National Policy on the Voluntary Sector

This document has been provided by the
International Center for Not-for-Profit Law (ICNL).

ICNL is the leading source for information on th e legal environment for civil society and public
participation. Since 1992, ICNL has served as a resource to civil society leaders, government
officials, and the donor community in over 90 countries.

Visit ICNL’s Online Library at
for further resources and research from countries all over the world.

Disclaimers Content. The information provided herein is for general informational and educational purposes only. It is not intended and should not be
construed to constitute legal advice. The information contai ned herein may not be applicable in all situations and may not, after the date of
its presentation, even reflect the most current authority. Noth ing contained herein should be relied or acted upon without the benefit of legal
advice based upon the particular facts and circumstances pres ented, and nothing herein should be construed otherwise.
Translations. Translations by ICNL of any materials into other languages are intended solely as a convenience. Translation accuracy is not
guaranteed nor implied. If any questions arise related to the accuracy of a translation, please refer to the original language official version of
the document. Any discrepancies or differences created in the tr anslation are not binding and have no legal effect for compliance or
enforcement purposes.
Warranty and Limitation of Liability. Although ICNL uses reasonable efforts to include ac curate and up-to-date information herein, ICNL
makes no warranties or representations of any kind as to its a ccuracy, currency or completeness. You agree that access to and u se of this
document and the content thereof is at your own risk. ICNL discl aims all warranties of any kind, express or implied. Neither ICNL nor any
party involved in creating, producing or delivering this document shall be liable for any damages whatsoever arising out of access to, use of
or inability to use this document, or any e rrors or omissions in the content thereof.


Voluntary Action Cell
Planning Commission
Government of India
May 2007

Government of India
Planning Commission
(Voluntary Action Cell)

1. Preamble
1.1 This Polic y is a commitment to encourage, enable and empower an
independent, creative and effective volunt ary sector, with diversity in form
and function, so that it can contribute to the social, c ultural and economic
advancem ent of the people of India.

1.2 The voluntary sector has cont ributed significantly t o finding innovativ e
solutions t o poverty, deprivation, di scrimination and exc lusion, through
means such as awareness raising, soc ial mobilization, service delivery,
training, research, and advocac y. The vo luntary sector has been serving as
an effectiv e non-political link bet ween the people an d the Government. This
policy recognizes the important role that the voluntary sector has to play in
various areas and affirms the gro wing need for collaboration with the
voluntary s ector by the Government, as well as by the private sector, at the
local, provincial and national levels.

2. Scope of the Policy
2.1 In the Policy, voluntary organizations (VOs) mean to include organizations
engaged in public service, based on ethi cal, cultural, social, economic ,
politic al, r eligious, s piritual, philant hropic or scientific & technological
considerations. VOs include formal as we ll as informal group s, such as :

community-based organizations (CBO s); non-governmental development
organizations (NGDOs); charitable organizations; support organizations ;
networks or federations of such organis ations; as well as professional
membership associations.

2.2 To be cov ered under t he Polic y, VOs should broad ly have the following
a) They are private, i.e., separate from Government
b) They do not return profits gener ated to their owners or directors
c) They are self-governing, i.e., not controlled by Government
d) They are registered organizations or informal groups, with defined aim s
and objectives.

3. Objectives of the Policy
3.1 The specific objectives of the policy are listed below:

3.1.1 To create an enabling env ironment for VOs that stim ulates their enterprise
and effectiveness, and safeguards their autonomy;

3.1.2 To enable VOs to legitimately mobi lize nec essary financial resources from
India and abroad;

3.1.3 To identify systems by which the Government may work together with VOs,
on the bas is of the principles of mu tual trust and respect, and with shared
responsibility; and,


3.1.4 To encourage VOs to adopt tr ansparent and acc ountable s ystems of
governanc e and management.
The following paragraphs describe how t hese objectives are to be achieved.

