Management

a) Normally the International donors transfer funds directly from their Headquarters in Foreign Source to the Organisations in India which will be treated as First Receipt. There are certain Cases where the Branch Office of the International funders receives first in India and then transfers the funds to the Organisations. In such cases, the Organisations have to declare these amounts in the second column and subsequent recipient.
b) Similarly, in the case of interest earned, it is to be declared as second/subsequent recipient Column.
c) The realization of Assets sold must also be declared as a second/subsequent receipt.
d) The same procedure has to be followed in the case of receipt in kind

The Central Intelligence Bureau Officer or the State Revenue Official or any other Government Officer who has been authorised to inspect the Books of Accounts shall inspect the Books of Accounts. The Organisation has to necessarily allow them to inspect the Books of Accounts and may request them to initial the Books of Accounts. If they are requesting certain information to be furnished in writing, it could be furnished in writing in the official letter head signed by the Chief Executive and a copy of such correspondence may be marked to the Home Ministry for information.

It is not possible to transfer Foreign Contribution directly or indirectly, to any other Organisation registered or unregistered which does not have approval from the Home Ministry to receive Foreign Contribution.

a) Any Organisation which has regular number/approval from the Home Ministry can receive Donation/Grant from a Foreign Visitor.
b) This donation/grant may be in Foreign or Indian Currency or in kind
c) The Organisation must make a Receipt indicating his name, passport number and other details and such donation must be deposited in FC Account and it must be utilized for the purpose for which the amount has been received.

The collected amount must be deposited only in FC Account. The amount may be re-distributed again. Necessary accounting records must be maintained and such transactions must be reflected under the head, “Any other purpose” in FC-3 statements with details of Opening Balance, Closing Balance, etc. The amount collected must be reflected as “second and subsequent recipient” and amount distributed must be shown as utilisation. The receipts and payments account and Balance Sheet of Foreign Contribution must also reflect the transaction.

It is not advisable to purchase Assets like Vehicles, partly from LC account and partly from FC Account. There will be problem in indicating the asset value in the Balance Sheet of FC. In the case of divisible assets, like land, it may be possible to purchase, provided separate cheques are issued from FC and LC depending on the availability of funds. This must be brought to the notice of the donors.

The Notification dated 27.12.96 speaks only about the Office Bearers. If there is a change which leads to 50 percent or more office bearers, then, the Organisation has to send fresh application to the Home Ministry for approval and till such time, the FC account must not be operated. However the Organisation can apply for prior permission and if the permission is obtained it can operate the account.

An Organisation can be registered in anyone of the following ways:
i. As a Company (not for profit) registered under Section 25 of Company’s Act.
ii. As a Society, under Societies Registration Act.
iii. As a Public Charitable Trust, registered under the Indian Trust Act.
iv. As a Co-operative, under the Co-operative Act.
v. As a Trade Union, under the Trade Unions Act.

Every form of Organisation has its own strengths and weaknesses. The effectiveness depends upon the efficiency in the management of the Organisation. It is said that the Society is more democratic. But we can see a number of Societies management more autocratically. Similarly, the Trusts can be managed more democratically. It is the intention and working of the Management which is more important. Management must have broad based members and Board and must run the Organization more democratically and with social transparency.

The Amendments must be intimated to the Registrar since only then they become operational.

No. Since the Deed provides for 5 Trustees, the new trustees can be appointed up to a total of 5 Trustees.

Yes. They have to. Normally this is included as part of their agreement.

Yes. It can receive after getting approval from the Home Ministry. However, it has to comply with other laws like the Income Tax, etc.

Yes. That can be decided by the members in the Annual General Body Meeting. 15. Can we open different Bank accounts for different programmes?

All FC must be operated only in One FC approved Bank account. But in the case of LC, different accounts may be opened for different, programmes.

If the Local Contribution is declared to the funding agency at the time of presenting the proposal, you shall maintain a separate Local account to deposit all the local receipts.

The funds from local contribution must not be mixed and deposited in FC account. But a statement may be prepared indicating the amount spent in FC/LC and the total expenditure incurred.

Value the contribution in terms of money and record it as receipt. It must be reflected in accounting statements and must be certified by the Auditor. There are provisions in the revised FC-3 form to indicate the transactions in kind.

Yes. It is possible only after obtaining the written permission from the Inspector General of Registration. In Tamil Nadu, Societies can send a detailed letter with the resolution of the Society and with a letter of approval from the Donors to the Inspector General of Registration through the respective Registrar of Societies and only after getting the written consent, the remuneration can be drawn. Similar procedure also exists in Andhra Pradesh and Karnataka.

No. It is essential that any asset purchased using the Organisations’ funds must be registered only in the name of the Organisation even if we have to pay more as registration charges. It must be specifically worded that the land purchased belongs to the Organisation and must be utilized only for the activities of the Organisation. This is suggested to avoid Income Tax complication and also transparency of ownership of the Organisation. In case of vehicles, the registration must be in the name of the Organisation irrespective of the registration fees that we have to pay out of the Organisation funds. Any other alternative method would be viewed seriously both under the Foreign Contribution Act and the Income Tax Act.

