How to get CSR Funding for your NGO ?- Program Quality

How to get CSR funding for your NGO? – PART 1

We have seen in last blog here (How to get CSR Funding for NGO?) , what NGO should not do to get CSR funds. Let us see now what NGO should do to get CSR funding. How your should prepared your NGO for CSR funding. One of the important aspect is how effectively your NGO implement the given project i.e. Program Quality.

Program Quality

Obviously, as a Chartered Accountant, I can not suggest about how to implement program effectively, but yes, I can suggest on how to maintain documents in such a manner, so that it can easily draw an idea about NGO working.

Past and Current Programs

Programs, which are completed in last five years should have been documented properly. There has to be proper file for each program containing all the documents starting from agreement, budget, all financial utilization certificates, quarterly reports, photographs and note on impact of the program. I suggest to have a “Program Closure Card”, a brief summary of Program. Please see below example.

This is illustration how Program Closure Card look

This is illustration how Program Closure Card look

 

Future Program

Every company ask full project plan for which you need CSR fund. Thus, NGO should have keep ready such kind of different project plans – mainly divided in two parts, short term plans and long term plans. Many CSR companies even provide funding for ongoing project or contribute in Long Term Project Plan of NGO.

Coming Soon – How to get CSR funding for your NGO? – PART 3

 

Draft Guidelines providing stringent regulatory mechanism for NGOs

The Centre filed in Supreme Court on Wednesday its draft guidelines providing stringent regulatory mechanism for NGOs. Earlier, in January 2017, famous lawyer for his PILs, Advocate Mr. Manohar Lal Sharma, filled a PIL to regulate the unorganized NGOs ecosystem in the country. SC had asked the Centre to prepare guidelines to regulate NGOs and Voluntary Organisations after finding that nearly 30 lakh of them were operating in India.

In its order, the Court noted that substantial funding is allowed for NGOs and voluntary organisations. Further, Rules 210-212 of the General Financial Rules, 2005 provide for a regulation mechanism for NGOs, though the respondents are not aware of the same. The court noted,

“There are 32 lakh NGOs out of which nearly 3 lakh are filing balance sheets. The respondents are not aware of the responsibility of audit in the General Financial Rules…There can be no doubt that the funds disbursed by CAPART [to NGOs] is public money and needs to be accounted.”

It, therefore, directed the Centre to complete the exercise of audit and submit a report by March 31 this year. It was directed,

“In case of non-compliance, it is essential to initiate civil and criminal action immediately after the completion of the exercise.”

Most importantly, the Court also directed the Centre to lay down guidelines/rules for accreditation of NGOs, the manner in which they shall maintain accounts and auditing of the same.

Centre proposes stringent guidelines for NGOs and VOs requiring all existing ones to register afresh online with Niti Ayog‘s NGO-Darpan. The guidelines submitted by additional solicitor general Tushar Mehta to a bench headed by CJI J S Khehar required them to register afresh if they wish to get govt grants.
It said NGOs will be provided unique ID and subjected to income tax act and foreign contribution regulations act. Centre’s draft guidelines say NGOs/VOs past track record and performance will be put under scrutiny before grant of accreditation. The NGOs and VOs getting govt funds are required to execute a bond to refund the amount with 10% interest if work not done.

However, detailed draft copies of guidelines not available so that can not comment on in dept detail.

SC asked amicus curiae Rakesh Dwivedi to submit his suggestions on the draft guidelines in two weeks.

FCRA Update – File FC6 Bank Account Details

Today, FCRA department has issued two lists of the organizations whose Bank Accounts are either not updated with FCRA or not as per Core Banking System format. These organizations are advised to update their Bank Accounts immediately in Form FC6.

As FCRA department is in the process of being paperless department, this is another step to have updated information regarding Bank Accounts of organizations.

List 1 Those NGOs, whose bank account detail is not updated as per core banking format

Before 4-5 years, due to core banking,  Bank Accounts are changed to 10 or 12 digits instead of 4 or 5 digits. However, many NGOs have not intimate this change to FCRA department.

Check out the list and your NGOs name here – List 1

List 2 Those NGOs, whose bank account details are not there with FCRA department

Some of the NGOs have change their bank account after registration and not intimated such change to FCRA department. Or simply, FCRA department do not have any information regarding NGOs bank Account.

Check out the list and your NGOs name here – List 2

Action to be taken

Above NGOs have to update their Bank details immediately by filling online form FC-6.

Watch Tutorial Video – How to update Bank Details in Form  FC6

 

For any further query, write in the below comment box.

