• Go in for Grant Agreements, rather than vendor agreements NGO’s needs to get into Grant agreements, rather than vendor agreements. Grant agreement is simpler; it also ensures that funds received will go towards the programme.
• Get a Utilization Certificate for the projectsAt the end of the project or financial year, get Utilization certificate from CA by specifying the funds received, utilized and carry forwarded.
• Maintain good governance practices beyond mandatory regulationNGO needs to abide by Income Tax Act, 1961 and Companies Act, 2013. However, it is important to go beyond these and look at building internal self-governance practices, such as human resource policy, fundraising policy, board policy. These will enable the nonprofit to function more efficiently
• Report changes in your board membership within 15 days to MHAReport to MHA when there is a change in 50% of your board within 15 days of the change taking place.
• Check your foreign sources carefully before accepting CSR fundsFCRA rules specifies that a foreign source is a business that has either been formed abroad, is a subsidiary of a foreign company, or a foreign multinational company. Always should remember that just because money is being given in rupees, that doesn’t make it an Indian source.
• Treat all receipts arising from FCRA money as foreign contributionsFunds which are generated out of the utilization of FCRA funds, will be treated as foreign contribution, and should be accounted for and reported separately as receipts.
• Be proactive about renewing your FCRA licenseInitiate your renewal process as early as possible, preferably within 6 to 12 months before its expiration. This allows for adequate time to complete the process.
• Be mindful of the difference between administrative and program expensesSection 135 of the Companies Act, 2013 nor in the CSR Rules describes about what counts as an administrative expense and what counts as a programme expense. To avoid ambiguity, it is best to lay this out while agreeing to the terms of Agreement. This distinction becomes more important when complying with FCRA, which mandates that more than 50% of foreign contributions cannot be spent on administrative expenditure.
• Publicly disclose foreign funds receivedNGO’s with a FCRA license needs to disclose publicly of their foreign contribution by the 15th day of the end of quarter, either on their own website, or in the FCRA website.

How can Peaksphere help you

Peaksphere is an Accounting & HR Services Consultancy backed by a team of in-house professionals to facilitates NGO Sector by building meaningful solutions that add value and drive agility into processes. Our association helps you to new level of value and productivity. Our dedicated expert will handhold you throughout the journey to ensure your GROWTH