4. Establishing an Enabli ng Environment for the Voluntary Sector

4.1 The independence of VOs allows them to explore alt ernat ive paradigms of
development to challenge social, economic and political forces that may work
against public interest and to find new way s to combat poverty, deprivation
and other social problems. It is therefore crucial that all laws, policies, rules
and regulat ions relating to VOs categor ically safeguard their autonomy, while
simultaneously ensuring their accountability .

4.2 Voluntary organizations may be register ed as societies, as charitable trusts,
or as non-profit companies under Central or State laws. Some States have
adopted the Societies Registration Act (1860), with amendments, while
others hav e independent laws. Similarly, laws relati ng to char itable trusts
vary across States. Over time, many of these laws and their corresponding
rules hav e become complex and restrictive, thus leading to delay s,
harassment and corruption. As the nodal agency for interface between the
Government and the Voluntary Se ctor, the Planning Commission will
encourage State Governments to review prevailing laws & rules and simplify,
libera lise and ration alise them as far as possible. In order to facilitate
registration of non-profit companies, t he Government will examine measures
to simplify procedures under section 25 of the Companies Act (1956),

including t hose for license, regist ration, and remuneration to member-

4.3 The Government will also exam ine t he feasibility of enacting a simple and
libera l cen tral law that will ser ve as an alternative all- India statute for
registering VOs, particularl y thos e that wish to operate in different parts of
the country and even abroad. Such a law would c o-exist wit h prevailing
central and state laws, allowing a VO the option of registering under one or
more laws, depending on the nature and sphere of its activities.

4.4 There has been much public debate on the voluntary sector, parti cularly its
governanc e, account ability, and transparen cy. It is widely believ ed that the
voluntary s ector must address t hese i ssues through suitable self-regulation.
The Government will encour age the evolution of, and subsequently accord
recognition to, an independent, national level, self-regulatory agency for the
voluntary sector.

4.5 At the sam e time, there is need to bolster public confid ence in the voluntary
sector by opening it up to greater public scrutiny. The Gover nment will
encourage Central and State level age nc ies to introduce norms for filin g
basic doc uments in respect of VOs, whic h have been rece iving funding by
Government agencies and plac ing them in the public domain (with easy
access through the internet) in order to inculcate a spirit of public oversight.

4.6 Public donation is an im portant source of funds fo r the voluntary sector and
one that can and must increase s ubstantia lly . Tax incentives play a positiv e
role in this process. Stocks and s hares have become a significant form of
wealth in the country today. In order to encourage transfer of shares and
stock options to VOs, the Government will consider s uitabl e tax rebates for
this form of donation. The Gove rnment will also s implify and streamline the
system fo r granting income tax exemption s tatus to ch aritable projects under
the Income Tax Act . At the same time, the Government will conside r
tightening administr ativ e and penal pr ocedures to ensure that these
incentives are not misused by paper charities for private financial gain.

4.7 International funding of voluntary organizat ions pla ys a small, but significant
part in supporting s uch organizations and their work in the country. An
organization seeking foreign funding must be registered under the Foreign
Contribution (Regulation) Act. This la w pres cribes stringent screening norms
that often restrict the ability of VOs to avail foreign funds. When approved,
there are problems like funds must be held in a single bank account, thus
presenting enormous difficulties to VOs working at different locations. The
Government will review the F CRA and simplify its provisions t hat apply to
VOs, from time to time, in consultation with the join t consultative group to be
set up by the concerned Ministry (as suggested under para 5.4).


4.8 The Central Government has framed guidel ines for bilateral agencies to give
direct assistance to voluntary organiza tions for projects of social and
economic importance. It controls access to such funds and their utilisation,
both through the FCRA and through r egulation by the Department of
Economic Affairs. This system needs to be simplified in consultation with the
joint consultative group to be set up by the c oncerned Ministry (as suggeste d
under para 5.4).

