Laws Governing Non-Governmental Organizations: Nepal

Nepal has a law that governs international non-governmental organizations (INGOs)

1. What are the laws in Nepal that govern non-governmental organizations?

ï         The Social Welfare Act of 1992.

ï         And the Social Welfare Council Rules of 1992

 Aside from the Act and the Rules, the Social Welfare Council has issued a set of directives to regulate INGOs that are frequently updated. Guidelines for General Agreement, Service and Facilitation, Guidelines for Project Contract Assessment, and Protocols for Monitoring/Evaluation are the major regulations that govern INGOs in Nepal.

2. What is Nepal’s primary regulating authority for INGOs?

The Social Welfare Council (“SWC”) is Nepal’s primary regulatory body in charge of overseeing INGOs.

3. Is Social Welfare Council (SWC) approval required for INGOs before they can begin operations?

To operate the INGOs, it is necessary to obtain SWC endorsement. Before executing development, social, or welfare activities in Nepal, a General Agreement and a Project Agreement must be signed with SWC.

4. What are the most important contracts that INGOs must have in order to operate?

ï         General Consent.

ï         Project Contract.

5. What exactly does the term “General Agreement” mean?

The general agreement, which is executed between INGOs and SWC, is the main agreement that build the basis for the operation of INGOs in Nepal. It is mostly entered for a limited time and must be renewed when the time period expires.

The General Agreement contains information such as (a) the area in Nepal that the INGO wishes to support, (b) the amount of funds per year that will be used to implement projects, (c) the date of project proposal submission for Project Agreement, (e) submission of progress report, and other regulatory compliance that INGOs must submit before SWC.

6. What exactly is a Project Contract?

PA is a contract signed by an INGO, SWC, and local partners for the project implementation in Nepal.

 It includes:

ï         context,

ï         priorities, 

ï         execution process/methodology,

ï         monitoring plan

ï         budget estimate, 

ï         And other information about the projects that INGOs intend to run.

NOTE:  The PA should be prepared in collaboration with local level stakeholders, such as the Municipality, District Development Committee, and line agencies at the central and district levels, as well as local stakeholders who will profit from the project.

7. When should non-governmental organizations submit their Project Agreement applications?

The PA application must be submitted to SWC within three months of the date the General Agreement was signed. If INGOs are unable to do so within the time frame specified, the SWC will extend the deadline by three months. If the submission is not made within the specified time frame, a fine will be imposed.

8. What is the maximum number of Project Agreements that can be concluded under a single General Agreement?

A General Agreement allows INGOs to enter into more than one PA.

9. Is there a monetary limit to which INGOs must contribute?

INGOs must donate at least USD $200,000 per year. The funding for INGOs should come from sources other than Nepal.

10. Is it mandatory to appoint a local NGO to run an INGOs project?

The project cannot be completed entirely by INGOs. The project is being carried out with the help of local partners. Local partners include (a) Non-Governmental Organizations (“NGOs”), (b) Profit Not Distribution Companies, and (c) any registered entity formed with the intention of not distributing profit.

b) A minimum of two years of work experience is required for the local partner. If a qualified partner is not available in the project district, a zonal-based partner, a regional-based partner, and a central-based partner will be prioritized. In this case, a local partner should be chosen as a sub partner. Such a local partner should be ready within a year of the project’s start date. Within one year of the project’s start date, such a local partner should be ready to go.

11. Is a local office in Nepal required for non-governmental organizations (NGOs)?

Yes, INGOs must establish a local office in Nepal to conduct their operations.

12. What is the role of INGOs’ established local offices?

The local office will not have a distinct legal status of corporate personality from INGOs operating under the laws of a different country. In terms of authority and function, the local office continues to be an essential component of INGOs.

Local offices of INGOs will also need to register with Nepal’s tax authorities and obtain a Permanent Account Number (PAN).

13. What documents must be submitted in order for the general agreement to be approved?

INGOs must submit the following documents with their application:

•         The home country’s registration certificate,

•         Bylaws (Approved Constitutions),

•         If the by-laws do not clearly explain the objective, an authentic document stating its objectives is required in addition.

•         A financial commitment (minimum of USD 200,000 per year), a concept paper/project proposal, and a draft general agreement are all required (in the prescribed format)

•         A letter of authorization to conduct business in accordance with the agreement’s terms,

•         A copy of the authorized person’s citizenship, passport, and bio data, • a covering letter, and dependable funding sources

 Within three months of receiving the application, the SWC must issue a decision.

14. Can non-governmental organizations (NGOs) invest in profit-making business activities in Nepal?

INGOs are prohibited from investing in any profit-seeking institution with the intent of doing business in Nepal.

15. Is there any restriction on how INGOs can spend their funds?

Administrative costs cannot exceed 20% of total funding for INGOs.

16. Can INGOs offer financial assistance to local partners without first obtaining approval from the SWC?

It is not essential to acquire consent before providing financial assistance to local partners. However, before receiving financial support from INGOs, the local partner must first obtain SWC approval.