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Establishing an Enabling Environment for the Civil Society

and Voluntary Sector
(T his article is based on the new syllabus of IAS Mains Exam i.e. General Studies Paper III. T he
article covers the following topics from syllabus: the role of NGOs, SHGs, various groups and
associations, donors, charities, institutional and other stakeholders )
T he f ollowing institutional arrangements can provide the enabling environment f or Civil Society and
Voluntary Organizations (VO)
1. T he independence of VOs allows them to explore alternative paradigms of development to challenge
social, economic and political f orces that may work against public interest and to f ind new ways to
combat poverty, deprivation and other social problems. It is theref ore crucial that all laws, policies,
rules and regulations relating to VOs categorically saf eguard their autonomy, while simultaneously
ensuring their accountability.
2. Voluntary organizations may be registered as societies, as charitable trusts, or as non-prof it
companies under Central or State laws. Some States have adopted the Societies Registration Act
(1860), with amendments, while others have independent laws. Similarly, laws relating to charitable
trusts vary across States. Over time, many of these laws and their corresponding rules have become
complex and restrictive, thus leading to delays, harassment and corruption. As the nodal agency f or
interf ace between the Government and the Voluntary Sector, the Planning Commission will encourage
State Governments to review prevailing laws & rules and simplif y, liberalise and rationalise them as
f ar as possible. In order to f acilitate registration of non-prof it companies, the Government will
examine measures to simplif y procedures under section 25 of the Companies Act (1956), including
those f or license, registration, and remuneration to members/employees.
3. T he Government will also examine the f easibility of enacting a simple and liberal central law that will
serve as an alternative all-India statute f or registering VOs, particularly those that wish to operate in
dif f erent parts of the country and even abroad. Such a law would co-exist with prevailing central and
state laws, allowing a VO the option of registering under one or more laws, depending on the nature
and sphere of its activities.
4. T here has been much public debate on the voluntary sector, particularly its governance,
accountability, and transparency. It is widely believed that the voluntary sector must address these
issues through suitable self -regulation. T he Government will encourage the evolution of , and
subsequently accord recognition to, an independent, national level, self -regulatory agency f or the
voluntary sector.
5. At the same time, there is need to bolster public conf idence in the voluntary sector by opening it up
to greater public scrutiny. T he Government will encourage Central and State level agencies to
introduce norms f or f iling basic documents in respect of VOs, which have been receiving f unding by
Government agencies and placing them in the public domain (with easy access through the internet)
in order to inculcate a spirit of public oversight.

Funding and resources

1. Public donation is an important source of f unds f or the voluntary sector and one that can and must
increase substantially. Tax incentives play a positive role in this process. Stocks and shares have
become a signif icant f orm of wealth in the country today. In order to encourage transf er of shares
and stock options to VOs, the Government will consider suitable tax rebates f or this f orm of

and stock options to VOs, the Government will consider suitable tax rebates f or this f orm of
donation. T he Government will also simplif y and streamline the system f or granting income tax
exemption status to charitable projects under the Income Tax Act. At the same time, the Government
will consider tightening administrative and penal procedures to ensure that these incentives are not
misused by paper charities f or private f inancial gain.
2. International f unding of voluntary organizations plays a small, but signif icant part in supporting such
organizations and their work in the country. An organization seeking f oreign f unding must be
registered under the Foreign Contribution (Regulation) Act. T his law prescribes stringent screening
norms that of ten restrict the ability of VOs to avail f oreign f unds. When approved, there are
problems like f unds must be held in a single bank account, thus presenting enormous dif f iculties to
VOs working at dif f erent locations. T he Government will review the FCRA and simplif y its provisions
that apply to VOs, f rom time to time, in consultation with the joint consultative group to be set up by
the concerned Ministry.
3. T he Central Government has f ramed guidelines f or bilateral agencies to give direct assistance to
voluntary organizations f or projects of social and economic importance. It controls access to such
f unds and their utilisation, both through the FCRA and through regulation by the Department of
Economic Af f airs. T his system needs to be simplif ied in consultation with the joint consultative group
to be set up by the concerned Ministry.
4. T he Government will encourage all relevant Central and State Government agencies to introduce preservice and in-service training modules on constructive relations with the voluntary sector. Such
agencies should introduce time bound procedures f or dealing with the VOs. T hese would cover
registration, income tax clearances, f inancial assistance, etc. T here would be f ormal systems f or
registering complaints and f or redressing grievances of VOs.

