Tax deduction on your donations

1. Why do I get a tax deduction on my donation?
Many of India’s poor live on less than Rs130 a day. This is hardly enough to feed a family of four, take a sick child to hospital or provide education for the poorest of the poor. Credible NGOs provide food, shelter, education and treatment for people who have dire need of it but cannot afford to pay for it. The government grants economic concessions to registered NGOs who work for the needy, and also to citizens who donate to those NGOs.
2. How does the government register NGOs?
As per the terms of registration, NGOs are mandated to spend spend 85% of their annual income on programme expenses in a given year.
Those that meet this qualification are granted a 12 A certificate which exempts the organisation from paying income tax. NGOs in turn apply to the Income Tax Commissioner for an 80G certificate which enables donors to claim a tax deduction based on their donation. NGOs with an  income of over Rs50,000 a year are required to have their accounts audited by a Chartered Accountant, and are also expected to file their returns with the Income Tax Commissioner each year. Failing to do so can lead to the government cancelling their registration licence. HelpYourNGO has listed 600 NGOs with audited financial reports for the past three years. You can be assured that these NGOs are compliant with legal requirements and spend their income on beneficiaries.
3. What kind of donations can I make?
All types of resident Indian taxpayers can claim a deduction under the Income Tax Act, 1961.
  • Donations to certain entities are eligible for deduction under section 80G. These include prescribed government schemes and registered NGOs
  • You can claim deductions up to 10% of your adjusted gross total income while donating to NGOs. However, if you are donating to designated government schemes, there is no qualifying limit




Qualifying limit on income

Prescribed Government Schemes

PM's National Relief Fund



Other Government Schemes

PM Drought Relief Fund



Registered NGOs

CRY, Sevalaya, Goonj..


10% of adjusted gross total income

  • Donations made in cash exceeding Rs10,000 are not eligible for deductions, as are donations in kind (materials, clothes, medicines, vehicles etc.)
4. How do I claim my deduction?
Charitable donations are accounted for under section 80G of the Income Tax Act.
  • Ensure that the NGO gives you a receipt and 80G certificate when you make your donation.
  • When filing your returns, include the following details: name of the donor, PAN, address, amount contributed, receipt and 80-G certificate

The year ahead for philanthropy

In every industry there is a phase that is marked by great turbulence and change. It’s hard to predict the outcome of the change while one is in the midst of it. However, we can be sure that the philanthropy sector is currently facing great changes from the outside. The assumption that NGOs are the solution to a social problems is being challenged by those who see NGOs as a last-mile delivery mechanism or a way of reaching the unreached. NGOs in turn are also responding to the changing paradigm in their own ways. Many of these factors complement each other, and have a cumulative impact on the non-profit sector and expectations from it. Here are factors that will change charity in 2016:

  • Big donors who want causes, not charities: Mark Zuckerberg is giving away money! Will charities benefit? Ultra-rich donors like Bill Gates and new entrant Mark Zuckerberg are not looking to fund charities. They’d rather look at the root cause of a social problem and engineer a solution that can best address the problem. It marks a shift from philanthropists writing out to cheques to hospitals to indefinitely fund operations. It’s a new market-based ideology that is not averse to alliances with unlikely bedfellows to provide solutions. In India, many of the ultra-rich like Azim Premji, Narayana Murthy, Ratan Tata and others route money through their own foundations, with existing NGOs receiving funds from those entities. At the same time, Tata believes in funding low-cost technological innovations (like the X-Prize) that can improve the lives of the poor. Not all of tomorrow's philanthropists are going to be signing cheques to existing NGOs.
  • A FitBit for your donations?: When you sign in to Facebook, you receive notifications of new messages, new friend requests and new updates. How about if you got notifications of how much impact your donations have had? There is now a move towards measuring and reporting NGO work in a manner that helps donors decode what is achieved with their money. Movements like ‘The Life You Can Save’ have pioneered this approach. Their 'Impact Calculator' shows you how many individuals you can impact for each dollar donated. For example, they estimate that donating Rs1000 to their chosen charity can provide 58 people with food-based micronutrient supplements for a year. The combination of data and the ease of giving online will transform the way donors look at donations. At HelpYourNGO, we're very excited by these developments. We started off by making data about NGOs more transparent and accessible. We're working on making giving easier next year. Watch this space for more!