1. The actual expenditures compared with approved budgets bringing into light the under/over expenditure in the individual budget item.
2. The appropriation from one head to another head without specific sanction/approval from SEVAI must be brought to light.
3. The closing balance as on 31st March must be indicated.
4. The interest earned out of SEVAI funds and details of utilisation of such interest has to be certified by the auditor.
5. The Auditor’s report must be attached.

As per standard accounting practices, it is essential that depreciation has to be charged for the assets so that the financial statement reflects true and fair position. But in the case of Balance Sheet of the Foreign Contribution it is better that depreciation is not charged in the Statement of Accounts to be sent to the Home Ministry. The depreciation can be charged at the time of preparation of consolidated Statement of Accounts. Since SEVAI is funding for the purchase of assets, SEVAI will not reimburse depreciation charges.

FC 1-A                                                                  For Prior Permission
Form FC 3                                                            Registration/Approval for receipt of FC
Form FC 3                                                            Annual Returns alongwith Receipts &
                                                                               Payments A/c. and Balance Sheet of FC
Form FC 6                                                            Foreign Contribution Article A/c.
Form FC 7                                                            Foreign Contribution Securities A/c
Forms under the Income Tax Act
Form No\10                                                         Accumulation of Fund Approval to carry forward
                                                                               The unutilized funds to the subsequent years
Form No\10-A                                                     Registration under Income Tax Act
Form No\10-G                                                    Application for Approval U/S. 80/(G)
Form No\3-A                                                      Annual Returns alongwith Consolidated
                                                                              Statement of Accounts of the Organisation
Form No\10-B                                                     Certificate to be issued by the Charted Accountant
                                                                             – Form 10-B must be enclosed along with Form
                                                                             3-A to be sent to the IT Department

An NGO cannot start business with profit motive. However, the IGP can be substantiated, if the Donor specifically sanctions the amount to the invested as IGP as a part of sustainability.

a)If IGP were to create employment opportunities for people.
b)If IGP were to be a part of training strategy to train people. Each case has to be substantiated on the basis of merit. The surplus of IGP can get exempted provided,
(i)The IGP undertaken is within the objective of the Trust.
(ii)The activity is a part of the sustainability or provides employment opportunities for people.
(iii)Surplus, if any, will not be distributed amongst the members of the Board, but will have to be utilized for the activities of the Trust.

No necessary. But it will be difficult to organize and control the activities if she/he is not living nearby. The remote control operation seldom works with NGOs. If there is a good professional team, it will work.

No. NGO cannot publish without getting the approval. But if the publication is incidental to the attainment of the objective of the Society/Trust, the Organisation can publish periodicals, books, etc.

Mentioning as ‘For Private Circulation Only’ does not differentiate the provisions of the Act. If the publication is brought out at periodical intervals, then it may be considered as a regular newspaper. The Government however may permit Associations if they apply in Form “X” and get approval (Notification No.50760 (E) dated 3.8.1987).

If the permission if for the amount in foreign currency, then there is no problem. If the approval is in Indian currency then, the NGO has to get the approval from the Government before transacting such excess funds.

Yes. We can.

No. We must record the entries in the Cash Book and proper documentation is to be kept.

Subsidiary Cash Books can be maintained. But only one master Cash Book must be maintained as per the FCR Act. In such cases it may be advisable to maintain separate ledgers for Donors.

Yes. Nil Returns have to be submitted.

Yes. As per the Societies Registration Act, the Registrar can inspect. There is no provision to this effect if the Organisation is registered under the Trust Act.

Yes. The recent ammendment of FCRA seems to be undemocratic and an interference in the democratic rights. There were representations to the Home Ministry in this regard. FCRA only indicates about 50% the change of office bearers. The Associations have to distinguish between office bearers and Executive Members.

a) Preparation of the Annual Budget Estimates
b) Withdrawal and disbursement of Funds
c) Maintenance of prescribed accounts
d) Ensuring Audit of Accounts
e) Rendering Returns to the authorities concerned

Budget is a document showing the estimated annual income and expenditure of the Organisation for implementing a particular project. It shows the availability of Funds for various activities to be undertaken during the year. Timely and proper utilisation of funds based on the budget provision implies achievement of the goal/objective for which the funds are needed. This is why, estimates have to be framed on realistic basis so that there may not be scope for non-utilisation/under utilisation/diversion of funds. Budget monitoring at frequent intervals is a must. The budget monitoring at frequent intervals is a must. The budget can be regarded as a mirror for the growth of the Organisation.

The budget provision that remains unutilized automatically lapses at the end of the financial year (31st March). The unutilized balance must be carried forward to the subsequent year, with proper resolution of the Governing Body of the Organisation and with the concurrence of the Donor; otherwise the unutilized balance requires to be refunded to the Donor.

