Why Donation for Fight against Coronavirus to third party NGOs is not a good idea?

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What is TDS

Earlier, the trusts were formed by affluent people of same community who infused corpus money out of their own savings and carried out charitable activities in the nature of relief for the poor, education or advancement of any other object of general public utility. However recently, there is huge trend of Sophisticated Trusts ( they prefer to call it NGOs) who would operate on a National level and lure the consumers into donation for a cause through various techniques not limited to but includes

  1. Social Media Ads – For a normal businessmen, the ads on Facebook or Linkedin is very costly but these NGOs have enough money for Ad Campaigns may be because it provides good conversion into donation money.
  2. Opt-out facility during e-commerce application – When you buy a movie ticket or a flight ticket, there is a separate check-box for Donation and it is already ticked by default and 80% of Indians because of our emotional nature and pettiness of the amount, fail to untick it.
  3. Phones through Call Centres – They get the database of Dayavan people and would call you citing a particular case whereas if not for your timely contribution, the patient will die shortly. Many a times, they dont even change the name of the patient as they go by the script!

Some of these volunteers have literally abused the prospective donors and some of the horrendeous experience can be found at https://www.quora.com/What-are-some-fraud-NGOs-in-India

In the RTI reply by AIIMS, it is clearly mentioned that AIIMS has no association with these NGOs viz. RELIEF INDIA TRUST, MSSION HEAL, A GIGGLES WELFARE ORGANISATION  and complaints have already been received from various places that these three NGOs are involved in illegally collecting money for poor patients admitted at AIIMS. AIIMS have advised not to donate to these NGOs.

It is not that every NGO is a Black sheep and it shall be extremely wrong on my part to derive any conclusions as every help counts but the million dollar question is
In situation like a worldwide pandemic like Coronavirus, should you donate money to a third party NGO just because you received an email through change.org or some online community starts a fundraising campaign ?

For coronavirus, the spread of the disease is so dreadful, that undisputedly the control has to be from the Top. The Central Government, State Government as well as Local authorities has been working in coordination till date to tackle the situation. The Corona Warriors mainly hail from Police Department and Government hospitals employees and hence when there is a dedicated Charity Fund for COVID19 called “PM CARES” monitored by Honourable Prime Minister himself and when each Chief Minister has a separate Relief Fund, I see no reason why a citizen needs to give donation to a private NGO.

No doubt, the migrant workers are affected the most and some NGOs are doing appreciable work in spearing awareness and providing help to these poorer section of the society and one such NGO, I came across is “Give India” which claims to be “India’s largest and most trustworthy giving platform for donors”. I tried to do my due diligence, to the best of my knowledge so I paid Rs. 100/- to MCA and downloaded their Audit Report for last 3 years. The Company Name is Give Foundation. My subsequent observations and fact findings are not to undermine the efforts of the NGOs including “Give India” who might be doing an incredible job but it is to provide a reply to the pseudo liberals who are encouraging citizens to give donations to such Private Funds against the PM Care Fund or Chief Minister Relief Fund.

  1. Supporters claim that Facebook has also tied up with Give India and there is no middlemen, but “Give India” is ONLY a middlemen! It does not do any charitable activity on its own! They state in their Financial statements that “It is an online donation platform and it helps raise funds and contributions from individuals across India and the world and then disburses these donations to credible Indian NGOs” Infact, looking at their audited financial statements, it seems that 10% of the total donation raised for a cause goes on to Company to fund their salaries assuming that it receives no cut from its associated NGOs.
  2. As per the latest audit report, the credit in the Profit and Loss account shows that the “Total Donation retained for covering administrative cost” is Rs. 5.09 Crore out of which the salary is paid to its employees of Rs. 4.39 Crore. The salary of its one Director is as high as Rs. 50+ lakhs pa which is funded out of your donations.
  3. The Income tax Department has also denied to consider Give India as charitable organisation and denied any exemption u/s 11 of the Income Tax Act. The litigation went till Income tax Tribunal and the Company lost at the forum of highest fact finding authority wherein the Court observed as under:

    “We find that the entire expenses incurred by the assessee are for providing advisory services to the affluent corporate and high net worth individuals who desire to make donations to public welfare trust or institution. Thus it is observed that the actual activity of the assessee during the year under consideration was confined to provide professional services to corporate and other persons who desire to do charity by advising them or by way of identifying genuine charitable institutions for them. The assessee for this service also charged fee from the donor corporate or other persons and such fee amounted to Rs.1,08,57,115/- during the year. Thus we find that no income of the assessee was utilised for providing educational activity medical relief, relief of poor and preservation of Environment (including watersheds, forests and wildlife). The entire expenses of the assessee were directed towards providing services to donors who are affluent section of the society and wish to make donation for charitable purposes. The above activity of the assessee of providing services to affluent section of the society cannot be, in our considered view held as activity of general public utility also. Thus we find that no part of the income of the assessee company was actually utilised for any charitable activity during the year”

    The Full copy of the Judgement can be downloaded at https://www.itatorders.in/appeal/ita-1465-ahd-2013-14-give-foundation-ahmedabad-the-jt-director-of-income-tax-exemp-ahmedabad
  4. Even in subsequent years also, the Income tax Department has denied its operation as a charitable Trust and the contingent liability reported out of such tax liability is Rs. 2.23 Crore ( Pg 17 of Audited Financials ) and they have paid only Rs. 86 lakhs in protest and no provision has been made in the books which is certified by Big 4 firm.
  5. The website Contact Us Page or About Us Page does not mention even the address of Registered Office ! Why would anyone do that ?

In view of the above, in my personal opinion, at least for the fight against Coronavirus, the donation, if any should directly go to National or State Fund and if someone is not comfortable to donate there just because he or she is Modi-Hater ( thats the only word which pops in my mind when I see people on social media making fun of PM Care Fund when they have a choice to remain silent! ), then at the best, they should try to provide financial help to their own domestic helpers and office staff or factory workers. Infact, a better option is when you look around, you will find a lot of noble souls who runs an NGO and whose efforts are clearly visible as how they are helping the daily wagers and donation may be made to them. And still if you are making donation to the third party NGOs, of course, “its your choice” but not at the cost of undermining the efforts of Central Government.

PS : When a businessmen pays Rs. 1,00,000/- to PM Care Fund, he gets 100% tax deduction of such amount but when he makes donation of same amount to Private NGOs, he may only get 50% tax deduction from his income. I have come across many businessmen who are nagging at the present Government to provide them tax soaps but dear, you just missed a blanket benefit which was before your eyes but you chose to ignore !

Details of PM Cares Fund

Name of the Account: PM CARES

Account Number: 2121PM20202

IFSC Code: SBIN0000691

SWIFT Code: SBININBB104

Name of Bank & Branch: State Bank of India

UPI ID: pmcares@sbi

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