SOCIETIES, TRUSTS AND RELIGIOUS ENDOWMENTS

Published on 30 Jan 2025

Trusts are established to manage certain assets for the benefit of a designated beneficiary or for a specific purpose outlined in the trust deed. They offer asset protection and tax benefits, making them an attractive choice for individuals and organizations aiming to contribute to social welfare.

Whereas societies are collections of people who come together for a common goal, which can be literary, charitable, scientific etc.

Criteria	Trust	Society
Formation	Governed by Indian Trusts Act, 1882	Governed by Societies Registrations Act, 1860
Governing body	Administered by the trustees	By a governing body or a managing committee
Registration	Registration is optional, but is advisable	Registered with the Registrar of Societies and follow specific guidelines.
Members	Minimum two members	At least seven members
Compliance	Annual compliance is not mandatory	Must file the list of names, occupation and address of the managing committee members to the registrar annually.
Taxation	Eligible for tax exemption under Section 11 of Income Tax Act, 1961	Eligible for exemption under Section 12 AA of Income Tax Act, 1961.

Donor agencies

Donor agencies are institutions like philanthropic foundations or international organisations, which invests in projects covering poverty alleviation, healthcare, education, infrastructure development, disaster management etc., and thus catalyse a positive change in the society.

Benefits of including donor agencies in developmental projects

Access to financial flow

Technical expertise

Facilitate capacity building through knowledge transfer

Penetration of modern and innovative technology

Issues in the involvement of donor agencies in the developmental projects.

Dependency: Over reliance on external funding may create dependency and the project may fail to deliver the intended social benefits.
Priority setting: Donor-driven agenda may prioritise certain sectors over others, potentially neglecting the critical areas of local priorities identified by the government and the community.

Example: The World Bank funded ICDS project has been criticized for not adequately addressing the local nutrition and healthcare needs.

Lack of community participation: When communities are not represented in the planning phase, their participation in the implementation phase will be less, thus reducing the efficacy of the project.

Example: In the World Bank funded Narmada Dam project, the external funding led to the perception that the project was imposed upon local communities, resulting in protests.

Cultural insensitivity: Donor interventions may not always consider local cultural norms, values, and socio-political dynamics, leading to unintended resistance from the community.
Accountability: When projects are funded from outside, there is difficulty in monitoring the funds, and holding them accountable for the diversion of funds.

Thus, donor agencies funding projects have many advantages but it needs to be balanced with the demand of the community. Fund transfer should be accompanied by proper technology transfer and capacity building to make the community better participants in the projects.

Religious endowments

Religious endowments involve individuals and communities dedicating resources for maintaining religious institutions and practices, in accordance with state-specific laws. They support the upkeep of temples, mosques, and other places of worship, while also contributing to cultural preservation and communal harmony.

Issues in the functioning of religious endowments

Mismanagement of funds: Due to poor transparency, the financial resources are diverted for personal gains, leading to financial inefficiency.

Example: Allegations of corruption at Tirumala Tirupati Devasthanam.

Political interference: Political interference can influence the decision-making process and appointment process, thus compromising the autonomy and integrity of the institutions.

Example: Political interference in the administration of Sree Padmanabhaswamy temple led to conflict between Travancore royal family and the Kerala government.

Dispute over ownership: Legal battles and conflict erupt over the control of certain places of worship, leading to instability.

Example: Sunni Waqf Board and Nirmohi Akhara engaged in a conflict over the custodianship and management over the disputed Ayodhya site.

Unequal resource allocation: Ensuring equitable resources and benefits among different sects within the religious communities poses a challenge.

The religious endowments need to be regulated in an efficient manner to reduce events of corruption and mismanagement. Also, their functioning shall be for the benefit of the community, and not for narrow political gains.