In as much as the project activities are met out of Foreign Contribution accounts, the day-to-day withdrawal of the funds from the Bank must be based on actual requirements. For this purpose, the details of activities to be carried out in a Calendar Month must be discussed at the Planning Meeting held with the Programme Co-ordinators, Administrator and Accountant for assessing the funds requirement. The Director presiding over the meeting will have to sanction the monthly indents for drawing of funds. Based on Monthly indents, the accounts department will provide funds on day-to-day basis, as per requirements put forth by the Programme Co-ordinators/Administrator. Under no circumstance, the funds not required for immediate disbursement must be withdrawn from the Bank.

a) Ensure submission of the proper voucher duly signed by the claimant and sanctined by the Director.
b) In the case of suppliers/contractors payment must be made by cheques/drafts and cash receipt must be obtained.
c) Insist on stock entry certificate for the materials purchased.
d) Deduct advance/part payment already made, while making the payments.
e) The staff members may be induced to maintain Savings Bank Accounts for crediting their monthly salaries.

a) Vehicle facility must be availed for bulk withdrawal of funds from the bank.
b) Minimum cash balance alone must be kept in the office for urgent expenses.
c) The daily closing balance of the cash must be recorded with notes/coins details and attested by the Secretary/Treasurer.
d) The office cash chest must be provided with double-locks, of which one key will be kept by accountant and another key by the Director.
e) Relevant Insurance policies must be taken.

a) In the case of purchases, the store keeper will have to furnish the certificate regarding the quality and quantity of material purchased, as also the stock entry certificate on the bill copy of the supplier.
b) The supplier’s must be in the name of the Organisation and not in the individual’s name.
c) The payment must be made by crossed cheques.
d) The above conditions shall apply in respect of bills of all work contracts.
e) In the case of the staff T.A. claims, the supporting vouchers for journey undertaken, lodging bill, hotel bill etc., have to be enclosed. It may also be seen whether the duration of halt in camp places is reasonable and the hospitality expenses incurred, if any, are justified.

Yes. The International Donors are collecting funds from Governmental and non-governmental philanthropists in their own respective countries. They are answerable to:
a) Their own Institutional donors including their Government
b) Individual donors and others who contribute
c) Their Board Members
d) Tax authorities and other legal regulatory personnel to whom they are accountable as per their statutes, and
e) Their statutory and internal auditors.

Hence the donors are insisting on,
(i) Information about the Organisation, present and future action plans, half yearly and annual reports
(ii) Half-yearly statement of accounts and the annual audited statement of accounts
The International donors collect the above information – statement of accounts – documents and present them to their donors, their auditors and to their authorities. This flow of information helps them to be transparent and also helps to increase their efforts with regard to resource mobilization.

a) Economy in expenditure by adhering to the budget provision.
b) Systematic writing of accounts and keeping the books of accounts up to date.
c) Proper filling of vouchers.
d) Periodical review of Bank balances and investment of surplus funds under short term Fixed Deposits in CO-Operative Bank offering higher rate of interest.
e) Preparation of Monthly Receipts and Payments Accounts.
f) Reporting quarterly financial transactions to the Governing Body of the Organisation.
g) Periodical verification of Fixed Assets and Disposal of unserviceable items.
h) Keeping minimum of stock of consumable items.
i) Speedy action for getting the adjustment voucher for the outstanding items of Programme Advances.
j) By keeping minimum cash balance in the office.
k) Closing of Books of accounts at the end of six months period and submission of accounts to the statutory Auditor for interim Audit.
l) Rendering the reports and Accounts to the Statutory Authorities and the Donors within the due dates.

a) Vouchers
b) Cash book
c) Receipt budget
d) General/subledger
e) Trial balance
f) Bank Reconciliation certificate
g) Bank Pass Books
h) Cash balance certificate
i) Budget Communication
j) Donor’s Letter sanctioning Grants
k) Bank Credit Advice for Receipt of Grant
l) Receipts and Payments Accounts
m) Income and Expenditure Accounts
n) FC-3 Form Statement
o) Donorwise Receipts and Payments Accounts
p) Activity Report
q) Income Tax Statements
r) Fixed Asset Register
s) Fixed Deposits Register
t) Investment Register

a) Preparation of budget
b) Donor’s approval/execution of agreement
c) Release of funds
d) Requirement of funds for each month
e) Need based withdrawal for each month
f) Disbursement on submission of bills
g) Scrutiny of bills/vouchers
h) Entry in Cash book
i) Computerisation of day-to-day transactions
j) Review of monthly accounts with reference to budget estimates
k) Salary bill preparation
l) Sanction of loan to staff and maintenance of General Register
m) Issue of printed Receipts
n) Placing of monthly accounts before the Finance Committee
o) Arranging and fixing of Executive Committee Meetings
p) Review of Affairs of the Society by the Executive Committee
q) Final settlement of Staff Welfare Claim to staff tendering resignation
r) Audit of annual accounts
s) Adoption of the accounts of the Society at the Annual General Body Meeting
t) Filing of Annual Returns to the Statutory Authorities – Ministry of Home Affairs, Income Tax Office & Registrar of Societies
u) Rendering of Project Accounts to the Donors