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Asked May 22, 2014

Partnership in NGOs

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Are there any laws applicable to NGOs in the matter of partnership? If yes, what are they?

Answer 1

In India non profit/public charitable organisations can be registered as trusts, societies, or a private limited non profit company, under section-25 companies. NGOs exist independently of the state. They are self-governed by a board of trustees or ‘managing committee’. They produce benefits for others, and are prohibited from distributing any residue money to their own members. An NGO is not a partnership as per the Partnership Laws in India, hence these laws do not apply to NGOs. A partnership compulsorily needs to share its profits amongst the partners, but as mentioned, an NGO is not allowed to do that, and should produce benefits for others. It should do its activities not for any profit but with an objective to serve the targeted population. Even if it carries on some auxiliary business in the interest of development of its target audience, such profits shall not be distributed by way of dividend to any of its members. See more on partnerships here: http://business.gov.in/starting_business/org_partnership.php Sources: www.jansahasindia.org www.legalissuesforngos.org www.ngosindia.com/resources/ngo_registration.php
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