Trust, Society, Section 8 Company
Trust (Public Charitable Trust)
A Trust is the oldest form of non-profit structure, usually created when a property owner (Settlor) dedicates property or money for the benefit of others (Beneficiaries).
Registration: Governed by the State Trust Act (or the Indian Trusts Act, 1882). It requires a Trust Deed registered with the local Sub-Registrar.
Advantages
- Simple to Start: Minimal compliance and very few "moving parts."
- Low Cost: Registration fees are generally lower than the other two.
- Total Control: The founder can maintain significant control over the management.
Disadvantages
- Low Transparency: Since it is less regulated, it may be viewed with less trust by large international donors.
- Difficulty in Amending: Changing the terms of a Trust Deed can be legally cumbersome.
Society
A Society is an association of individuals combined for a common goal (scientific, literary, or charitable). It is more "democratic" than a trust.
Registration: Governed by the Societies Registration Act, 1860. Requires a minimum of 7 members (in most regions) and a Memorandum of Association.
Advantages
- Democratic Setup: Governance is managed by a managing committee elected by members.
- Wide Recognition: A very common format for schools, clubs, and welfare associations.
Disadvantages
- Internal Disputes: Because it is democratic, it is prone to "power struggles" among members.
- Annual Filings: Requires filing a list of managing committee members every year with the Registrar.
Section 8 Company
This is a limited company formed for promoting commerce, art, science, sports, education, research, social welfare, or religion. It is "non-profit" because any profits made are reinvested into the company's goals.
Registration: Governed by the Companies Act, 2013. It is the most robust and sophisticated NPO structure.
Advantages
- High Credibility: Viewed as the most reliable by government agencies, foreign donors, and corporate CSR wings.
- Limited Liability: Members have no personal liability for the company's debts.
- Better Governance: Strict compliance leads to transparent and professional management.
Disadvantages
- High Compliance: Must follow all company law requirements (audits, board meetings, annual filings).
- Expensive: Registration and annual maintenance costs are much higher than Trusts or Societies