Addressing the 'trust deficit'....

All NGOs work for some cause. 

And their funding is under scrutiny. 

The government or its designated department gives approval after ensuring the legitimacy of the cause. 

At the time of registration, let the govt provide a seed fund, open the NGO's account in a chosen bank, and announce that the NGO can seek funds from anyone who wishes to support the cause. 

The funds would be routed through only this account. Can't transparency be ensured this way? 

And political parties also can be considered non-governmental organizations!

Quoting from NGOs’ foreign funds and a trust deficit

".... foreign funding of NGOs is dwarfed by other foreign money coming into India. Of this, the amount used for potentially questionable purposes is about 13 per cent. Let us look at another set of issues. All organisations working in society need to be transparent and accountable, including NGOs, whether domestically or foreign funded. The RTI tries to do that for the government. But beyond the NGOs, corporates and the government, there are political parties and religious organisations. 

The Supreme Court has admitted a petition saying that India’s two major political parties, the BJP and the Congress, receive illegal foreign funding. Like other major democracies, India also does not permit political parties to receive foreign funding. But no notice has been issued by the government to the political parties. One of the parties said they have returned the money, and the matter was laid to rest after that. Would other organisations, including the corporate sector and the NGOs be permitted to respond similarly? The political parties have also violated the RTI Act by refusing to comply with CIC orders. 

Meanwhile, the Maharashtra Government has passed an ordinance that an FIR cannot be filed against legislators and senior officers without prior approval to avoid frivolous allegations. But there is no protection for ordinary citizens against harassment whether by the police, income tax or other authorities. The police investigate allegations against themselves and give themselves a clean chit. There is no remedy for citizens who need some permission from the government and there is no reply for months or years. The government has publicly used the phrase ‘tax terrorism,’ but has so far done nothing to protect the citizen. It is well known that several religious organisations and their affiliates receive foreign funding. Those that indulge in anti-national and subversive activities will not be affected by the new FCRA rules — their work is underground.

So we see a trend where government officers and elected representatives, political organisations and some religious organisations and affiliates are protected, but others are harassed. This is in line with some of the erstwhile Communist countries, such as Hungary and Russia, which are also clamping down on NGOs getting foreign funding. Interestingly there is no such clampdown in the West. Are we moving towards a free market economy along with totalitarian controls? The major reason that is offered for these controls is that sometimes NGOs indulge in activities that are “detrimental to national interest, likely to affect public interest, or likely to prejudicially affect the security, scientific, strategic or economic interest of the state.” This was the classic language used by the British colonials in order to justify new laws and regulations aimed at curbing civil liberties. This is not to say that no NGO ever does anything wrong. If they break the law, they should be brought to book. There are more than adequate laws to ensure that this happens."