Context: Ministry of Home Affairs which is the nodal ministry for administration of FCRA Act registered 1,111 NGOs and associations enabling them to receive foreign donations. This is the highest number of FCRA registrations since 2014. Registration under FCRA is mandatory to receive foreign donations. The NGO must have a definite cultural, economic, educational, religious, or social program to get registered under the FCRA Act.
FCRA has been contentious for NGO sector as 6,000 NGOs have been de-registered from January 1, 2022, by the Ministry of Home Affairs. This curbed funding for these NGOs to receive funding forcing them to scale down their operations.
BASICS OF FCRA
Applicability of FCRA
- As per Section 1(2) of FCRA, 2010, the provisions of the act shall apply to:
- Whole of India
- Citizens of India outside India.
- Associate Branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India
Entities that can make foreign contribution
- Any “Person” can receive foreign contribution subject to following conditions.
- It must have a definite cultural, economic, educational, religious, or social program.
- It must obtain FCRA registration/prior permission from Central Government, specifically Ministry of Home Affairs.
- It must not be prohibited under Section 3 of FCRA, 2010.
Entities prohibited under FCRA to receive FCRA
- As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution:
- Candidate for election.
- Correspondent, columnist, cartoonist, editor, owner, printer, or publisher of a registered newspaper.
- Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government.
- Member of any legislature.
- Political party or office bearer thereof.
- Organization of a political nature as may be specified by the Central Government.
- Association or company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmes through any electronic mode, or any other electronic form or any other mode of mass communication.
- Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (g).
- Individuals or associations who have been prohibited from receiving foreign contribution.
Permission to accept Foreign Contribution
- There are two modes of obtaining permission to accept foreign contribution according to FCRA, 2010:
- Registration
- Prior Permission
Eligibility criteria for grant of registration
- For grant of registration under FCRA, 2010, the association should:
- Be registered under an existing statute like the Societies Registration Act, 1860 or Indian Trusts Act, 1882 or Companies registered under Section 8 of the Companies Act, 2013 for Charitable Purposes
- Normally be in existence for at least 3 years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized.
Eligibility criteria for grant of prior permission
- Prior permission is granted for receipt of a specific amount from a specific donor for conducting specific activities/projects. For this purpose, the association should meet following criteria:
- Be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 etc.
- Submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given; and
- For Indian recipient organizations and foreign donor organizations having common members, FCRA Prior Permission shall be granted to the Indian recipient organizations subject to it satisfying the following:
- The Chief Functionary of the recipient Indian organization should not be a part of the donor organization.
- At least 75% of the office-bearers/ members of the Governing body of the Indian recipient organization should not be members/employees of the foreign donor organization.
- In case of foreign donor organization being a single person/individual that person should not be the Chief Functionary or office bearer of the recipient Indian organization.
- In case of a single foreign donor, at least 75% office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.
Conditions to be met for Grant of Registration and Prior Permission
- In terms of Sec.12 (4) of FCRA, 2010, the following shall be the conditions for the grant of registration and prior permission:
- The 'person' making an application for registration or grant of prior permission-
- is not fictitious or benami.
- has not 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.
- has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country.
- has not been found guilty of diversion or mis-utilization of its
- is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends.
- is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes.
- has not contravened any of the provisions of this Act.
- has not been prohibited from accepting foreign contribution.
- the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him. the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.
- Acceptance of foreign contribution by association/ person is not likely to affect prejudicially.
- the sovereignty and integrity of India.
- the security, strategic, scientific, or economic interest of the State.
- the public interest.
- freedom or fairness of election to any Legislature.
- friendly relation with any foreign State.
- harmony between religious, racial, social, linguistic, regional groups, castes, or communities.
- the acceptance of foreign contribution
- shall not lead to incitement of an offence.
- shall not endanger the life or physical safety of any person.
- The 'person' making an application for registration or grant of prior permission-
Need for Foreign Contribution (Regulation) Amendment Act, 2020
- Increase in Annual Flow of Income: Annual inflow of foreign contribution had almost doubled between the years 2010 and 2019. However, many recipients of foreign contribution have not utilized the same for the purpose for which they were registered or granted prior permission under the said Act.