4.9 The Gover nment will enc ourage all relev ant Centra l and State G overnment
agencies to introduce pre-service and in-service training m odules on
constructive relations with the vol untary sector. S uch agenc ies should
introduce time bound procedures for dealing with the VOs. These would
cover regis tration, income tax clearanc es, financial assistance, etc. There
would be formal systems for register ing complaints and for redressing
grievances of VOs.

5 Partnership in Development
5.1 The voluntary sector can play an important role in the development process,
particularly through community partici pation. VOs can offer alternativ e
perspectives; committed expertis e; an understanding of the loc al
opportunities and constraints; and perhaps most importantly, the capacity to
conduct a meaningful dialog ue with communities, particularly those that are
disadvantaged. It is therefore essent ial that the Government and the

Voluntary Sector work t ogether. Where feasible, such partnership may als o
include other entities such as panchayati raj institutions, municipalities,
academic institutions, and priv ate sector organizatio ns.

5.2 Partnership between Go vernment and VO s implies identifying shared goals
and defining complem entary roles. It mu st be based on the basic principles
of mutual trust and respect, with shar ed responsibility and authority. These
principles must be explic it in the te rms and conditions of the partnership.
They must also be evident in the formal and informal systems of

5.3 This Policy recognizes three instruments of partnership, viz ., (i)
consultation, through a formal process of interaction at the Centre, State and
District level; (ii) strategic collab orat ion to tackle complex interventions where
sustained social mob iliz ation is critical ove r the l ong term; and (iii) project
funding thr ough standard schemes. The G overnment will ensur e that thes e
three instruments of partnership ar e given due attention in Annual Plans
prepared by Ministries and States. The acti on that will be taken in respect of
each of the three instruments is discussed in the following paragraphs.

5.4 The Government will encourag e setting up of Joint Consu ltative Groups /
Forums or Joint Machineries of gov ernment and volun tary sector
representatives, by relevant Cent ra l Depart m ents and State Governments. It

will also encourage district administrations, district planning bodies, district
rural development agencies, zilla parishad s and local governments to do so.
These groups will be perm anent forums with the explicit mandate to share
ideas, views and infor m ation and to i dentify opportunities and mechanisms of
working together. The Government wil l introduce s uitable mechanisms f or
involv ing a wide cros s-section of the voluntary sector in thes e Groups /

5.4.1 The e xpertise of the vo luntary sector will als o be utilize d, by includ ing e xpert s
from VOs i n the committees, task forc es, and adv isory panels c onstituted by
the Government from time to time to help address important issues.

5.5 The country faces a number of comp lex problems that require adaptive,
multi-sectoral solutions where sustai ned s ocial mobilization is particularly
important. These include poverty alleviation, sk ill promotion,
entrepreneurship development, empow erment of women, population
stabiliz atio n, combating HIV/AI DS, mana ging water resources , elementa ry
education and forest managem ent, to nam e a few. Such areas urgently
require strategic collabor ation between the Govern ment and VOs, through
nationa l lev el programmes that are long- term in duration , and utiliz e multip le
strategies, methodologies and activities to achieve their objectives. The
Government will identify national collaborative programmes to be
implement ed in partnersh ip with VOs. Each national collaborative

programme will involv e a finite s et of reputed, medium or large VOs with a
proven track record, and the ability to work on a reas onably large scale. T he
Government will ens ure that such national collaborative progr ammes are
given due importance in Plan doc uments.

5.6 The third instrument of partner ship between the Government and the
voluntary s ector is project funding. A large number of Government agencies
operate sc hemes for financ ial assistanc e to VOs. T hese schemes usually
deal with activities such as surveys, research, workshops, documentation ,
awareness raising, training, creation and runnin g of public we lfare facilitie s,
and so on. Project grants are a useful means for t he Government to promote
its activities without its direct involvemen t. They are also a valua ble source of
support to small and medium VOs. Ne vertheless, there are legitimate
concerns regarding the effectiveness of grant-in-aid schemes. Out-dated
design of funding sc hemes, arbitrary procedures, selection of unsuitable
VOs, poor quality of implementation, and misuse of funds are some of the
reasons for the possible defeat of the objectives of such funding. Concerned
Government agencies would be encouraged to ensur e proper accountabilit y
and monitoring of public funds distributed to VOs.

