The budget 2017 has brought both challenges and opportunities to the nonprofit sector in India. The two main announcements that impact the development sector are expected to completely change the landscape of how people do charity and how nonprofits accept it. The first is the cut down on the limit of cash donations one can make, second is the alterations in the tax exemption clause.
The recent demonetization move in India revealed what digital India will look like in the years to come. That said, social problems won’t be going away anytime soon, so the need to fundraise is indispensable.
Let’s discuss what the Union budget announcements of 2017 will mean, and how they will impact the world of crowdfunding.
Reduction in amount of cash donation
The amount of cash that one can donate anonymously to an organization has been reduced from Rs 10,000 to Rs 2,000. This is a major crackdown on political funding. It is a bold step towards curbing illegal activities and money laundering that nonprofits may be involved in. In any case, it will always be more beneficial for a genuine donor to give donations with proper documentation and through registered banks because it will add credibility and accountability to the organization’s utilization of the funds.
So what does this mean for crowdfunding in India? It means that nonprofits need to start embracing technology and digital tools to raise money for their cause. No longer can they sustain themselves in this competitive ambiance, by using traditional methods of fundraising. They will have to invest their efforts in online fundraising platforms such as Impact Guru.
Removal of clause 35AC
Clause 80G allowed a tax rebate of almost 50% and 35AC of almost 100%. The union budget 2017 announced the removal of clause 35AC, which has been a cause of worry for the development sector. It allowed 100% tax exemption to individuals and companies that donated to certain specific charities that are required to be verified by the central government. Experts believe that removal of this provision will also remove the most valuable incentive that motivates people and organizations to donate.
With regards to crowdfunding, it means that nonprofits will have to use newer and more creative techniques that incentivise people to donate. Online crowdfunding platforms use digital and social media tools, as opportunities to draw in funds.
Therefore the time has come for more people to shift to such platforms and create new processes to sustain that conducive environment for giving in such times of unpredictable dynamism.
More and more charities have begun to see the need for digitization in achieving their social mission, and the announcements in the Union Budget of India 2017 seem to be a positive catalyst for it. It remains to be seen how nonprofit organizations react to the changes that are coming their way.
For any queries regarding online donations, you may visit Impact Guru and speak to our fundraising consultants for more clarity on recent developments.