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A cause for concern

A cause for concern

Run these checks to ensure the credibility of an NGO before donating to it.

Charitable intent doesn’t always translate into judicious charity. Scrutinising an NGO before you donate your hard-earned money to it is as important as screening the company whose shares you want to buy. Here’s a step-by-step guide for checking these organisations:

Shortlist NGOs
Google the cause close to your heart and the Net will throw up many options. One way to weed out questionable organisations is to check Websites like www.giveindia. org, which have their own screening procedures. Factor in the location of the NGO too, because if you want to volunteer for an activity, it’s best to go for a local body. Another filter is experience. Any NGO that is less than one year old should not be considered unless you know it well.

How to Give Wisely
Check the registration certificate. The constitution document should give details of the trustees/board members, and the registered address of the NGO. The ‘Objects Clause’ should clearly define its purpose/s.
Check the statement of accounts for the past three years (at least). This will indicate the source of donations as well as the manner and quantity of disbursal.
Undertake a site visit to observe the NGO’s activities.
Always insist on a receipt, duly signed and dated.

Read, Talk, Visit
Credibility Alliance, a consortium of voluntary organisations, has norms to check the legitimacy of NGOs. Begin with the body’s registration. There are three types of NGOs: trusts, societies and non-profit companies. Each has to be registered with a separate authority—charity commissioner, registrar of societies and registrar of companies, respectively. The registration documents must clearly define the objectives and list the NGO’s address.

Check the financial statements to ensure that the NGO has enough working capital for the next six months. The debt levels should be low. The board members should not have a conflict of interest as far as financial transactions are concerned. Most importantly, details of finances and the management must be easily available to all donors.

However, nothing beats a visit to assess the effectiveness of an NGO. “We send newsletters to donors, but encourage them to visit the projects they support. They can take photographs, talk to beneficiaries, etc” says Kalpana Sankar, CEO of Hand in Hand, an NGO that works for the sustainable eradication of poverty.

Give, and Some Take
The sky may be the limit for donation, but the taxman is not so benign. Contributions up to only 10% of the gross total income are tax-deductible. Also, the entire donation may not qualify. For instance, only 50% of a contribution to the National Children’s Fund is tax-exempt. Donations to global charities are eligible only if they have been notified by the government for 100% deduction or are registered under Section 12A of the Income Tax Act for a 50% deduction.

Contributions in kind do not enjoy any tax benefit, but can be more useful than cash. As Vidya Reddy, executive director, Tulir, Centre of Prevention and Healing of Child Sexual Abuse, says: “A much-needed support was the donation of a printer and A4 size paper.” This is the best part of charity: no contribution is too small.

Published on: Nov 04, 2009, 3:56 PM IST
Posted by: AtMigration, Nov 04, 2009, 3:56 PM IST