Nupur Jha
No one can deny the help and support many NGOs have provided to India’s development journey. However, are all NGOs as helpful as they seem? Shocking reports reveal that some have been involved in illegal activities and scams. It’s crucial to understand the circumstances surrounding these scams and what led to such cases.
To gain a better understanding, here’s everything you need to know about this matter and to gain insight into how some NGOs might be deceiving people instead of helping them.
NGOs Involvement In Frauds, Anti-National Activities And More
NGOs are not immune to involvement in various illegal activities such as financial fraud, participation in anti-national cases, and criminal behavior. Throughout the years, a lot of NGOs have even been linked to human trafficking, money laundering, and inciting disturbances within the country.
The Union Home Ministry refused to renew the licenses of 25 NGOs under the Foreign Contribution Regulation Act (FCRA) in 2016. The list even included names like the Adani Foundation, Indira Gandhi National Centre for the Arts, and Sanjay Gandhi Memorial Trust.
Not just that, the Delhi High Court said almost 99% of NGOs are frauds and merely serve as money-making instruments.
Such NGOs have faced accusations of facilitating the conversion of black money into white, often for the benefit of individuals with personal or political influence.
Why And How NGOs Turn Black Money into White?
Some NGOs fall into two main categories: those that use loopholes to avoid taxes and those that are outright scams.
Tax haven NGOs benefit from government incentives, getting either half or full tax exemptions based on their claimed charitable activities.
For example, back in 2014, the CEO of GoPro promised a whopping $500 million to charity. This earned him a hefty tax break from the government.
But here’s the catch: there was no trace of where exactly that money went. It turned out the CEO had actually channeled the funds into a charity he had set up, giving him total control over it.
Sadly, this isn’t a one-off case – similar stories abound.
So, why do these scams happen? Starting an NGO is not very hard, and they don’t always have to disclose everything to the government. This lack of transparency means money can easily end up in the hands of the owners without any oversight.
Moreover, it’s shockingly simple to exploit this opportunity to launder money. Consider this scenario: a construction company wishes to convert 3 Crore rupees of black money into white. They seek out an NGO willing to assist and make an anonymous donation. The NGO then purchases a construction item from the same company, matching the donation’s value.
However, the actual cost of the item may be significantly lower, with the NGO deducting a small portion as their fee. In the end, the construction company recoups its funds, which are now transformed into white money through a seemingly legitimate transaction.
Other methods for frauds include:
Shell or Front Organizations
NGOs can create shell companies or front organizations that seem to be involved in legitimate activities. However, in reality, these setups often serve as a way to launder black money.
Misuse of Foreign Funding
In India, NGOs must register under the Foreign Cooperation Act to receive funding from abroad. Unfortunately, some misuse this by either misreporting the funds’ purpose or channeling illegal money through the system.
False Grants or Donations
A common tactic used by NGOs is to accept donations or grants from companies or individuals and then issue false receipts to make it seem like the funds were obtained legitimately. This method frequently turns illegal money into clean, legal funds.
However, there are NGOs that are genuinely helping, so at the same time, it is not okay to generalize. However, the public should be cautious with their money and resources before they donate.
It’s truly disheartening to see resources intended for the poor and underprivileged are being diverted to benefit the greedy instead.
