On September 17, 2019, the Supreme Court ruled that NGOs ‘substantially’ funded by the government, directly or indirectly, would come under the ambit of Right to Information Act, 2005, in order to inject transparency and accountability in the functioning of NGOs and other private institutions. Therefore, it becomes necessary for such organisations to maintain their records as per the provisions of the act. The judgement came rejecting appeal filed by NGOs, including DAV College Trust and Management Society, New Delhi; DAV College Chandigarh; and some other colleges from Chandigarh. These colleges had claimed that they are not ‘public authority’ under the act, whereas the court said that those institutions were substantially funded by the government.
What Constitutes ‘Substantial’
Defining the word ‘substantial’, the court said substantial financing can be both direct or indirect. If a land is given to an NGO or trust free of cost or at huge discount, that could be substantial financing. As per the court, ‘substantial’ simply means ‘a large portion’ but not necessarily ’a major portion or more than 50 per cent. If any establishment is dependent on the grants of state, it is substantially financed.
However, the bench, comprising Justices Deepak Gupta and Anirudhha Bose, said that whether an institution was substantially financed by the government or not was a question of fact, which had to be determined on facts of each case. Some organisations feel that the definition of ‘substantial finding’ must be strictly applied to only the components of funds, received from the government for a project.
Right to Information Act, 2005
RTI is a legal right for the citizens of India, and it was enacted to consolidate the fundamental right in the Indian Constitution. The authorities under this act are known as quasi-judicial authorities. An initiative taken by the Department of Personnel and Training, Ministry of Personnel, Public Grievances and Pensions, the act provides a portal gateway to all Indians for quick research of information, published on the web by various public authorities under Union and state governments.
The act is the foundation for enjoying other human rights. It not only empowers people to enjoy all the constitutionally recognised rights but also makes public agencies transparent. It helps contain corruption and upholds democratic ideal with an informed citizenry and transparency of an information.
Funding Sources of an NGO
A non-government organisation (NGO) is a citizen-based, non-profit group and functions independently of government at local, national, and international level for some political or social cause. Their expenses like funds for projects, salaries of the workers, and other overhead costs are borne by several sources, such as membership dues, sale of goods and services, private sector for-profit companies, grants from state or Union governments, and donations from public. NGOs can get government funding, but government representatives cannot become members of NGOs.
The legal status of NGOs helps in operating them as non-profit organisations and so they are exempted from paying tax on the funding they receive.
With the judgement, now the NGOs have to disclose vital information, ranging from finances to hierarchy to decisions to functioning, to the RTI applicant citizen. According to the court, societies which are neither owned or controlled by the government, if funded by the government come under RTI Act.
The court’s ruling empowered citizens to ask for information to find out whether their money, which is given to NGOs and other bodies is used for the requisite purposes or not.