Rule 231 of The General Financial Rules 2017 Grants to Voluntary Organisations
Original Rule Text
Visual Summary
Grants-in-aid for administrative expenditure to voluntary organizations.
Limited to 25% of approved administrative expenditure on pay and allowances.
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:
- Rule 228 of The General Financial Rules, 2017 General Principles for Grants-in-aid: This rule lays down the general principles for sanctioning grants-in-aid to various entities, including voluntary organizations, providing the broader context for Rule 231.
- Rule 230 of The General Financial Rules, 2017 Principles and Procedure for Award of Grants-in-aid: This rule details the application process, maintenance of lists, scheme viability, and other conditions for awarding grants, which are directly relevant to the grants mentioned in Rule 231.
- Rule 232 of The General Financial Rules, 2017 General Principles for Award of Grants-in-aid for Centrally Sponsored Schemes: While Rule 231 focuses on voluntary organizations, Rule 232 provides principles for grants to State Governments for Centrally Sponsored Schemes, offering a comparative perspective on government funding mechanisms.
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:
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.