Law governing INGOs in Nepal

Law governing INGOs in Nepal

INGO stands for the international non-governmental organization that works for wellbeing without any profit earning aim. The organization was established with a specific goal to provide service in a society that is independent of government intervention.

The main mottos of INGOs are Environmental protection, human rights promotion, and women's advancement, and many more. They design, finance, or implement activities in the field of information and communication technology in education in developing countries.

Scientific, technological, commercial and industrial, medical, and professional fields are home to the majority of INGOs. A large number of people are also involved in sports and recreation, development, education, women's rights, and a variety of other fields.

The main laws governing INGOs in Nepal are:

  • Social Welfare Act, 1992 and

  • Social Welfare Council Rules, 1992

Aside from the Act and the Rules, the Social Welfare Council has adopted a number of guidelines to govern INGOs, which are revised on a regular basis. The key guidelines governing INGOs in Nepal are the Guidelines for General Agreement, Service and Facilitation, Guidelines for Project Agreement Appraisal, and Guidelines for Monitoring and Evaluation.

These guidelines are periodically updated. It is necessary to take the approval of the council before any development-related, social, and educational operation and functions. NGOs are usually non-profit organizations that obtain money from corporations or membership dues and funding resources. Within specific nations, several large INGOs have operational projects and advocacy efforts that work together.

The main regulating authority that governs INGOs in Nepal

Social Welfare Council (“SWC”) is the main regulating body responsible for regulating the INGOs in Nepal. It is compulsory to take approval from SWC to operate the INGOs. Along with the approval General Agreement and Project Agreement have to be executed with SWC before conducting development, social, or welfare activities in Nepal.

Major approval requirement for the operation of INGOs

A request for approval must be presented to the Council.

To perform developmental, social, and welfare initiatives, INGO must engage in a General Agreement and a Project Agreement with the Council.

General Agreement

a) GA is the main agreement that provides the basis for the operation of INGOs in Nepal which is executed between INGOs and SWC. It is entered only for a certain period of time and must be renewed after the expiry of the time period. The agreement can be terminated if the party wants but need to give prior notice before six months.

b) GA incorporates information such as

(a) The area where the INGO wants to supports in Nepal,

(b) Amount of fund per annum that will be used to implement projects,

(c) Date of submission of project proposal for Project Agreement,

(e) Submission of progress reports and another compliance requirement that INGOs need to submit before SWC.

Procedure to enter into GA

You need to submit an application with the required documents.

  • Certificate of Registration of the home country,

  • By-Laws (Approved Constitutions),

  • If by-Laws do not explain the objective clearly an authentic document to state its objectives is required in addition,

  • Financial Commitment (minimum USD 2,00,000 per annum),

  • Concept paper/ project proposal, and

  • Draft General Agreement (in the prescribed format)

  • Letter of Authorization to deal with the business of agreement,

  • A Copy of Citizenship, Passport, and Biodata of the authorized person,

  • Covering Letter,

  • Reliable Funding Sources

The SWC will grant approval within 3 months period from the date of receiving the application.

Project Agreement

The application of the PA needs to be submitted within 3 months from the date of the signing of the General Agreement before SWC. If INGOs are not able to do so within the time mentioned, the SWC will provide additional 3 months for submission of the application. Fine will be charged if the submission is not made within an extended period.

a) PA is the agreement that is executed between INGO, SWC, and the local partners for the implementation of projects in Nepal.

b) It incorporates background, objectives, implementation process/ methodology, monitoring plan, budget estimate, etc. of the projects that INGOs intend to operate.

(Please note: PA should be prepared after consultation with local-level stakeholders which includes Municipality, District Development Committee, and line agencies at central and district level and local stakeholders who will be benefited from the project.)

How many Project Agreements can be concluded under one General Agreement?

INGOs and the council can conclude more than one PA under a GA. The number of project agreements under one General agreement is not fixed.

The duration of the project to be implemented under the Project Agreement will be connected to the term of the Project Agreement.

Is there any minimum amount that needs to be donated by INGOs?

INGOs are required to donate at least USD 2,00,000 per annum. The source of funds for INGOs should be injected from outside of Nepal.

Is there any compulsion to appoint the local NGO for the operation of the Project of INGOs?

a) INGOs cannot implement the project thoroughly itself. The project is implemented through local partners. These local partners include (a) Non-Governmental Organization (“NGO”) or (b) Profit Not Distribution Company or (c) any registered entity established with the objective not to distribute profit.

b) Local partners should have a minimum work experience of two years. Provided that if the eligible partner is not available in the concerned project district, zonal-based partner, regional-based, and central-based partner will be prioritized respectively. In such a case, the local partner should be selected as sub partner. Such local partners should be capacitated within one year of the timeline of the project startup date.

Is it necessary to set up the local office by INGOs in Nepal?

Yes, INGOs needs to set up a local office for its operation in Nepal.

The status of local office set up by INGOs

Without the assistance of local entities as partner organizations, the INGO will be unable to carry out its programs in Nepal.

a) The local office will not have independent legal status or corporate personality separate from the INGOs existing under the laws of a foreign jurisdiction. The local office remains as part of INGOs in terms of authority and its function.

b) The local office of the INGOs will also have to be registered with the tax authority of Nepal and obtain a Permanent Account Number (PAN).

Can INGOs invest in profit-oriented business activities in Nepal?

INGOs are restricted to make any share investment in any profit motive institution with the intention of carrying business in Nepal.

Is there any restriction for INGOs while allocating its budget?

INGOs cannot spend more than 20% of total funding on administrative costs.

Can INGOs provide financial assistance to local partners without obtaining approval from SWC?

It is not necessary to obtain approval to provide financial assistance to local partners. However local partners should get approval from SWC before receiving financial assistance from INGOs.

Should INGOs open bank account in a commercial bank of Nepal?

It is required to hold a bank account with one of Nepal's commercial banks. In addition, the INGO will be required to deposit the amount of the Financial Commitment as agreed upon in the General Agreement for the project's implementation.

Filing and reporting obligations for INGOs

It is necessary to provide an audit report to the Council within six months of the fiscal year's end, along with a thorough explanation of their work and activities; report on their activities every six months; and a yearly report detailing administrative and program expenditures.

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