- Lack of Compliance such as submission of annual returns and maintenance of proper accounts. Due to this, the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-Governmental organisations, during the period between 2011 and 2019.
- Criminal investigations due to misappropriation of funds by NGOs was initiated against dozens of such non-Governmental organisations which indulged in outright misappropriation or misutilization of foreign contribution.
- Need to strengthen compliance mechanism, enhancing transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year.
- Facilitate genuine NGOs or associations who are working for the welfare of the society.
Foreign Contribution (Regulation) Amendment Act, 2020 provides for
- Include "public servant" within its ambit, to provide that no foreign contribution shall be accepted by any public servant.
- Prohibit any transfer of foreign contribution to any association/person.
- Reduce the limit for defraying administrative expenses from existing "fifty per cent" to "twenty per cent.
- Insertion of a new Section 12A empowering the Central Government to require Aadhaar number, etc., as identification document.
- Enabling the Central Government to permit any person to surrender the certificate granted under the Act.
- Ensure that every person who has been granted certificate or prior permission under section 12 shall receive foreign contribution only in an account designated as ‘‘FCRA Account’’ which shall be opened by him in such branch of the State Bank of India at New Delhi, as the Central Government may, by notification, specify and for other consequential matters relating thereto.
Supreme Court Judgement upholding FCRA Amendment 2020
Supreme court has upheld the amendment to the FCRA Act in 2020. There was challenge from parties that the amendment is constraining and seems to constrain freedom of NGOs sector to draw foreign aid and constrains their operation.
- Strict Regulatory Framework: The amendments only provide a strict regulatory framework to moderate the inflow of foreign funds into the country.
- Uncontrolled flow of money may Impact socio-economic structure: The presence/inflow of foreign contribution in the country ought to be at the minimum level, if not completely avoided. The influence may manifest in diverse ways, including in destabilizing the social order within the country,
- NGOs must look within for donors: The court said charity could be found at home and NGOs could look within the country for donors.
- Foreign Donation Not Good for a Self-Reliant Country like India: The third-world countries may welcome foreign donations, but it is open to a nation, which is committed and enduring to be self-reliant and variously capable of shouldering its own needs, to opt for a policy of complete prohibition of inflow/acceptance of foreign donation from a foreign source.
- Reflects Badly on the Country: Unregulated inflow of foreign donations would only indicate that the government was incapable of looking after its own affairs and needs of its citizens.
- Unregulated foreign funding strains government’s efforts in regulation: The court noted how 19,000 certificates of registration under the FCRA were cancelled for violating statutory compliances. The annual inflow of foreign contribution had almost doubled between the years 2010 and 2019. There was a spurt of criminal investigations. Donations had been re-routed. Successive transfers and creation of a layered trail of money had made it difficult to trace the flow and final utilisation of foreign donations despite the “firm regime” in place since 2010.
- The amendments do not prohibit inflow of foreign contributions but are a regulatory measure to permit acceptance by registered persons or persons having prior permission to do so with condition that they must themselves utilise the entire contribution.
- Restrictions are Reasonable: The court held that the restrictions in the amendments were “reasonable” and “founded on intelligible criteria”. It fixed accountability on the recipients, increased the efficacy of “continual supervision” over foreign contributions, did not discriminate and served the purpose of the FCRA 2010.
- Court allowed use of Indian Passport instead of Aadhaar: The court read down one of the provisions - Section 12(A) of 2020 Amendment Act, which mandated the production of Aadhaar card for registration. The Bench allowed the office-bearers of NGOs to use their Indian Passports as an identification document.
Concerns against FCRA Amendment
- UN Human Rights Council in its Resolution 22/6 on Protecting Human Rights Defenders declared that “no law should criminalize or delegitimize activities in defence of human rights on account of the origin of funding”.