Partnership in Development
1. T he voluntary sector can play an important role in the development process, particularly through
community participation. VOs can of f er alternative perspectives; committed expertise; an
understanding of the local opportunities and constraints; and perhaps most importantly, the capacity
to conduct a meaningf ul dialogue with communities, particularly those that are disadvantaged. It is
theref ore essential that the Government and the Voluntary Sector work together. Where f easible,
such partnership may also include other entities such as panchayati raj institutions, municipalities,
academic institutions, and private sector organizations.
2. Partnership between Government and VOs implies identif ying shared goals and def ining
complementary roles. It must be based on the basic principles of mutual trust and respect, with
shared responsibility and authority. T hese principles must be explicit in the terms and conditions of
the partnership. T hey must also be evident in the f ormal and inf ormal systems of collaboration.
3. T his policy recognizes three instruments of partnership, viz., (i) consultation, through a f ormal
process of interaction at the Centre, State and District level; (ii) strategic collaboration to tackle
complex interventions where sustained social mobilization is critical over the long term; and (iii)
project f unding through standard schemes. T he Government will ensure that these three instruments
of partnership are given due attention in Annual Plans prepared by Ministries and States. T he action
that will be taken in respect of each of the three instruments is discussed in the f ollowing
4. T he Government will encourage setting up of Joint Consultative Groups /Forums or Joint
Machineries of government and voluntary sector representatives, by relevant Central Departments
and State Governments. It will also encourage district administrations, district planning bodies,
district rural development agencies, zilla parishads and local governments to do so. T hese groups
will be permanent f orums with the explicit mandate to share ideas, views and inf ormation and to
identif y opportunities and mechanisms of working together. T he Government will introduce suitable
mechanisms f or involving a wide cross-section of the voluntary sector in these Groups /Forums.
5. T he expertise of the voluntary sector will also be utilized, by including experts f rom VOs in the

committees, task f orces, and advisory panels constituted by the Government f rom time to time to
help address important issues.
6. T he country f aces a number of complex problems that require adaptive, multi-sectoral solutions
where sustained social mobilization is particularly important. T hese include poverty alleviation, skill
promotion, entrepreneurship development, empowerment of women, population stabilization,
combating HIV/AIDS, managing water resources, elementary education and f orest management, to
name a f ew. Such areas urgently require strategic collaboration between the Government and VOs,
through national level programmes that are long-term in duration, and utilize multiple strategies,
methodologies and activities to achieve their objectives. T he Government will identif y national
collaborative programmes to be implemented in partnership with VOs. Each national collaborative
programme will involve a f inite set of reputed, medium or large VOs with a proven track record, and
the ability to work on a reasonably large scale. T he Government will ensure that such national
collaborative programmes are given due importance in Plan documents.
7. T he third instrument of partnership between the Government and the voluntary sector is project
f unding. A large number of Government agencies operate schemes f or f inancial assistance to VOs.
T hese schemes usually deal with activities such as surveys, research, workshops, documentation,
awareness raising, training, creation and running of public welf are f acilities, and so on. Project grants
are a usef ul means f or the Government to promote its activities without its direct involvement. T hey
are also a valuable source of support to small and medium VOs. Nevertheless, there are legitimate
concerns regarding the ef f ectiveness of grant-in-aid schemes. Out-dated design of f unding
schemes, arbitrary procedures, selection of unsuitable VOs, poor quality of implementation, and
misuse of f unds are some of the reasons f or the possible def eat of the objectives of such f unding.
Concerned Government agencies would be encouraged to ensure proper accountability and
monitoring of public f unds distributed to VOs.
8. Some Central agencies have achieved good results by decentralizing the process of project f unding.
Rather than administering various schemes directly, they appoint regional or State level intermediary
organizations to do so on their behalf . T his allows f or closer interaction f or better selection and
monitoring of VOs. Intermediaries could include umbrella VOs, prof essional or academic institutes,
State Government agencies, or multi-stakeholder standing committees. T he Government will review
the experience of such decentralized f unding and make suitable recommendations to Central
9. T here is reason to believe that accreditation of VOs will lead to better f unding decisions and make
the f unding processes more transparent. Further, accreditation may provide incentives f or better
governance, management and perf ormance of VOs. No reliable accreditation system is in place at
present. T he Government will encourage various agencies, including those in the voluntary sector, to
develop alternative accreditation methodologies. It will allow time f or such methodologies to be
debated and gain acceptability in the voluntary sector, bef ore considering their application to
Government f unding of VOs.