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Women in India (1875), the Indian National Conference (1887) etc. The Society’s Registration Act (SRA) was approved
in 1860 to confirm the legal status of the growing body of non-governmental organizations.
In India, it was the 1970s which saw rapid growth in the formation of formally registered NGOs and the process
continues to this day. Most NGOs have created their respective thematic, social group and geographical priorities such
as poverty alleviation, community health, education, housing, human rights, child rights, women’s rights, natural
resource management, water and sanitation; and to these ends they put to practice a wide range of strategies and
approaches. Primarily, their focus has been on the search for alternatives to development thinking and practice;
achieved through participatory research, community capacity building and creation of demonstrable models. When
we review some of the work done by NGOs over the past 3 decades, we find that they have contributed greatly to
nation building.
Many NGOs have worked hard to include children with disability in schools, end caste- based stigma and
discrimination, prevent child labour and promote gender equality resulting in women receiving equal wages for the
same work compared to men. During natural calamities they have played an active role in relief and rehabilitation
efforts, in particular, providing psycho-social care and support to the disaster affected children, women and men.
NGOs have been instrumental in the formation and capacity building of farmers and producers’ cooperatives and
women’s self- help groups. Several NGOs have worked hand in hand with the Government to ensure that millions of
out of school children are enrolled and continue their school education, thus making the right to education a reality.
The leprosy eradication programme was spearheaded by NGOs and today only residual leprosy remains in our
country. NGOs have implemented the JeevanDhara programme for creation of wells for safe drinking water;
promoted community toilets for total sanitation, and supported the public health programs on immunisation and for
eliminating tuberculosis and malaria. The much celebrated NREGA, ICDS, ICPS, Nirmal Gram and SwasthyaBima of the
government have their roots in the work of many NGOs. NGOs have significantly influenced the development of laws
and policies on several important social and developmental issues such as the right to information, juvenile justice,
ending corporal punishment in schools, anti-trafficking, forests and environment, wildlife conservation, women,
elderly people, people with disability, rehabilitation and resettlement of development induced displaced people to
name a few. Further, NGOs made their modest attempts to ensure the effective implementation of these laws and
policies by conducting and disseminating findings from participatory research, budget analysis, public hearings, social
audits, workshops, seminars and conferences.
Summing up, it is now well established that NGOs have an important role to play in the development processes and
that both the state and market need the collaboration of credible, active, and accountable NGOs. Given their connect
with the grassroots realities, NGOs can and should play the “game changer” to pro-poor development through
leadership on participatory research, community empowerment and search for development alternatives.
With the increasing role of the NGOs in development activities they are now attracting professionals from various
other sectors, and capacities are being built in support areas such as financial management, resource mobilization,
human resources, leadership development, governance procedures and practices and institutional development. At
another level NGOs have been addressing the social service issues and empowerment related advocacy efforts have
been increasing. The study conducted by a New Delhi based NGO concluded that every fifth NGO in India works on the
issues of community and social service. The favourable disposition of the governments and the political will to involve
NGOs is more pronounced in implementation of the welfare schemes addressing causes of women and children.
Further, the industrial policies have influenced the formation and relations between the businesses and NGOs. The
Confederation of Indian Industries (CII), a leading organisation, has been raising the issues of corporate social
responsibility. The emphasis of industrial policies on the promotion and development of small, cottage and village
industries has also lead to the formation of agencies such as the Khadi and Village Industries Commission, Small
Industries Associations and likes.
Profiling NGOs:
India has possibly the largest number of active non-government, non-profit organizations in the world. There has been
a sharp increase in the number of new NGOs in the past decade in India. According to a government study, there were
only 1.44 lakh registered societies till 1970. The maximum increase in the number of registrations happened after
2000. A recent study commissioned by the government showed that there are about 3.3 million NGOs in India by the
end of 2009 i.e., one NGO for less than an average of 400 Indians. Even this staggering number may be less than the
actual number of NGOs active in the country. This is because the study, commissioned in 2008, took into
consideration only those entities which were registered under the Societies Registration Act, 1860 or the Mumbai
Public Trust Act and its variants in other states.
