4 NGO listings by year-end; no progress on tax sops for donors yet: Ashish Chauhan

With Rs 1.8 crore raised from Zerodha, NABARD, Ashish Kacholia and Govind Iyer, it plans to train 10,000 graduates from government colleges and assist them in employment placement through its UNXT program

About four more non-profit organisations (NGOs) are set to list on India's social stock exchanges (SSE) by the end of this financial year, said National Stock Exchange's managing director and chief executive officer Ashishkumar Chauhan said on December 13.

Speaking to media on the sidelines of the first NGO's listing ceremony, Chauhan said, "Today is a historic day. The first listing marks a bridge between donors and non-profit organisations. Social stock exchange promote transparency, trust, efficiency, discoverability and cost saving. Before the financial year end, we have three or four more listings in the pipeline."

SGBS Unnati Foundation became the first NGO to list on India's social stock exchanges. With Rs 1.8 crore raised from Zerodha, NABARD, Ashish Kacholia and Govind Iyer, it plans to train 10,000 graduates from government colleges and assist them in employment placement through its UNXT program.

"Apart from NGOs, central and state governments as well as individuals doing charity work are also welcome to raise funds via the social stock exchange," he said.

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What happens after listing?

What the donors subscribe to in an SSE issue is essentially a zero-coupon, zero-principal security. It is neither a bond nor a share. The securities cannot be traded and will carry a tenure equal to the duration of a given NGO's project.

On the day of the listing, the donors are issued a certificate that recognises the amount donated. After the listing, social impact assessors will evaluate the progress of the project every one year and keep donors abreast of developments.

Initially, the minimum issue size was set at Rs 1 crore, which was later brought down to Rs 50 lakh. Similarly, the minimum application size was brought down from Rs 2 lakh to Rs 10,000.

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Tax sops for donors

Section 80G of the Income Tax Act offers tax deductions on donations made to certain funds or charities. However, this is not applicable to donations made via social stock exchange, yet. Deployment of corporate social responsibility (CSR) funds is also not allowed in SSE issues.

"Both the proposals need finance ministry's approval. There has been no progress on this yet," Chauhan said.

Tax benefits will help encourage donor participation and is one of the main demands of the industry. Currently, 39 NGOs have registered themselves with the NSE and 37 with the BSE.