Wednesday, 19 April 2017

Maharashtra State Regulates fundraising by UNREGISTERED ASSOCIATIONS & INDIVIDUALS

Amendment in MPTA 1950 aimed only at UNREGISTERED ORGANISATIONS & INDIVIDUALS who raise funds from the general public

The report published in the Times of India (TOI) is titled: “Maharashtra cabinet approves stringent rules to regulate transactions of unregistered NGOs”.

The TOI report states: “In order to bring accountability and transparency in the transactions of unregistered NGOs or groups who collect donations for charitable, religious or public purposes, the state cabinet has approved stringent rules that will regulate these donations.” In other words what the state cabinet has approved on 18th April is amendment of the Maharashtra Public Trust Act, 1950 to make it compulsory for unregistered organizations or even individuals who seek donations to take permission from the assistant or deputy charity commissioner, and require that all such donations and other transactions by such UNREGISTERED BODIES and INDIVIDUALS should be audited by the charity commissioner. In our view such an amendment is appropriate and in fact much needed. Charitable trusts (including societies registered under the Act of 1860) which are already registered with the Charity Commissioner have no reason to feel concerned or uncomfortable.

And under section 66 of the MPTA 1950, action has been proposed on people who collect donations without prior permission of the charity commissioner. A jail term of 3 months and or a penalty up to 1.5 times the total amount of donations collected has been proposed.

According to an official of the State Law & Judiciary department, “currently there is no regulation which monitors these donations and its use. There is a lot of misappropriation of funds that goes on under the garb of donations and to make all these organizations accountable this decision has been taken."

All organisations other than registered public trusts will be covered under the new rules. In our view this amendment may also affect crowd funding platforms which hitherto have remained unregulated.

Local Ganapti mandals, Navratri mandals, associations and societies which are unregistered but seek donations for various programs and religious functions will now be required to seek permission.

Permission certificate issued by the office of the charity commissioner to raise funds by such unregistered bodies and individuals will be valid for only six months and an organization will have to seek fresh permissions each time the certificate lapses to continue seeking donations or alternately seek registration as a charitable trust or society under the Act of 1860.

Raising funds without such permission could attract jail term of three months and or a penalty up to one and a half times the total amount of donations collected by such unregistered bodies and individuals.

Noshir H. Dadrawala

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