The Hindu : New Delhi News : Study calls for better monitoring of NPOs

Online edition of India's National Newspaper
Friday, Feb 11, 2005

New Delhi

New Delhi

Study calls for better monitoring of NPOs

By Anita Joshua

NEW DELHI, FEB.10. Concerned about growing disenchantment among the public with non-profit organisations (NPOs) -- evident despite generous donations made in the wake of the tsunami calamity -- a Planning Commission-sponsored study has called for proactive monitoring mechanisms that are inspection and performance-driven. As a first step in this direction, a comprehensive central incorporation law has been advocated to overcome the plethora of laws and agencies that currently administer charities in the country.

As per the study `A Review of the Charities Administration in India', the law for legal incorporation of NPOs would "review, integrate and include the best provisions of the various laws now in force, and apply to trusts, registered societies and non-profit companies set up under Section 25 of the Companies Act, 1956, alike".

Prepared by Sampradaan Indian Centre for Philanthropy (SICP) -- after Planning Commission asked it to undertake such a study in 2003 -- the suggested legislation is on the lines of the Charities Act of the U.K. Advocating more effective monitoring, SICP has recommended a minimum number of audits and creation of a "sensitive" category "comprising the types of organisations held most guilty of abusing the charitable provisions -- schools, colleges and hospitals charging high fees".

This apart, a graded sanctions regime has been suggested. "If a charity is not providing public benefits on a scale significant enough to justify its charitable status, it should -- depending on the severity of the offence -- receive an `education letter' for minor defaults; more serious offences could receive a reprimand with directions for reform followed by punitive fines. Registration should be cancelled for very serious offences such as fraud and malpractice."

Again, the British example has been cited where there is a "naming and shaming" strategy. "For organisations whose registration is to be revoked, their identity and the reasons for revoking the registration should be made public. Alternatively, use a reward system to secure compliance by publishing the list of those charities which file returns on time and are considered legally compliant." Also, a public register of charities should be maintained as a one-stop central record of all registered organisations as is available in Hong Kong and the U.K.

With no response from the Government almost six months after the report was submitted, SPIC hopes to raise it at the meeting called by Planning Commission next week to discuss voluntary sector policy. The SPIC executive director, Pushpa Sundar, said: "Tsunami has again thrown the subject of charity and accountability into sharp relief. Donors have unstintingly given aid, though many doubt it will reach the right person. Proper regulation and accountability of recipient organisations is important at all times. We need a vigilant but user-friendly charities administration to promote and regulate charity. Moreover, this Government is committed to administrative reform, and it should be extended to civil society concerns as well."

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