Rule 231 of The General Financial Rules 2017 Grants to Voluntary Organisations

Rule 231 of The General Financial Rules 2017 Grants to Voluntary Organisations

Original Rule Text

“Rule 231 (1) Grants-in-aid to “Voluntary Organisations” Subject to the following terms and conditions, Grants-in-aid towards administrative expenditure may be sanctioned to voluntary organizations to ensure a certain minimum staff structure and qualified personnel to improve their effectiveness and expand their activities under the following conditions: – (i) The Grants-in-aid should not exceed twenty-five percent of approved administrative expenditure on pay and allowances of the personnel of the voluntary organisation concerned; (ii) Grants-in-aid to meet administrative expenditure to any private institutions other than the voluntary organizations should not ordinarily be sanctioned. In exceptional cases such Grants can be considered for sanction in consultation with Internal Finance Wing. Rule 231 (2) Before a Grant is released, the members of the Executive Committee of the Grantee should be asked to Execute Bonds in a prescribed format binding themselves jointly and severally to:- (i) abide by the conditions of the Grants- in-aid by the target dates, if any, specified therein; and (ii) not to divert the Grants or entrust execution of the scheme or work concerned to another Institution(s) or Organization(s); and (iii) abide by any other conditions specified in the agreement governing the Grants-in-aid. (iv) In the event of the Grantee failing to comply with the conditions or committing breach of the conditions of the Bond, the signatories to the Bond shall be jointly and severally liable to refund to the President of India, the whole or a part amount of the Grant with interest at ten percent per annum thereon or the sum specified under the Bond. The stamp duty for this Bond shall be borne by the Government. Rule 231 (3) Execution of Bond will not apply to Quasi – Government Institutions, Central Autonomous Organisations and Institutions whose budget is approved by the Government.”

Visual Summary

Eligibility for Grants

Grants-in-aid for administrative expenditure to voluntary organizations.

Administrative Expenditure Cap

Limited to 25% of approved administrative expenditure on pay and allowances.

Bond Requirement

Executive Committee members must execute bonds for compliance and non-diversion.

Executive Summary

Rule 231 of the General Financial Rules, 2017 outlines the conditions for sanctioning grants-in-aid to voluntary organizations, primarily for administrative expenditure. It stipulates that such grants should not exceed 25% of the approved administrative expenditure on pay and allowances. For private institutions, grants for administrative expenditure are generally not sanctioned, except in exceptional cases with Internal Finance Wing consultation. A crucial requirement before releasing a grant is that members of the grantee’s Executive Committee must execute bonds, binding them to adhere to grant conditions, not divert funds, and comply with the agreement. Failure to comply makes signatories jointly and severally liable to refund the grant with 10% interest. However, this bond requirement does not apply to Quasi-Government Institutions, Central Autonomous Organisations, and institutions with government-approved budgets.

In-Depth Analysis of the Rule

Rule 231 provides a framework for financial assistance to voluntary organizations, aiming to enhance their operational capacity and ensure accountability in the use of public funds. The rule distinguishes between voluntary organizations and other private institutions, imposing stricter conditions for the latter.

Breakdown of the Rule:
  • Grants to Voluntary Organisations (Sub-rule 1): Grants-in-aid for administrative expenditure can be sanctioned to voluntary organizations to help them maintain a minimum staff structure and qualified personnel. This is intended to improve their effectiveness and expand their activities.
  • Expenditure Limit (Sub-rule 1(i)): A key condition is that the grants-in-aid must not exceed 25% of the approved administrative expenditure on the pay and allowances of the voluntary organization’s personnel. This cap ensures that organizations do not become overly reliant on government funding for their core administrative costs.
  • Grants to Private Institutions (Sub-rule 1(ii)): Generally, administrative expenditure grants are not extended to private institutions other than voluntary organizations. Any exceptions require prior consultation and sanction from the Internal Finance Wing, highlighting a cautious approach to funding non-voluntary private entities.
  • Executive Committee Bonds (Sub-rule 2): Before any grant is released, the members of the grantee’s Executive Committee are required to execute bonds. These bonds legally bind them, jointly and severally, to:
    • Adhere to the specified conditions and target dates of the grant.
    • Not divert the granted funds or outsource the execution of the scheme/work to other institutions/organizations.
    • Comply with all other conditions outlined in the grant agreement.
  • Consequences of Breach (Sub-rule 2(iv)): If the grantee fails to comply with the bond conditions, the signatories are jointly and severally liable to refund the entire grant amount, or a part thereof, to the President of India, along with interest at 10% per annum. The government bears the stamp duty for this bond.
  • Exemptions from Bond (Sub-rule 3): The requirement for executing bonds does not apply to Quasi-Government Institutions, Central Autonomous Organisations, and institutions whose budgets are already approved by the Government. This exemption recognizes that these entities likely have other mechanisms for accountability and oversight.
Practical Example:

A non-profit organization, “Rural Development Initiative (RDI),” applies for a grant from the Ministry of Social Justice and Empowerment to cover administrative costs for its rural education program. RDI’s approved administrative expenditure on staff salaries is Rs. 10 lakhs. According to Rule 231(1)(i), the maximum grant-in-aid RDI can receive for this purpose is Rs. 2.5 lakhs (25% of Rs. 10 lakhs). Before the funds are disbursed, the Executive Committee members of RDI must sign a bond, committing to use the funds only for the approved administrative costs and not to divert them. If RDI later uses the funds for an unauthorized purpose, the committee members would be personally liable to refund the grant with interest.

