 2026, based on 438 nonprofits, found that 68% faced a funding deficit in FY2024–25, rising to 83% among micro-organisations; 73% had no corpus fund, while 90% identified financial sustainability as their principal challenge.
    • This produces mission drift, staff insecurity and project discontinuity, as organisations pursue donor-compatible activities instead of long-term community priorities.
  • Unequal Access to CSR and Philanthropic Capital:
    • Funding is influenced by corporate networks, geographical proximity and proposal-writing capacity, creating a structural disadvantage for small, rural and community-based organisations.
    • The Bharat NGO Report 2025, surveying 325 NGOs across 20 States, found that 84% had annual budgets below ₹3 crore, 80% lacked adequate corporate-networking opportunities and smaller NGOs recorded only a 50% proposal-approval rate, compared with 73% for larger organisations
    • Further, approximately 70% of CSR expenditure originated from only 500 companies, while the Northeast and Aspirational Districts received merely 2–4%, reinforcing spatial inequality in social investment.
  • Regulatory Complexity and Uncertain Operating Environment:
    • NGOs must navigate multiple regimes involving State society or trust laws, Section 8 requirements, Income-tax registration, CSR-1, NGO Darpan, PFMS and FCRA compliance.
    • The FCRA Amendment Bill, 2026 proposes greater government supervision and disposal of foreign-funded assets upon cessation of registration, raising concerns over regulatory uncertainty and operational autonomy of NGOs.
  • Weak Professional and Digital Capacity:
    • Grassroots credibility does not automatically provide expertise in financial management, cybersecurity, monitoring and evaluation, data protection or statutory reporting.
    • The 2025 Bharat NGO survey found that 61% lacked expertise in Management Information Systems, only 17% used licensed software, and 51% required proposal-writing training.
    • This digital-capacity divide makes smaller organisations vulnerable to cyber fraud, poor data quality and exclusion from technology-intensive funding platforms.
  • Output-Oriented Rather than Outcome-Oriented Functioning:
    • NGOs and donors often measure workshops conducted, materials distributed or beneficiaries enrolled, rather than sustained improvements in learning, health, income or social behaviour.
    • Short grant cycles discourage baseline studies, longitudinal assessment and independent social audits.
    • Consequently, a successful pilot may be repeatedly showcased without evidence of scalability, additionality or cost-effectiveness.
  • Weak Downward Accountability to Beneficiaries:
    • Accountability generally flows upward towards donors, companies and regulators, while communities may have little influence over programme selection or evaluation.
    • Token consultations can produce elite capture, with local intermediaries speaking for women, migrants, Scheduled Tribes or persons with disabilities without securing their meaningful participation.
    • Absence of accessible grievance redressal, informed consent, safeguarding protocols and beneficiary representation on governing bodies can convert welfare recipients into passive data points rather than rights-bearing partners.
    • The rise of “briefcase NGOs”, organisations that exist primarily on paper and operate with limited genuine grassroots engagement, can further weaken beneficiary accountability and divert resources away from intended communities.
  • Trust Deficit and Constrained Civic-Society Space:
    • NGOs perform both service-delivery and watchdog functions, but the latter can generate friction when organisations question displacement, environmental approvals, custodial practices or welfare exclusion.
    • Legitimate concerns regarding money laundering and foreign influence require scrutiny; however, opaque or disproportionate enforcement may generate a chilling effect, encouraging self-censorship and weakening evidence-based policy criticism.
    • Thus, the central challenge is to reconcile national-security safeguards and financial probity with Article 19 freedoms, associational autonomy and democratic dissent.
What Measures are Needed for Smooth Functioning of NGOs in India?
  • Democratise Access to Philanthropic and CSR Capital:
    • Create a district-wise social-needs index linking funding priorities with poverty, health, education, gender and climate-vulnerability indicators.
    • Companies could voluntarily earmark part of CSR spending for Aspirational Districts, the Northeast and low-NGO-density regions, rather than concentrating expenditure around corporate headquarters.
    • The Social Stock Exchange should be expanded through pooled Zero-Coupon Zero-Principal instruments, simplified registration and a common due-diligence facility for small NGOs. S
  • Adopt Proportionate, Risk-Based Regulation:
    • Replace uniform compliance with a graded regulatory framework based on an NGO’s turnover, funding source, public-risk profile and operational scale.
    • A small village organisation should not face the same reporting complexity as a large, multi-State institution; low-risk NGOs could file simplified returns, while high-value entities undergo enhanced audits.
    • Registration suspension or non-renewal should involve a notice, curable compliance period, speaking order and independent appellate mechanism, ensuring natural justice without weakening action against fraud.
  • Institutionalise Ethical Governance and Public Disclosure:
    • NGOs should move from personality-driven management to board-governed institutions through independent trustees, fixed terms, audit rotation and clearly defined executive powers.
    • Larger NGOs should disclose related-party transactions, executive remuneration, donor concentration, administrative costs and programme outcomes in a standardised annual public report.
    • Mandatory conflict-of-interest policies, whistle-blower protection, safeguarding committees and internal grievance systems would reduce founder capture, financial diversion and workplace misconduct.
    • An independent Non-Profit Governance Accreditation Council could provide graded accreditation instead of a simplistic government-approved/not-approved label.
  • Build Downward Accountability through Community Ownership:
    • NGOs should establish beneficiary councils, reserve governing-board representation for community members and undertake participatory budgeting for locally implemented projects.
    • Annual Jan Sunwai or social audits, conducted in local languages, should disclose expenditure, beneficiary-selection criteria, service standards and unresolved complaints.
    • Projects affecting tribal land, cultural practices or sensitive personal data must follow free, prior and informed participation, thereby converting consultation from tokenism into substantive consent.
  • Create a National NGO Capacity and Talent Mission:
    • India needs a dedicated ecosystem for training NGOs in financial management, fundraising, law, cybersecurity, data protection, behavioural communication and impact assessment.
    • Regional shared-service hubs can provide affordable accountants, legal advisers, translators, MIS platforms and grant-writing support to clusters of small NGOs.
    • A Civil-Society Fellowship Programme could place young professionals from universities, law schools and management institutions with rural NGOs, while experienced NGO workers receive recognised social-sector credentials.
  • Shift from Project Counting to Evidence-Based Collaborative Governance:
    • Establish an open Social Impact Evidence Registry where NGOs publish baselines, methods, costs, outcomes and even unsuccessful interventions.
    • Funding evaluation should measure additionality, inclusion, cost-effectiveness and long-term behavioural change, rather than only workshops held or beneficiaries registered.
    • District administrations can create Government–Civil Society Compacts mapping underserved populations, allocating complementary responsibilities and scaling proven local innovations through public programmes.
Conclusion
  • India’s non-governmental sector remains indispensable for bridging last-mile welfare delivery gaps, championing transparency, and driving grassroots innovation. However, sustainable sector growth requires harmonising strict regulatory compliance with equitable access to domestic philanthropy. Ultimately, fostering an enabling environment that balances national security imperatives with democratic associational freedoms will determine the efficacy of civil society in achieving inclusive national development goals.