In India:

Indian non-profits are looking at a changed playing field in 2016.

2016 marks a year that will herald great changes for charities. In the future, it will no longer be business as usual for charities!

The U-turn on Mark Zuckerberg’s $45 billion gift

What is happening with Mark Zuckerberg’s Facebook shares? The new dad announced in a Facebook post that he would commit 99% of his Facebook shares toadvance human potential and promote equality. The Facebook post ‘broke the internet’, with people all over the world heaping praise and thanks on Zuckerberg and his wife. The euphoria didn’t last long though. Critics began to question the ‘donation’, and media publications were asked about calling Zuckerberg’s announcement charity. So is it charity? Or is it another way for Zuckerberg to keep his wealth close? We sort through the hype and the hoopla for you.

Here are some criticisms of Zuckerberg’s big announcement

  • His money will go to a business structure, not a charity: Many assumed that the money that would come from the sale of Facebook shares would go straight to charity – to fund schools, hospitals and other clear-cut charitable activities. Jesse Eisinger at ProPublica has pointed out that Zuckerberg has, in essence, moved money from one pocket to another”. Zuckerberg has created a Limited Liability Company (LLC), a private limited company that he and his wife are wholly in charge of. The LLC will invest or write out cheques to other for-profit or non-profit entities as per their interests.

What the critics are saying: It’s not a traditional charity, and it seems like the Chan Zuckerberg Initiative is taking a less-trodden route to achieve their mission. As an LLC, the Chan Zuckerberg Initiative is not mandated to spend a minimum amount of their income on charitable activities. The reporting and transparency structures are different than those for a charitable organisation, giving more control to Zuckerberg and Chan.

  • He’s done it for the tax benefit: The structure that Zuckerberg sets up protects him from paying the capital gains tax that he would have had to pay if he sold his Facebook stock directly in the market. Critics argue that not having to pay taxes on the $45 billion amount represents massive savings for Zuckerberg – and massive losses for the state. If the state had been able to collect that money, it would have been able to pay for more roads, pensions or public goods for its citizens. Zuckerberg has responded to these allegations, stating that the LLC will pay capital gains tax if it decides to sell the Facebook shares. On the other hand, if it donates the shares or sells it to raise money for a registered charity, they will receive related tax benefits.

Why the outrage:

Much of the hostility stems from the perception that Zuckerberg has chosen an LLC to avoid paying taxes to the government. (So much so that Zuckerberg has written a follow-up post explaining his decision). Americans are engaged in hotly contested debates about rising income inequality. Scientific American notes that in the US, CEOs out-earn janitors 354-to-1. Many American corporations now make more money than medium-sized countries, while paying very little in taxes to the American government. The perception seems to be that Zuckerberg is choosing this structure to avoid paying capital gain taxes.

Why are people disturbed?

The new LLC is not forbidden from making a profit or investing in profit-making companies, something that people do not associate with charities. There is also speculation as to whether funding investments in for-profit companies represents charitable activities.

Our take

We obviously can’t comment on any of the questions about tax evasions as we have no evidence or special insight into Mark Zuckerberg’s mind. However, we do know that socially-focused initiatives can achieve their objectives through a number of routes. It’s not unusual for socially-focused initiatives to take a different form than the ones we have imagined. Grameen Bank is a poverty-reduction initiative in the form of a community development bank. Amul was set up to counter monopolistic trade practices in the milk trade, and chose a co-operative organisational structure to benefit their members. If either of them were structured as pure NGOs, it may have been difficult for them to achieve the scale that they have. Even out-and-out commercial inventions like Google have benefited the world by making knowledge more accessible. All these initiatives do not fit the conventional understanding of non-profits. Yet they arguably have provided more long-term benefits to members than simply setting up a school or a hospital. This is not to say that there is no need to build schools or hospitals. Rather, there are multiple approaches to solving a problem.