Related Provisions

Understanding Rule 231 is enhanced by considering other related rules within the General Financial Rules, 2017:

Learning Aids

Mnemonics:
  • V.O.I.C.E. – Voluntary Organisations Interest Cap Executive Bond. (Highlights key aspects: Voluntary Organisations, Interest on refunds, Cap on administrative expenditure, and Executive Committee Bonds.)
Process Flowchart:
Voluntary Org Appliesfor GrantGrant for Admin Exp(Max 25% of P&A)Private Inst. (Exceptional)Consult Finance WingVoluntary Org. (Normal)Proceed to BondExecutive CommitteeExecutes BondsGrant ReleasedIf Breach: Refund Grantwith 10% InterestExemptions: Quasi-Govt,Autonomous Orgs

Multiple Choice Questions

1. What is the maximum percentage of approved administrative expenditure on pay and allowances that grants-in-aid to voluntary organizations can cover, as per Rule 231(1)(i) of the General Financial Rules, 2017?

  • A) 10%
  • B) 25%
  • C) 50%
  • D) 75%
Show Answer

Correct Answer: B) 25%

2. According to Rule 231(1)(ii) of the General Financial Rules, 2017, grants-in-aid for administrative expenditure to private institutions (other than voluntary organizations) are:

  • A) Always sanctioned.
  • B) Never sanctioned.
  • C) Ordinarily not sanctioned, but possible in exceptional cases with Internal Finance Wing consultation.
  • D) Sanctioned only if they match the grant amount.
Show Answer

Correct Answer: C) Ordinarily not sanctioned, but possible in exceptional cases with Internal Finance Wing consultation.

3. Before a grant is released to a voluntary organization, who is required to execute bonds binding themselves to the grant conditions, as per Rule 231(2) of the General Financial Rules, 2017?

  • A) The Head of the Department
  • B) The President of India
  • C) Members of the Executive Committee of the Grantee
  • D) The Accounts Officer
Show Answer

Correct Answer: C) Members of the Executive Committee of the Grantee

4. If a grantee fails to comply with the conditions of the bond executed under Rule 231(2) of the General Financial Rules, 2017, what is the stipulated interest rate for refunding the grant amount to the President of India?

  • A) 5% per annum
  • B) 8% per annum
  • C) 10% per annum
  • D) No interest is charged
Show Answer

Correct Answer: C) 10% per annum

5. Which of the following entities is NOT required to execute a bond before a grant is released, as per Rule 231(3) of the General Financial Rules, 2017?

  • A) Voluntary Organizations
  • B) Quasi-Government Institutions
  • C) Private Institutions (non-voluntary)
  • D) Non-Government Organizations
Show Answer

Correct Answer: B) Quasi-Government Institutions

Frequently Asked Questions

What is the primary purpose of Rule 231 of the General Financial Rules, 2017?

Rule 231 primarily governs the sanctioning of grants-in-aid to voluntary organizations for administrative expenditure, aiming to enhance their operational effectiveness while ensuring accountability.

Are all private institutions eligible for administrative grants under Rule 231 of the General Financial Rules, 2017?

No, ordinarily, grants for administrative expenditure are not sanctioned to private institutions other than voluntary organizations. Exceptional cases require specific sanction in consultation with the Internal Finance Wing.

What happens if a voluntary organization diverts grant funds in violation of Rule 231 of the General Financial Rules, 2017?

If grant funds are diverted or conditions breached, the signatories to the bond (Executive Committee members) are jointly and severally liable to refund the grant amount to the President of India, along with 10% interest per annum.

Key Takeaways

  • Rule 231 regulates grants-in-aid to voluntary organizations for administrative expenses, capping them at 25% of approved pay and allowances.
  • Private institutions (non-voluntary) are generally not eligible for administrative grants, with rare exceptions requiring specific financial consultation.
  • Executive Committee members of grantee organizations must execute bonds, ensuring compliance with grant conditions and preventing fund diversion.
  • Breach of bond conditions leads to joint and several liability for refunding the grant with a 10% annual interest.
  • Quasi-Government Institutions, Central Autonomous Organisations, and government-budget-approved institutions are exempt from the bond requirement.

Conclusion

Rule 231 of the General Financial Rules, 2017 establishes a clear and accountable framework for providing financial assistance to voluntary organizations. By setting limits on administrative expenditure, requiring executive bonds, and outlining consequences for non-compliance, it ensures that public funds are utilized effectively and transparently for their intended welfare-oriented purposes, fostering responsible governance and financial prudence in the non-profit sector.

Related posts:

  1. Rule 230 of The General Financial Rules 2017 Principles and Procedure for award of Grantsinaid
  2. Rule 229 of The General Financial Rules 2017 General Principles for Autonomous Organisations
  3. Rule 228 of The General Financial Rules 2017 Grants in Aid
  4. Rule 236 of The General Financial Rules 2017 Audit of Accounts