 

Accounting of Grants for NGOs

Do you know how Grant is presented in your NGOs Financial Statements? As REVENUE or as LIABILITY ? This is one of the crucial question regarding accounting of Grants for NGOs. Generally, we depend on the Chartered Accountants on how our Financial Statements are prepared and presented. Sometimes presentation of Financial Statements become misleading and serve no purpose.

Today we learn how to do accounting of grants for NGOs which is more appropriate in present days.

Introduction – Accounting of Grants for NGOs

There is no clarity Inida regarding how grants should be presented. We have Indian Accounting Standard 20 which mainly dealt with  accounting of Government Grants and not grants for specific projects from Funding Agencies. However, considering Indian Accounting Standards #20 and US Statement of Financial Accounting Standard #117, we can derive following three methods of presenting Grants in the Financial Statements.

Option A – Grants treated as Revenue

Here, we consider Grants Received as Revenue of the current year whether it is related to current year or for next years. Thus, when two years project is sanctioned and total grant received in the first year only, we treat full grant as income of first year. See below image to understand presentation in Financial Statements.

 

In this method, you can see above that unspent grant of Rs 40 clubbed in Income and Expenditure Account as “Excess of Income over Expenses” . Due to this, it becomes difficult to know what funds lying in the I/E Account. Check out the Balance Sheet where I/E Account show Rs. 50 which comprise of Unspent Grants and Other Income.

Option B – Grant treated as Liability

Here, it assumes that, grants and funds received for specific project, is the liability of organization and not Income. Thus whatever grant received, whether for current year or next years taken to Balance Sheet and considered as Liability. Expense from such grant then deducted from the liability and net amount shown in the Balance Sheet. Checkout below how Financial Statements look if we treat Grant as Liability.

In this method, Balance Sheet present correct financial position. However, Income and Expenditure does not show much revenue except income earned by NGOs like Non Specific Donations and Interest Income.

Option C – Best of the above Two

Due to limitations of both the above method, we should presented financial statements as per this hybrid method using best of both the above methods. In this method, we consider that much revenue for current year which actually spent during the year and remaining balance transfer to next year as “Unspent or Unutilized Grant”. Lets have a look, how the financial Statements presented under this method.

In this method, Income Expenditure Account and Balance Sheet showing correct information and in self explanatory manner.

Conclusion

In India, there is no such proforma available in any Act regarding presentation of Financial Statements of NGOs. Thus as per my opinion it is advisable to follow accounting of grants for ngos as per option C – Hybrid method, which is self explanatory and showing correct information.

Note – In all the above three methods, presentation of Receipts and Payment Accounts would not change.

For any questions or query hit the below comment section.

Cashbook of NGO

After, note ban, cash book is getting more importance. Some of the entities also getting notice from Income Tax Department to submit cash book. So, let us today discussed, some of the points related to cash book.

1. Manual V/s Computerized Cash Book of NGO

Now a days, all the books of accounts are maintained on computer, so it is difficult to find manual cash book of ngo. However, for better management and internal control purpose, it is required to have a Manual Cash Book along with the computerized cash book of NGO. There are many benefits to have manual cash book, like, daily cash checking and authorization, no cancellation or deletion, no rectification of amounts etc…

Thus if you maintained manual cash book along with the computerized cash book, that definitely increased the credibility of your accounting and control system.

2. Negative Cash Balance

For any reason, it is not accepted to go cash in a negative balance. Check the cash balance and see whether at any point of time it goes negative or not. To check negative cash balance in Tally go to cash book – F6 Daily breakup

cb1

3. Unnecessary Withdrawals

Many a times major chunk of cash is withdrawn from bank for some event and event is cancelled later on.  At that time it is advisable to deposit the same amount to the bank. Many a times while checking cash book, it found that cash is withdrawn even though there was a enough cash balance on the books. This situation creates doubts about the genuine transactions of cash.

4. High and Law Cash balance

What should be  the average cash balance in the NGO. As such there is no such norms on the amount. However, it is advisable to keep low cash balance in the NGO. To check high and low cash balance in Tally,  go to Cash Book -> F6 Daily Breakup -> F12 Configure -> Show High Low Details – YES

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Hope this post on Cash book of NGO will give you some information on how your cash book should look. Check out your cash book and above points before its too late. Please give your comments and suggestion in the given below comment section.

Demonetization and NGO – Dos and Don’ts

We know the current scenario of demonetization of old currency notes of Rs. 1000 and Rs. 500. As every day new news coming in, it is difficult for us to decided what should be the correct step to deposit old notes.