Secondly, NGOs are bound by restrictions that make it difficult for them to be financially sustainable. This includes

  • Restrictions on business income
  • Mandates to spend a certain portion of their income for the charitable purpose for which they were set up
  • Restrictions on where they can invest their money

This is done to ensure that money spent by NGOs goes to help the needy and not in setting up profit-chasing businesses in the name of serving the poor. It is an understandable restriction. However, it means that NGOs frequently struggle for funds to keep their operations open. At the same time, it results in them living a hand-to-mouth existence, which is not conducive to generating long-term solutions for the problems they are trying to solve.

For example, Jonas Salk and his researchers worked on the polio vaccine for nearly a decade before they had a breakthrough. Incidentally, they were funded by a non-profit set up by the country’s President who also suffered from the disease, and national fundraising campaigns for the cause. Not all nonprofits have this luxury, and are forced to treat the symptoms of the problem and not the problem itself. In the long run, the money invested in finding a cure of polio has saved millions of lives across the world to date.  It is rare for an NGO to continute to receive assured income source if it is unable to demonstrate immediate results. 

Perhaps this is why billionaires like Gates and Zuckerberg are choosing a hybrid model to spend their philanthropic dollars. At the end of the day NGOs alone are not enough to solve the world’s biggest problems. It remains to be seen whether social enterprises or for-profit initiatives will succeed in this task. That seems to be the chance that Zuckerberg is taking.

Celebrity Philanthropy – What’s Behind the Flashbulbs?

Is Angeline Jolie the world’s most famous socially conscious celebrity? Or is Being Human more popular? And the real question – have Jolie’s or Salman Khan’s endorsements changed the lives of refugees or the poor? We’re fascinated by celebrities and their lives, sometimes even against our better judgement. (No fingers pointed here!) In this age of PR machinery, celebrities recast their public images to respond to public demand. This holds true specially in the case of celebrity philanthropy.

  • Donating designer clothes to charity? Check.
  • Portion of every match winnings donated to charity? Check.

Showcasing one’s compassionate side is a great way to grab eyeballs and retain positive public opinion. Occasionally one encounters celebrities who misuse these opportunities to generate goodwill for themselves. The engagement with the cause is minimal, choice of NGO is questionable, and it seems that the only true beneficiary is the celebrity.

There are several ways through which celebrities engage with charities. Some successfully leverage their fame to bring money and influence to causes in dire need. Others are simply orchestrated events. We show you how and where celebrities choose their charitable footprint!

Continue reading Celebrity Philanthropy – What’s Behind the Flashbulbs?

India’s Sanitation Crisis

It’s an oft-repeated truism that India has more cellphones than toilets. The cellphone statistic can be traced to the radical changes in telephony in the 1990s. Understanding why Indians don’t have access to toilets is more complex.

