FCRA changes aim to stop unproductive NGO spending’

• The Ministry of Home Affairs in its 2021-22 annual report has highlighted the amendment brought to Foreign Contribution (Regulation) Act to discourage expenditure by non-government organizations (NGOs).

Foreign Contribution (Regulation) Act:

• The “Foreign Contribution (Regulation) Act” (FCRA) regulates foreign donations and ensures that such contributions do not adversely affect internal security.
  • First enacted in 1976, it was amended in 2010 in which a slew of new measures was adopted to regulate foreign donations.
  • After the coming of FCRA, in 2010, the FCRA, in 1976 has been repealed.
  • The FCRA act is implemented by the Ministry of Home Affairs. It is a mandatory requirement to receive foreign funds.
  • Under the new rules notified by MHA in 2015, NGOs are required to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony.

Provisions of the Act:

• The FCRA requires every person or NGO wishing to receive foreign donations to be registered under the Act.
• To open a bank account for the receipt of foreign funds in the State Bank of India, Delhi is mandatory.
• These funds can be utilized only for the purpose for which they have been received, and as stipulated in the Act.
• The receivers of foreign funds are also required to file annual returns, and they must not transfer the funds to another NGO.

Applicability:

• The FCRA is applicable to all associations, groups, and NGOs which intend to receive foreign donations.
• It is mandatory for all such NGOs to register themselves under the FCRA.

Amendments in the Act:

• Prohibition to accept foreign contributions: It bars public servants from receiving foreign contributions.
• Transfer of foreign contribution: There is a complete ban on the domestic transfer of foreign funds and a reduction of the administrative expense limit from 50% to 20%.
  • It would ensure the exact identification of office-bearers and eliminate chances of Benami/bogus entry.
  • It would also discourage expenditure on unproductive items like inflated staff salaries, posh buildings, offices, luxurious vehicles,”
• Aadhaar for registration: Aadhaar number is mandatory for all office bearers, directors, or key functionaries of a person receiving the foreign contribution, as an identification document.
• FCRA account: The foreign contribution must be received only in an account designated by the bank as an FCRA account in such branches of the State Bank of India, New Delhi.
  • No funds other than the foreign contribution should be received or deposited in this account.
• Surrender of certificate: The Bill allows the central government to permit a person to surrender their registration certificate.
• Restriction in the utilization of foreign contributions: It allowed the government to restrict the usage of unutilized foreign contributions.
  • This may be done if, based on an inquiry the government believes that such a person has contravened provisions of the FCRA.

The purpose for Amendment in 2020:

• Dubious utilization of funds:
  • The annual inflow of foreign contributions has almost doubled between the years 2010 and 2019.
  • But many recipients of foreign contributions have not utilized the same for the purpose for which they were registered or granted prior permission under the FCRA 2010.
• Threat to national security: NGOs were found not adhering the statutory compliance, hence adversely affecting the internal security of the country.
• Bringing Transparency: The new Bill aims to enhance transparency and accountability in the receipt and utilization of foreign contributions.

Registration under FCRA:

• FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
• MHA makes inquiries through the Intelligence Bureau into the antecedents of the applicant and accordingly processes the application.
• The MHA is required to approve or reject the application within 90 days, failing which it is expected to inform the NGO of the reasons for the same.
• Once granted, FCRA registration is valid for five years.
• NGOs are expected to apply for renewal within six months of the date of expiry of registration. In case of failure to apply for renewal, the registration is deemed to have expired.

When is a registration suspended or canceled?

• The government reserves the right to cancel the FCRA registration of any NGO if it finds it to be in violation of the Act.
  • Registration can be canceled for a range of reasons including, if “in the opinion of the Central Government, it is necessary for the public interest to cancel the certificate”.
  • Once the registration of an NGO is canceled, it is not eligible for re-registration for three years.

NGOs accused of violating FCRA provisions:

• Several international and well-known NGOs such as Compassion International, Greenpeace India, Sabrang Trust, Lawyers’ Collective, Amnesty International, and Ford Foundation have come under the government’s scanner for alleged violations of FCRA.

Conclusion:

• NGOs are helpful in implementing government schemes at the grassroots. They fill the gaps, where the government fails to do its job. Although the intention of the government is well directed to control the NGOs which engage in dubious activities. But if it fails to recognize the diversity of NGOs, which include world-class organizations that are recognized globally, the provisions might crush their competitiveness and creativity.