Earlier, Trust and NGOs were already under the radar of the Government before demonetization,  now we can predict that more strict control coming in near future.

Let us discuss today about dos and don’ts by NGOs in a Question Answer Round.

Q – Can old notes be deposited in NGOs Bank Account and what is the time limit?

A – Yes, old notes can be deposited in NGOs Bank Account till December 30.

Q – How much cash can be deposited?

A – As such no limits, but not more than the CASH ON HAND AS ON 8th NOV.

Q – Can we take cash donation in Old notes now?

A – No. After 8th Nov, old Rs. 500 and Rs. 1000 notes are not valid tender.

Q – Can we take donation in cash in back dated and thus create more cash balance as on 8th Nov ?

A – I suggest NO. Just two days back, not confirmed but, IT (Exemption) of Mangalore has issued notices to NGOs to submit authorized copy of cash books as on 8th Nov with denomination.

Q – Can we deposit cash in FC in old notes ?

A – Yes you can deposit old notes in FC account but not more than cash balance of FC books as on 8th Nov. I suggest if the cash balance is not much amount  get it exchange with new notes.

Q – What about staff advance already given before 8th Nov in old notes?

A – Do not take bake the advance and deposit in the Bank. It is advisable to ask staff members to exchange it.

Q – What about Donation boxes lying outside the offices like at airports, malls etc..?

A – Immediately get all the donation boxes back and record its cash on books as donation and keep photographs before and after opening of boxes or record a video at the time of opening of boxes with the current date newspaper. So that later, NGO can prove that the donation boxes open after 8th Nov and there were old notes which were deposited in the bank.

Q – What is advisable regarding taking donations between 8th Nov to 30th Dec..?

A – As a genuine NGO, one should not accept any donation in CASH during this period. If you received donation in new notes, kindly take the proof of the donors and keep the bank deposit slips.

All the above answers are purely my opinion. If you have any further questions, kindly ask in the comment section below this blog.

 

Latest Updates FCRA – Quarterly Return

Latest Update

Recently FCRA department has updated website and integrated quarterly return tab. Now every NGO has to file a intimation of quarterly receipts of FCRA. Currently Quater – October 2015 to December 2015 is open. So fill this form and submit to FCRA. See the screenshot below.

FCRA_Quarterly

Steps to be followed :

Step 1 – Click on the link shown in the above image.

Step 2 – Login with you user id and password

Step 3 – After login,, first screen is your NGO info page. Click on the last link stating quarterly intimation.

Step 4 – Read all the instruction carefully.

Step 5 – Quarterly Intimation Tab – Select the quarter and entered the total fcra amount received during the quarter. Click Next.

Step 6 – Donorwise Detail Tab – Enter the donor details as per the below screenshot.

Image 2

Step 7 – Final Submit – Check all the details again and then, Final Submit.

Deadline :

As such in FCRA amendments rule quarterly details should be updated within 15 days of quarter end. However for this quarter Oct to Dec 2015, update all the information as early as possible.

Video :

 

Video – How to upload FCRA documents to website

As you aware that as per new FCRA Act, all the organizations have to upload FCRA documents to the official website of the organization. Read this blog for more details.

If your organization do not have any website or do not afford to have one. you can create free website as illustrated in this video

FCRA Renewal Status

How do we know, what is the status of application of FCRA renewal ? This is the question, every organization is asking now a days. Yes, we all are waiting regarding any communication from MHA, FCRA department regarding FCRA renewal status.

What is current scenario?

As per our knowledge, no organization,  throughout India has received any Renewal or Query Letter from MHA, FCRA department.

How to check FCRA Renewal Status?

No such mechanism prescribed or available right now online to check where your application is lying. Keep visiting our blog for any new news.

Time limit for FCRA Renewal?

As per section 16 (3) of FCR Act, 2010, renewal certificate should be issued withing 90 days from the date of the application received.

section 16(3)

“The Central Government shall renew the certificate, ordinarily within ninety days from the date of receipt of application for renewal of certificate . . . .

Provided that in case the Central Government does not renew the certificate within the said period of ninety days, it shall communicate the reason thereof to the applicant”

What to do now?

Organization can email to the FCRA department to ds-fcra@nic.dot.in email address (this email address mention on the fcraonline.nic.in website) with the details on which date you apply for renewal and DD no etc..

If you get any communication from FCRA department regarding renewal or any queries, kindly post in the comment so it will be useful to other readers of this blog. Thanks.