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It can be noted that a great majority of the NGOs are small and about three-fourths of all NGOs are run entirely by
volunteers. About 13 percent of the NGOs have between 2 to 5 employees; about 5 percent have between 6 to 10
employees and only about 8.5 percent NGOs employ more than 10 people. According to a survey conducted by
society for Participatory Research in Asia (PRIA), 73.4 percent of NGOs have one or no paid staff, although across the
country, more than 19 million persons work as volunteers or paid staff at an NGO. More often NGOs are registered as
trusts, societies, or as private limited non-profit companies, under Section- 25 of Indian Companies Act, 1956. They
also enjoy income tax exemption. Foreign contributions to non-profits are governed by Foreign Contribution
Regulation Act (FCRA), 1976.
Q: What are the key governance challenges facing NGOs?

In view of the emergence of a new paradigm of scaling up, in which NGOs are seen as catalysts of policy innovations
and social capital; as creators of programmatic knowledge that can be spun off and integrated into government and
market institutions; and as builders of vibrant and diverse civil societies, it’s imperative to critically analyze the role of
NGOs in the process of development and understanding the challenges facing the sector.
Transparency and accountability are key ingredients of Governance in the NGO Sector as these determine operational
efficiencies and risk mitigation. Over the years, corporate sector has been able to recognize and implement best
governance practices through appropriate institutional framework. However, the NGO sector is yet to evolve any
institutionalized framework, which could potentially play an important role in overall development of the nation.
NGOs play an increasingly active role in today’s political and social arenas. Civil society organizations are increasing in
number all over India. Of late, some of the local and national NGOs have been found involved in malpractices and
acting irresponsibly, thus undermining the credibility of civil society. It’s a huge concern and poses a great challenge to
the development movement spearheaded by NGOs in the country.
There is a huge flow of funds into the non-government organization sector and this requires prudence and good
practices to maintain accountability and transparency to the benefit of all stakeholders. Although NGOs do internal
auditing but for more accountability and transparency, it is advisable to go through external auditing also, especially
where public funds are involved. Hence, issues of internal control mechanisms, professionalism, accountability,
transparency and financial management must be given impetus. The challenge is multidimensional, and is
compounded by the‘unorganised’ nature of the sector, lack of regulatory frameworks and the fact that India boasts of
more than a million NGOs of different roles, structures and sizes. In particular, the Indian voluntary sector urgently
needs self-regulatory guidelines and transparency mechanisms to increase the trust and awareness as to how the
philanthropic funds are being utilised.
This is a critical challenge that creates a barrier to raising funds and capital for the sector. The general lack of
transparency in the functioning of a large proportion of NGOs leads to aversion in donating funds for charitable causes
since the general public is largely cynical about the ‘genuineness’ of the non-profit spirit of the sector. The stringent
governance standards of an NGO will facilitate the effective management and increase the accountability to its
stakeholders including donors, the government and the community. It is in the self-interest of the NGOs to realize the
fact that to implement a structure of ‘corporate governance’ principles would provide the real value to the
stakeholders.
Also, this would enable to track the potentially dubious sources of funding coming in for the voluntary sector – an
aspect which has gained impetus in the wake of the increased number of terror attacks and extremist activities.
Recently, the Union Home Ministry has identified some NGOs as security threat to the country. Such security
considerations have underscored the rising need of improving the governance practices in the Indian NGOs and
exercising better regulatory mechanisms, disclosure norms, and management processes including financial
management and budgeting systems as well. Moreover, in the larger interest going beyond the security
considerations, the impetus has to be on inculcating a culture of including performance goals, conducting financial
and performance audits, and reforms for increasing the operational accountability and transparency in the eyes of the
public, volunteers, donors and other stakeholders.
Suggestions:
The implementation of a strategic framework is essentially important in the management of an NGO. The
endorsement of such a framework brings in professionalism and internal control mechanisms, which further makes
the organization’s performance more effective. Developing strategies also include establishing a mechanism of
consistent monitoring of whether they are being implemented and linking the results to the organization’s goals.
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