Non-Governmental Organisation

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  • NGOs are considered as independent of the state, and voluntary in nature. They depend on individual donations, foreign funding, and aid from different government agencies and private donors. Their work helps rid India of prejudices, corruption, illiteracy, and poverty.
Foreign NGO's and Foreign Funding:
  • Foreign NPOs seeking to establish branch or liaison offices in India are required to obtain approval from the Reserve Bank of India (RBI) under the provisions of Foreign Exchange Management Act, 1999 (FEMA).
  • The RBI is the sole registration body relevant for foreign NPOS seeking to operate in India.
  • The liaison office generally only functions as a channel of communication between the organization's home office abroad and parties in India, and is not allowed to undertake any business activity or earn any income in India.
 Foreign Funding
  • Any association can receive foreign contribution subject to the following conditions:
  • It must have a definite cultural, economic, educational, religious or social programme.
  • It must obtain registration / prior permission from the Ministry of Home
  • Affairs (Central Government)
  • It must not be prohibited under the law to receive foreign contributions.
What Are 'Foreign Contributions'?
  • Foreign contributions include articles (books, computers, relief material etc.), sums of money (whether the currency is Indian or foreign) or a security or share/stock, received from any foreign source.
Regulation, in 2010, the following cannot receive foreign contributions for any democratic, Cultural, Economic, educational, religious or social programme:
  • a candidate for election;
  • a correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
  • a judge, government servant or employee of any corporation or any other body controlled on owned by the Government;
  • a member of any legislature;
  • a political party or office bearer thereof,
  • an organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government.
Regulation to Media
  • An association or company engaged in the production or broadcast of audio news or audio-visual news or current affairs programs through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (i) or Section 2 of the Information Technology Act, 2000 or any other mode of mass communication;
  • A correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (vii).
  • Individuals or associations who have been prohibited from receiving foreign contributions.
Mode of Obtaining Permission:
  • There are two modes of obtaining permission to accept foreign contributions according to FCRA, 2010: (1) registration and (2) prior permission.
Recent Regulation
  • A new law that was signed on September 28, 2020 will greatly tighten restrict the existing Foreign Contribution Regulation Act (FCRA).
Provisions:
i) Prohibition to accept foreign contribution:
  • The Bill adds public servants (as defined under the Indian Penal Code) to this list. Public servant includes any person who is in service or pay of the government, Or remunerated by the government for the performance of any public duty.
ii) Transfer of foreign contribution:
  • Under the Act, foreign contribution cannot be transferred to any other person unless such person is also registered to accept foreign contribution (or has obtained prior permission under the Act to obtain foreign contribution). The Bill amends this to prohibit the transfer of foreign contribution to any other person.
Aadhaar of Registration
  • The Bill adds that any person seeking prior permission, registration or of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document.
  • In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.
FCRA account
  • Under the Act, a registered person must accept foreign contribution only in a single branch of a scheduled bank specified by them.
  • The Bill amends this to state that foreign contribution must be received only in an account designated by the bank as "FCRA account" in such branch of the State Bank of India, New Delhi, as notified by the central government.
Utilisation of Foreign Contribution
(Unutilized foreign fund are taken by Government)
  • Under the Act, if a person accepting foreign contribution is found guilty of violating any provisions of the Act or the Foreign Contribution (Regulation) Act, 1976, the unutilised or unreceived foreign contribution may be utilised or received, only with the prior approval of the central government.
  • The Bill adds that the government may also restrict usage of unutilised foreign contribution for persons who have been granted prior permission to receive such contribution.
Renewal of License
Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration.
The Bill provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application:
  1. Is not fictitious or benami,
  2. Has not been prosecuted or convicted for creating communal tension indulging in activities aimed at religious conversion, and
  3. Has not been found guilty of diversion or misutilisation of funds, among others conditions.
Reduction in use of foreign contribution for administrative purposes
  •  Under the Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received. Further, they must not use more than 50% of the contribution for meeting administrative expenses. The Bill reduces this limits to 20%.
Renewal of Registration
  • Under the Act, the government may suspend the registration of a person for a period not exceeding 180 days. The Bill adds that such suspension may be extended up to an additional 180 days.
Recent issue:
  • An FCRA registration is mandatory for NGOs to receive foreign funds. There are 22,591 FCRA registered NGOs.
  • Recently The foreign contribution licences of 5,968 non-governmental organisations (NGOs), including Mother Teresa's Missionaries of Charity (MoC), got cancelled on after they failed to comply with revised guidelines or apply for renewal.
  • A total of 12,580 NGO licences under the Foreign Contribution (Regulation) Act (FCRA) have expired as of December 31, 2021, of which 5,789 licences lapsed on January 1, 2021.
The Supreme court a case was filed against government in denying renewal of the foreign Contribution (Regulation) Act (FCRA) registration of the Missionary of Charity citing "audit irregularities”.
Government Argument:
  • A line of argument made by the government in the Supreme Court recently that NGOs have no fundamental right to receive "unbridled foreign contributions".
  • There is no question of fundamental rights being violated through controls of acceptance of foreign contributions by certain types of organisations as the said organisations or individuals are always open to operate with locally secured funds and achieve their expectations.
  • Foreign contributions, considering their nature and vast expanse of abuse, said by Government.
  • The government, in November, had also red-flagged the use of foreign funds to finance activities detrimental to national security and interests.
  • The government had referred to intelligence inputs which indicates money from abroad was being used to feed activities meant to destroy peace and security; it was even going to the Naxals.
  • "There is an element of national security, integrity of the nation involved here... Every transaction is watched by the MHA, from the very beginning.
  • The FCRA amendments had been introduced to “strengthen the mechanism, enhance transparency and accountability”. He had said it was noticed before the amendments came that only a miniscule portion of the foreign funds were actually used by NGOs for their registered objectives.
NGO's argument
  • The strong stand had even prompted the court to specifically ask why the MHA was involved in the FCRA as the nodal Ministry.
  • Petitioners had contended in court that the amendments were choking the flow of foreign funds to NGOs engaged in philanthropic activities in India.

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