Want To Start A Non-Profit or Orphanage?

Here is some humble advice from us to you…

Note: Our organization is not a fund raising organization and cannot be of any assistance in the financing of new projects.

We have a lot of people ask us about starting a non-profit, most of the time they ask about “how they can start an orphanage” so much of the information in this page is specific for orphanages. We can’t give the best idea in regards to how much it costs to run a non-profit as our organization is not really comparable given that we grow most of our own food, run our own school, do all our own maintenance/vehicle repairs and also make much of our furniture/buildings/clothing… etc. Also please note that our organization is not a fund raising organization and cannot be of any assistance in the financing of new projects. We have been functioning since 1952 and it has been over 10 years since we received any funding from other organizations (as we try to be as self-supporting as possible). Anyway, here is the information:

What is the first step in starting a non-profit??

The very first step is to learn the culture of the people you want to serve. The largest reason for failure of any organization is failure to communicate effectively. This can be found to be the source of financial problems, relational problems, legal issues and just about every other problem. A good rule of hand is to spend 2 years immersed in a culture before starting anything. Just learn about the people, the traditions, the food, the way people relate to each other, how respect is show, how respect is earned. We cannot stress the importance of this first step too much.

How much does it cost to start a non-profit?

Of course this number changes dramatically depending on what you want to do, starting cash for an orphanage of around 10-30 kids (assuming you had the building already) shouldn’t be more than around US$10-30,000 to get completely registered and equipped. The hardest thing by far is getting the initial start-up money into India legally and the FCRA registration -this can take anywhere up to 6 months to 2 years or more to get permission to receive funds from outside India.

Can I work a day job and run the orphanage at the same time?

Keeping on working while you run the orphanage would not be impossible. It all depends on:

  • How many kids you have
  • How many employees you have
  • Whether or not you can get assistance from any other NGO’s (i.e. finance/volunteers)

Our suggestion would be to start out VERY small. No more than 2-4 kids. Try it for a year or two; work out the boundaries you need to set in your life between work and the orphanage, your old family and your new family. There are loads of stresses that come with having a regular child… let alone 2-4 children who might have spent anywhere up to 10 years living on the streets. Don’t rush into anything as sustainability is what is important. It is better to help 1 orphan for their whole life than 1000 orphans for just a few months.

Where do I get the kids for the orphanage?

Many of our children are brought here by their family members when relatives die. Some are brought by the police. Some are brought by the Human Rights Association or local MLA’s or Pradhans (village chiefs).

Our suggestion would be to get your organization connected with the following:

  • Local Police, MLA’s, Government Offices, Pradhans, Sawapatis… etc.
  • Human Rights Association
  • Any NGO’s operating in your area that have similar goals
  • Local press / journalists

At the very least write a letter to each and post via Registered Mail (as then they won’t just think it is junk mail). A week or two later you could visit their offices in person (just to let them see that you are serious). It is good to have your goals/vision draw up on paper (in Hindi and English).

Who will be against me, what type of opposition should I expect?

There are many people who think that just because you are running an NGO you must be incredibly rich. It is quite the opposite. Most of our members would personally have less than $300 cash in their bank accounts and their only real “assets” are their motorcycles or scooters.

There will always be people who prey on NGO’s and orphanages the world over. They think that we all get money from Western Countries and therefore we can afford to be “ripped off”. Many businesses that we deal with are sympathetic to our cause and give us great discounts but there are others that intentionally charge more believing that we won’t care.

Sometimes you also have to be aware of religious and political agendas, these both can often affect the way people treat you and your organization. This applies from the smallest situations (like people donating to your cause) right up to Central Government Offices. We don’t know why people act this way; we should all be concerned about the needy (no matter what religion is involved).

What is required to sustain an orphanage?