5.6.1 Some Central agencies have achieved good results by decentraliz ing the
process of project funding. Rather than administering various schemes
directly, they appoint regi onal or State level interm ediary organizat ions to do

so on their behalf. This allows for closer int eraction for better selection and
monitoring of VOs. Interm ediaries could inc lude umbr ella VOs, professional
or academic institutes, State Govern ment agencies, or multi-stakeholder
standing c ommittees. The Government wi ll review the experience of such
decentraliz ed funding and make suitable recom m endations to Cent ral
5.6.2 There is reason to believe that accreditation of VOs will lead to better funding
decisions and make the funding proces ses more transparent. Further,
accreditation may provide incent ives for better governance, management
and performance of VOs. No r eliable acc reditation system is in place at
present. The Government will enc ourage va rious agenc ies, including those in
the voluntary sector, to develop alte rnative accreditation methodologies. It
will allow time for such methodologies to be debated and gain ac ceptability in
the voluntary sector, befor e considering t heir app lic ation to G overnment
funding of VOs.

6. Strengtheni ng the Voluntary Sector
6.1 The Indian society has a well-es tab lished tradition of philanthrop y. While a
regime of tax c onces sions facilit ates donations to charitable organizations,
there is considerable untapped potential to channelise pr ivate wealth f or
public service. The Government will support and encourage existing, as well
new, independent philanthropic instituti ons and private foundations to provide
financia l as sistance to deserving VOs. It will also promote a dialo gue among

public and private grant makers so that they may take advantage of the best
practices in grant maki ng and fund-raising strategies.

6.2 Accountability to all s takeholder s and transparency in functioning are key
issues in good gov ernance. The voluntar y s ector is expected to s et its own
benchmarks in these areas. Sinc e VOs vary in their objectives and activities,
it would b e impractical to e xpect uniform norms for accountability an d
transparency. The Government will encourage support organizations, and
VO networks & federations to facilitat e discussion and c onsens us building on
these issu es. It will a lso encoura ge such ag encies to a dvise and assist VOs
to adopt n orms that they find a ccept able and usefu l. The Gove rnment will
recognize excellenc e in gov ernanc e among VOs by publicizing best

6.3 Training is a crucial requirement fo r people working in the voluntary sector.
Howev er, this is often neg lecte d on acc ount of limit ed av ailability of good
quality training courses t hat are reasonably priced. The Government will
support and encour age organizations that train aspirants to enter the
voluntary s ector, as well as thos e alre ady working in the sector. It will make
available physical facilities currently ava ilable with its training institutes as a
measure of such support.


6.4 Innovation in institutio nal, technical and social approaches to development
problems is an essential ingredient of vo luntary action. The Gov ernment will
encourage and recognize innov at ive & pioneering work.

6.5 Databases of VOs wor king in different fields and at di fferent levels are useful
for communication within the voluntar y sector, as well as b etween the
voluntary sector and t he public & privat e sector. The Government will
commission suitable agencies to prepare and update such databases.

6.6 Information on Government policies and programmes is often difficult for VOs
to access. The websit es of various Go vernment agencies will be re-designe d
to provide links to key documents and databases, including thos e related to
project funding schem es.

6.7 The Government will encour age involv emen t of volunteers in public services,
such as, at family welf are centers, pr imary health centers, hospitals, schools,
vocational training centers, sanitation campaigns, etc.

This National Policy on the Voluntary Sec tor-2007 is the beginning of a process to
evolve a new working relations hip betwe en the Governm ent and the Vo luntary
Sector, without affecti ng the autonom y and identity of VOs.