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Social mores in India dictate that a toilet (“impure”) should not be built inside the house but outside the (“pure”) living and cooking areas. It is common to see standalone toilets outside rural houses. Caste, class and tradition combine to keep access to sanitation a distant dream for the landless rural poor, migrant urban families and slum dwellers who don’t own houses. Chawls in Mumbai, for example, are built with common toilets. Compounding this is a cultural reluctance to speak about matters of sanitation in public – a taboo topic. The worst affected by this silence are underprivileged women who work in the disorganized sector with no access to amenities. Toilet Benefits Prime Minister Narendra Modi’s exhortation to put toilets before temples has spurred civil society to action. This is the first time that there is such a mainstream discussion of the implications of sanitation facilities, though the area has always been one of importance. The United Nations Inter-Agency Mechanism, UN Water says that access to water and usable sanitation services is “one of the most efficient ways of improving human health.[1]” What’s more, rural areas with 100% toilet coverage report a decline in sexual assault cases against women. What’s the connection between the two? Women answering nature’s call at night are often at the mercy of miscreants, who target them at that hour. In Lucknow, police official Ashish Gupta stated that “more than 60% of the rapes in the state occur when the victims step out to relieve themselves because they have no toilets in their homes[2]”. This story repeats itself in urban areas as well. The health and social benefits earned by investing in toilets has now caught the attention of the mainstream, who are keen to do their part. Who’s going to solve India’s toilet problem? The PM’s Swachh Bharat Abhiyan and insistence on building toilets has resulted in increased funding in the space. The Government has allocated approximately Rs20,000 crores to the scheme[3]. In 2015, the Government announced that CSR activities under Swachh Bharat Abhiyan would receive 100% tax exemption[4]. Top-down funding It’s incredible that the PM’s words have galvanised a flow, if not a deluge, of funds towards this sector! The Central Government has set aside funds for the construction of toilets in schools, anaganwadis and sanitation complexes. Private funders have taken a more innovative approach to the projects they are considering. The Bill and Melinda Gates Foundation and USAID have partnered with the Government of India to improve practices and build capacity in sanitation solutions. The Foundation has funded research in designing toilets to serve the needs of the poor. This includes toilets without access to water, sewers or electricity and effective treatment and disposal of human waste. Private companies like Eram Scientific Solutions (Eram) have thrown their hat into the ring too. A private limited company that identifies itself as a social enterprise; Eram was one of the NGOs shortlisted for the Gates-USAID-GoI toilet challenge. Eram has received significant attention for their eToilet – a toilet with an automatic flushing system which is operated electronically, reducing the need for maintenance. While the eToilet has been purchased by some state governments the jury is still out on the acceptability of these toilets. NGOs/Social Enterprises: NGOs hold a key position in the value chain when it comes to sanitation: They link beneficiaries to government schemes that subsidise toilet construction by household They create awareness about use and maintenance They supervise construction and mobilise communities Others like Sulabh International are now synonymous with public toilets. The original toilet builders, Sulabh’s vision was to improve the condition of manual scavengers who were forced to clean human waste with their hands. Their innovation is an ‘environmentally friendly, two-pit, pour-flush compost toilet[5]’ that does not need to be cleaned by hand. This has been installed in 1.2 million houses in India. Most would be familiar with Sulabh Shauchalayas or pay-per-use public toilets, 8,000 of which have been set up across the country. Sulabh International Social Service Organisation is now in consultative status with the Economic and Social Council of the United Nations. Several well-meaning initiatives have failed because they did not acknowledge the community’s doubts about using public toilets. Mumbai-based Triratna Prerana Mandal (TPM) believes in a bottom-up approach to sanitation solutions. Started by a group of young locals, they are now a Community Based Organisation that is part of a World-Bank funded slum sanitation improvement programme[6]. TPM is responsible for the maintenance of a public toilet complex in Santacruz, Mumbai. They issue families in the area with low-cost passes to use the facilities, and take care of cleanliness and maintenance of the toilet. What’s more, they have set up solar panels to generate renewable energy and reduce their costs. Lastly, they have also turned the space above the toilet into a community centre, providing facilities like a kitchen and computer centre for those in the area. Goonj.. provides much-needed feminine hygiene solutions for women and girls. Menstruating women and girls are the worst affected by a lack of water and sanitation facilities. Poor menstrual hygiene has deadly consequences for women. Taboos inhibit discussion of the topic. The lack of access to water and sanitary napkins leads women to use alternatives like ashes, husk sand and re-use unwashed rags. These unhygienic alternatives result in Reproductive Tract Infections (RTI) and increase the risk of cervical cancer. Access to water facilities is life saving for these women. Organisations like Aakar Innovations and innovators like Arunachalam Muruganantham work to reduce this deficit. Conclusion We will hopefully live in a country with better access to toilets and sanitation facilities for all. The Observer Research Foundation’s recent research study into the subject of sanitation concludes with a demand to make Sanitation and Clean Water fundamental rights of every Indian citizen[7]. Once we see sanitation as an inalienable fundamental right, change is sure to follow. [1] [2] [3], Infographic on toilet use, accessed on 12th February [4] ‘Budget 2015: 100% tax exemption for contributions to Swachh Bharat, Clean Ganga’, Firstpost Bureau, Firstpost, 28th February 2015 [5] [6] Source: Activity Report FY14, Triratna Prerana Mandal [7] Pg 62, Tiwari, Payal, Recommendations, Toilet Torture in Mumbai’s Slums, Observer Research Foundation Mumbai