FCRA, the law related to NGO funding

The Ministry of Home Affairs (MHA) has removed some crucial data from the Foreign Contribution (Regulation) Act (FCRA) website.

• The information removed includes the annual returns of NGOs and a list of NGOs whose licences have been cancelled.
• The FCRA website used to
  • maintain detailed data on NGOs granted licences;
  • NGOs granted prior permission for receiving foreign contribution;
  • NGOs whose licences have been cancelled, and
  • the ones whose licences are deemed to have expired
  • It also had the annual returns of NGOs.

What is the FCRA?

• The FCRA was enacted during the Emergency in 1976 in an atmosphere of apprehension that foreign powers were interfering in India’s affairs by pumping in funds through independent organisations.
• These concerns had been expressed in Parliament as early as in 1969.
• The law sought to regulate foreign donations to individuals and associations so that they functioned “in a manner consistent with the values of a sovereign democratic republic”.
• An amended FCRA was enacted under the UPA government in 2010 to “consolidate the law” on utilisation of foreign funds, and “to prohibit” their use for “any activities detrimental to national interest”.
• The law was amended again by the current government in 2020, giving the government tighter control and scrutiny over the receipt and utilisation of foreign funds by NGOs.
• Broadly, 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 the foreign funds in State Bank of India, Delhi, and to utilise those funds only for the purpose for which they have been received and as stipulated in the Act.
• They are also required to file annual returns, and they must not transfer the funds to another NGO.
• The Act prohibits receipt of foreign funds by candidates for elections, journalists or newspaper and media broadcast companies, judges and government servants, members of legislature and political parties or their office-bearers, and organisations of a political nature.

What is the process of granting of FCRA registration?

• Online application: NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation.
  • FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
• Inquiry through IB: Following the application, the MHA makes inquiries through the Intelligence Bureau (IB) into the antecedents of the applicant, and accordingly processes the application. Under the FCRA, the applicant (should not):
  • should not be fictitious or benami
  • should not have been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another
  • should not have been prosecuted for or convicted of creating communal tension or disharmony
  • should not have been found guilty of diversion or misutilisation of funds
  • should not be engaged or likely to be engaged in the propagation of sedition
• Approval or rejection: The MHA is required to approve or reject the application within 90 days.
  • In case of failure to process the application in the given time, the MHA is expected to inform the NGO of the reasons for the same.

For how long is approval granted?

• Validity: Once granted, FCRA registration is valid for five years.
• Renewal: 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, and the NGO is no longer entitled to receive foreign funds or utilise its existing funds without permission from the ministry.