Not-for-profit organizations

Not for profit is a type of organization that does not earn profits for its owners. All of the money earned by or donated to a not for profit organization is used in pursuing the organization's objectives. Typically not for profit organizations are charities or other types of public service organizations. Generally, not for profit organizations can apply for a tax exempt status so that the organization is not subject to most forms of taxation. Donations made to a tax exempt not for profit organization may also be tax-deductible for the donor.

A “Section 25” company is registered under Section 25 of the Companies Act, 1956. This section provides an alternative to those who want to promote charity without creating a Trust or a Society for the purpose. It allows the formation of a company, which will exist as a legal entity in its own right, separate from the person promoting it. The crucial bit, however, is that any company under this section must necessarily re-invest any and all income towards promoting the said object or charity. In essence, unlike a regular company, where owners and shareholders can make profits or receive dividends, no money gets out of a Section 25 company. 

A Section 25 company is often preferred because it is easier to start — being exempt from statutory requirements of minimum paid-up capital. They are much easier to run than Trusts and Societies, as board meetings require a smaller quorum and requirements for calling such meetings are less rigid. It is easier to increase the number of directors, it is easier for people donating money to join or leave or transfer shares to others, and such a company is obliged to fulfill far less stringent book-keeping and auditing requirements as against a regular company. Lastly, a Section 25 company enjoys significant tax benefits. Depending on how it is registered under the Income-Tax Act, companies could benefit from income-tax exemptions, or from the provision wherein people donating money to these companies receive income deductions in their income-tax liability. Such companies are also exempt from stamp duty payments. Section 25 is preferred by several businessmen because they are conversant with the company structure, while benefits from several exemptions make it easy for philanthropy.

Two examples of this setup are the Jana Urban Space Foundation and Hunnarshala foundation.

Jana Urban Space Foundation [JanaUSP] was first established as India Urban Space Foundation (IndiaUSP) in 2007. It is a non-partisan, not-for-profit trust working on the core premise that urban planning and urban design are central to shaping vibrant cities and city regions, thus enhancing the quality of life. JanaUSP's goal is to catalyse a more thoughtful transition for a rapidly urbanizing India, through three streams of activities involving practice and policy: Urban Planning;Urban Design; Policies for Planning and Design.

The Foundation supports government agencies by preparing spatial plans for regional, municipal, and neighbourhood levels. In addition integrated design and implementation solutions have been provided for projects to improve urban design of public spaces such as roads, junctions, transport hubs, rural produce distribution markets, etc. JanaUSP provides technical expertise on policy reforms for better planning and design.

It is a private company with 0 rupee authorized capital and 0 rupees paid-up capital.

It conducts real estate activities with own or leased property. [This class includes buying, selling, renting and operating of self-owned or leased real estate such as apartment building and dwellings, non-residential buildings, developing and subdividing real estate into lots etc. Also included are development and sale of land and cemetery lots, operating of apartment hotels and residential mobile home sites.(Development on own account involving construction is classified in class 4520).] How do transactions for such large portions of land take place?

Hunnarshala also works towards environmentally sustainable towns and villages which promote local management and control, empowerment of the local community and ensure dignified living for citizens by providing basic housing and services. They have worked on disaster rehabilitation in India (Gujarat, Tamil Nadu, Kashmir and Bihar), Iran, Indonesia and Afghanistan. In this process it has supported the building of over 30 thousand Interim shelters and about 12 thousand permanent reconstructions. HSF has helped develop technical guidelines for housing on eco-friendly building material and provided training on earthquake resistance structures to engineers and masons in these countries.

Hunnarshala Foundation, a section 25 company as per the Companies Act of India,  was formed after the massive earthquake of Kutch in 2001 with objectives to promote eco-friendly construction practices, low energy building designs & technologies which are scientifically validated through research initiatives. These technologies have glimpses of local culture and aesthetics. The knowledge of these technologies is transferred to the local artisans who further link it to the contemporary market.

Further inquiry needs to be conducted on the exactly how these setups function and if this is ideal for a profession like architecture where the professional has a social responsibility that extends beyond any monetary incentive.

A good article on social responsibility: http://www.di.net/articles/the_social_responsibility_architects/