This is certainly not a complete list but here are a few things that are very important in regards to sustainability:

  • The biggest need will always be money. Don’t kid yourself; you are going to need a lot of it -especially as your orphanage grows in size. Foreign or domestic support can help in this regard but it is a good idea to look at sustaining your project through other areas. Running a school is a great example and one that has worked well for our organization.
  • As the children increase you will find that you/your family are not able to “do it alone” and you will need help. Good people are hard to find, especially when you need them to work for cheap!
  • A good website that clearly states your goals/purposes. This really does make a difference. These days everyone uses the net. That’s probably how you found me! It is important to get your name out there as this can help with both of the above points (i.e. people may donate or come to volunteer).
  • As mentioned above, sustainability is important. There is no real value in your project if it collapses after 1-5 years because your “life savings” got finished.
Where does the official process of starting an orphanage begin?
  • Acquire a piece of property to base the organization (if possible eventually have it registered in the name of the organization) or find someone willing to give a legal lease for long term (the minimum is something like 5-10 years).
  • Get as many letters of support as you can as fast as you can, from local businesses, politicians, dignitaries, foreign businesses, local panchiats/village heads… etc. These will all help to avoid delays/problems in your registration/setup process. A “Letter of Support” can be as simple as a person writing “I am in support of the work that ____________ is proposing in the __________ area. If you are able to support it we would appreciate it. Signed, __________”. You can actually chain these letters off other people, i.e. start with the “smaller people/businesses” and use a collection of the letters from them to get letters out of bigger and bigger people/positions/offices. You would be surprised the amount this can help. “It’s not what you know, it’s who you know”.
  • Register the organization as a Society (this is done through your local Registrar of Societies), if you need help finding them ask at your local Thasil (i.e. ask an SDM or even a lawyer there at the courts). For this you will need a Board of Directors, By-Laws and a few other things. You can ask at the Registrars of Societies office about this (ours was done in 1948 so the process has changed a lot since then).
  • All orphanages and children’s homes in India must be registered under the Juvenile Justice (Care and Protection of Children) Act 2000 as amended in 2006 even if they have a license under any other law. Applications for registration under the JJ Act should be done in the prescribed manner through the District Social Welfare Office where the concerned institute is functioning.
  • If you want to get funding from overseas while working in India you will need an FCRA Number and bank account. This is done through the Ministry Of Home Affairs in New Delhi. A FCRA is in accordance with the Foreigners Contribution Regulation Act of 1976 (an act which you will probably need to have an understanding of). The application process is straightforward but seems to take a lot of time.
  • You will also need to register your society for a PAN number. After this you can ask at your local tax office about applying for a “tax-free” status. If you want people who donate to you from within India to be able to claim the donation as “tax deductible” then you need an “80G Certificate” this is pretty complicated and you will need the help of a Chartered Accountant.
  • It’s a good idea to have a permanent accountant. The accountant does not have to be a certified accountant (i.e. a chartered accountant) just someone to keep account of your day-to-day income/spending and then every year you will need to take your papers to a Chartered Accountant who will then audit them and you can then submit your audit to the taxation office.
  • It’s a good idea to have a permanent lawyer too. Lots of different documents are needed for this such as a Memorandum of Association or Bye-laws, including applicable rules and regulations; report of annual activities, financial reports/audit reports, sources and pattern of income & expenditure; minutes of the Executive Board or General Assembly that endorses the setting up of the NGO; letters of support (references from MLA’s, Pradhans, SDMs… ) etc.
  • Finding funding is a difficult thing but if you register as an NGO you can apply for grants from businesses and other NGO’s. We have no experience in this area and thus cannot offer any further advice.
Do you have any other useful information about starting a non-profit?

There are loads of great books out there on this type of thing, most of them are regarding starting and NGO but all of the steps for starting a non-profit society are pretty much the same right up to the NGO status application. One of the books that our team found useful was called “Legal Handbook for Christian Services in India” which should be available from decent Christian Bookstores in India… even if you’re not a Christian there is a lot of relevant information in there for non-profits and especially those involving foreigners/foreign aid.

There are a bunch of laws that you need to be aware of, it is good to have these books on hand most can be bought online through the Eastern Book Company:

  • Societies Registration Act
  • Foreign Contribution Regulation Act
  • Income Tax Act
  • Juvenile Justice (Care and Protection of Children) Act
  • Law of Adoption, Minority, Guardianship & Custody

Some others that are nice to know too:

  • The Constitution of India
  • Payment of Wages Act
  • The Minimum Wages Act
  • The Charitable & Religious Trusts Act
  • Basic Education Act
  • Right to Information Act

We hope that this helps to give some form of guidance. The function of our organization is not to help establish other NGO’s or organization and so we may not be able to answer questions that you might have -but if it is something that we can help out with we will try.