Non-Governmental Organisations (NGOs) form a significant part of this sector, working relentlessly towards the betterment of society. While many NGOs are genuine and dedicated to their cause, some lack efficacy or transparency. It is thus essential to exercise due diligence before making any kind of donations to ensure that your contributions make a real impact. In this blog, we will explore the social sector landscape in India, the importance of due diligence and evaluations, and the remarkable corporate CSR policy established by the government.
The Importance of the Social Sector:
India is home to 3 million registered non-governmental organizations (NGOs). Each NGO is driven by distinct missions and objectives and often work in collaboration with government agencies, corporate entities, and international organizations to maximise their reach and effectiveness. Though independent in governance and nature, each is subject to government regulations and financial or tax assessments by the regulatory authorities. Just as other establishments, fines and penalties may be imposed for compounding certain irregularities.
In light of the growing number of NGOs in India, understanding their diverse nature and potential, regulatory considerations becomes crucial. Let’s explore the significance of due diligence in ensuring impactful contributions to the social sector.
Importance of Due Diligence
Though NGOs have made significant contributions to society, it is disheartening to acknowledge that not all organizations operate with genuine intentions or efficiency. Consequently, conducting due diligence before donating becomes essential. Due diligence involves a thorough assessment of an NGO’s credibility, efficiency, and impact. It ensures that your resources are channelled to trustworthy organizations that can maximise the benefits to the intended beneficiaries. Platforms like LET IT COUNT, GuideStar India and Charity Navigator can provide valuable insights and reliable ratings for NGOs, facilitating the due diligence process.
That’s why it’s important to do your due diligence before donating to an NGO. Due diligence involves verification of multiple aspects however, here are a few basic things to keep in mind:
- Check the NGO’s registration status: Make sure the NGO is registered with the government and that its financial statements are available to the public. You can verify the NGO’s registration status on the Ministry of Corporate Affairs website: https://mca.gov.in/.
- Read the NGO’s mission statement and goals: Ensure that the organisation’s goals align with your own values and interest
- Look for transparency and accountability: The NGO should be transparent about its finances, how it uses donations and other accounting policies.
- Talk to people who have worked with the NGO: Seek feedback from individuals who have direct experience with the organisation to gain insights into its work and impact. Beneficiaries and their families are also a great source of information for knowing the effectiveness of ground work
- Publications: Annual Reports, Audited statements, litigation reports etc are a few others measures to check to validate authenticity
Corporate Social Responsibility
In recent years, there has been a growing emphasis on corporate social responsibility (CSR). CSR is the idea that businesses have a responsibility to give back to the communities in which they operate. This can be done through a variety of means, such as donating to charity, volunteering employee time, or promoting environmental sustainability.
India is the first country in the world to make corporate social responsibility (CSR) mandatory for all companies with a net worth of over INR 500 crore, turnover of over INR 1000 crore, or net profit of over INR 5 crore. This means that these companies are required to spend at least 2% of their profits on CSR activities.
Under the CSR policy, companies must establish a CSR committee, develop certain policies, and allocate a minimum percentage of their profits towards eligible activities. These activities may span across various sectors like education, healthcare, environmental conservation, women empowerment and so on. By making CSR mandatory, the government has encouraged companies to embrace their role as responsible corporate citizens and actively engage in social welfare, besides improving the company reputation and goodwill.
2022 reported a CSR spend of INR 14600 crore, in addition to a INR22000 received as foreign funding. While about 37% of the companies spent more than their prescribed CSR Budget for the year, a large number of companies showed unspent CSR funds. One of the prime reasons for this was not being able to identify projects. Organisations like LET IT COUNT make this process simple but identifying very high social impact projects that have been verified for authenticity and consistency through an in-depth Due Diligence process.
The importance of Giving
In a world filled with diverse challenges and societal disparities, the act of giving holds immense significance. Giving, whether through financial contributions, volunteering time and skills, or offering support, has the power to transform lives, uplift communities, and create a more compassionate and equitable world.
Think about the last time you reached out to help someone in need. Maybe you volunteered at a local shelter, donated clothes to a community drive, or simply offered a listening ear to a friend going through a tough time. In those moments, you probably experienced a deep sense of fulfilment and purpose. That’s the beauty of giving—it nourishes our souls and reminds us of the power we hold to make a difference.
When we take that first step and demonstrate our commitment to making a positive impact, we inspire others to do the same. Our actions become a spark that ignites a fire of compassion, encouraging friends, family, and even strangers to join in and spread the joy of giving. It’s a beautiful cycle that multiplies the impact and brings about even greater change.
So, the next time you have the opportunity to give, whether it’s your time, resources, or skills, embrace it wholeheartedly. Remember that you have the power to create a brighter future, not just for others but also for yourself. In this interconnected world, let’s embrace our superpower of giving and make a real difference—one act of kindness at a time.