- UN Special Rapporteur on Assembly and Association has clarified that controls in laws should not “unduly obstruct the legitimate work” and need to be “fair, objective and non-discriminatory, and not be used as a pretext to silence critics”.
- Fail to comply with International Legal Obligations: ICJ claimed that FCRA Amendment fails to comply with India’s international legal obligations and constitutional provisions to respect and protect the rights to freedom of association, expression, and freedom of assembly.
- Impose Arbitrary Obstacles by the Government: ICJ stressed that the Bill’s provisions would impose arbitrary and extraordinary obstacles on the capacity of human rights defenders and other civil society actors to conduct their important work.
- Against Civil Societies in India: ICJ noted that the restrictions in the Bill continued a larger pattern of threats and harassment faced by civil society in India. The Indian Government has sought to restrict human rights defenders from traveling outside India and used overbroad laws like sedition (Section 124A, Indian Penal Code) and Unlawful Activities Prevention, 1967 Act to arbitrarily arrest human rights defenders.
- Restrict Access to Foreign Funding: FCRA 2020 provides for overly broad rules and measures which would effectively restrict access to foreign funding particularly for public servants and smaller non-governmental organizations.
- Adds government’s oversight: Adds onerous governmental oversight, additional regulations and certification processes, and operational requirements, while simultaneously reducing the limit of administrative expenditure that can be allocated to foreign contributions to 20% from previous 50%.
Importance of NGOs for National Development
- Key Drivers of inter-governmental negotiations ranges from regulation of hazardous wastes to a global ban on land mines and the elimination of slavery.
- Promotes legal reforms pushes government to undertake important reforms through legislations affecting rights and services for vulnerable sections of the society.
- Helps in Capacity Building and filling development deficit in diverse sectors health, education, environment awareness, social inclusion, skill enhancement etc.
- Helps alleviation of Poverty & Hunger
- Supplements electoral democracy by updating governments regularly of public opinion in favour of certain issues or concerns on certain welfare schemes.
- Ensures Community Participation by raising awareness on important national, Regional or Local Issues helps to strengthen participatory democracy in India.
- Helps government to understand challenges of industry eg: Finance Ministry organize sessions with FICCI, IFCI to understand concerns and challenges of different industrial sector.
- Competition among civil societies is beneficial and productive for citizens & government.
- Provides platform for vulnerable sections to raise their voice eg concerns of prostitutes, LGBT, HIV victims, victims of custodial torture, manual scavenging, Dalit violence.
- Ensures Women Empowerment by providing livelihood measures.
Criticism of NGOs
- Unnecessary PIL filed in Courts without sufficient evidence. This has led to an increase of PIL culture in the High Courts & Supreme Court.
- Promote Vested Interests of groups whom they wish to support.
- Some NGOs involved in misuse of foreign funding received under FCRA.
- Create additional pressure on the government by providing misleading arguments.
- Cannot be said to be truly democratic as they represent small section of the society including those who fund their functioning.
Very informative. The Indian experience with reference to the NGOs receiving foreign funds have been alarmingly negative. The data of foreign donations received indicate overbearing presence of Christian organisations in the US and Europe, which are likely to cause unwarranted socio-religious disharmony in the delicate fabric of Indian populace. These organisations, invariably, under the disguise of various popular humanitarian work, end up being involved in religious converson--by lure or blackmail! These activities have dangerous potential of causing social and religious disharmony and thereby, cause immense damage to India.
The above donors (the Christian organisations), should not compare India with other nations such as those in Africa or South America. In comparison, India already have a majority of non-Christian population that observes religious conversion dangerous and a threat to their own existence.
The International call under "Human Rights" is pretty confusing and inconsistent to their own actions. Such Human Rights can sought to be preserved in 'unstable countries' that are facing political upheavals and religious rivalries and especially, where the state rule is not empowered enough to protect the Human Rights of its citizen. Therefore, the criticism of UN-based or otherwise Human Right activist groups, in unwarranted where India is concerned.
NGOs in India, should rather put efforts on obtaining contributions within the country, from the government itself and also from several large commercial enterprises.