This resource, authored by Noshir H. Dadrawala (CEO, Centre for Advancement of Philanthropy), offers a comparative analysis of the different legal structures available for registering a charitable organisation in India: Public Charitable Trusts, Charitable Societies, and Section 8 Companies under the Indian Companies Act 2013.

The resource focuses on why registering as a Section 8 Company may be a more advantageous choice for new entities.

This resource aims to inform and guide organisations who are considering setting up a new entity or changing the structure of their current entity after an analysis of Indian charity law and the evolving preferences in the social sector.

The key learnings derived from this resource include:

1. Legal Diversity and Regulation: The document emphasises the disparity in state-level regulations for Public Charitable Trusts. This highlights the importance of considering the location of registration.
2. Structural Differences: It highlights the differences between Trusts, Societies, and Section 8 Companies in terms of governance, membership, liability, and operational requirements.
3. Advantages of Section 8 Companies: The document strongly advocates for Section 8 Companies, citing advantages such as “limited liability,” a central regulatory framework, a robust online system, the ability to attract corporate donors, and the capacity to invest in diverse financial instruments. It notes that these companies are regulated by a central law (Indian Companies Act), which provides a uniform regulatory environment.
4. Evolving Trends: The document observes that while older foundations were often registered as Trusts or Societies, newer corporate foundations and intermediaries increasingly prefer Section 8 Companies. This trend indicates a shift towards structures with greater accountability and a more professionalised governance framework.
5. Tax and Regulatory Equality: The document clarifies that the Income Tax Act 1961 and the Foreign Contribution Regulation Act 2010 (FCRA) generally treat Trusts, Societies, and Section 8 Companies similarly. This means that tax benefits and eligibility for foreign funding are not significantly different across these structures.

This resource will help NGOs to:

1. Make Informed Decisions: The document equips NGOs with a clear understanding of the legal landscape and helps them make informed decisions about their legal structure, aligning it with their mission, operational needs, and long-term sustainability goals.
2. Plan Strategically: The insights here will help NGOs with strategic planning by considering the regulatory requirements, governance structures, and donor preferences associated with each legal form.