Explained: What is FCRA that Allows NGOs to Receive Foreign Donations?

Earlier, the website displayed in-depth information on licences granted to NGOs to accept foreign contributions, quarterly accounts of foreign contributions they received, cancelled and expired licences, and NGOs' annual returns. Now, only the overall data on the number of FCRA registered associations, number of annual returns filed, and number of cancellations and expirations of licences till date is available on the website's dashboard.

What is FCRA & Why It's Needed?

The Act was first enacted in 1976, with the objective to regulate the acceptance and usage of foreign funds by individuals and associations. The primary reason was to prevent foreign entities from having undue influence on the working of governmental or non-governmental organisations in the country through contributions.

The 1976 Foreign Contribution Regulation Act was repealed in 2010 with a renewed FCRA, enacted by the UPA government. Its primary purpose was to consolidate the law on foreign funds and "prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to national interest".

The Act defines foreign contribution as "donation, delivery or transfer made by any foreign source", be it Indian or foreign, or any article valuing more than the stipulated value. The interest accrued on foreign contribution also comes under the purview of the Act. Although, personal gifts below a certain market value are exempted. It is mandatory for all associations, groups and NGOs that intend to receive foreign donations to register under the Act.

Who Can Apply for FCRA?

Any individual, association, or company registered under the Companies Act, 2013 can receive foreign contribution, provided that they obtain the FCRA registration or prior permission from the central government. The registration encompasses donations for "cultural, economic, educational, religious or social programme(s)".

Electoral candidates, members of any state or central legislature, political parties, public servants, judges, newspaper or media broadcast agency owners, editors or correspondents, are prohibited from receiving any foreign contribution under the Act.

Other conditions include person or association seeking registration to not be 'benami', and to not have been prosecuted/convicted for creating communal disharmony or espousing forceful inter-religious conversions. The person must not misuse the funds received for personal gain and mustn't be engaged in propagation of sedition.

Another condition is that the acceptance of foreign contributions must not harm the sovereignty of the country or impact the functioning of any legislature adversely. Also, it must not lead to incitement of an offence or cause inter-group disharmony.

What is FCRA Registration Process?

The applicant has to fill an online form and pay a fee of Rs 10,000, attested with the requisite documents. The status of the application can be tracked through the FCRA website.

The Act requires the MHA to approve or reject the application within 90 days. In case of failure to process the application within this period, the MHA has to inform the reason behind it to the applicant.

After the registration is complete, the NGO has to open an FCRA account in the State Bank of India, Sansad Marg, New Delhi for receipt of foreign contribution. According to an amendment under the FCRA, 2010, no organisation can receive foreign contribution in any other bank or branch. Organisations can, however, open utilisation accounts other than the main FCRA account, the details of which are to be submitted to the ministry.

FCRA Licence: Expiration, Cancellation & Suspension

The registration is valid for five years, after which the NGO has to renew it, and the application for renewal has to be submitted six months before the registration expires. If one doesn't apply for renewal, the registration is deemed to have expired and the NGO is neither allowed to receive any more foreign funds neither can it use its existing funds, without MHA's permission.

Once registered, the organisations have to file annual returns detailing the utilisation of the foreign funds on the FCRA website. Failing this, the association can be charged with penalty, or have its registration cancelled, or even face prosecution under FCRA, 2010.

If the government finds an association in violation of the Act, or if the central government is of the opinion that it is "necessary in the public interest" to cancel its certificate, it can do so. Cancellation can also be processed if any discrepancies are noticed in an NGO's audit.

The government is authorised to suspend an FCRA licence for a period of 180 days, during which period it holds power to freeze the usage of foreign funds of the concerned organisation. If an NGO's FCRA certificate is cancelled, it can re-apply only after three years.

Recent Amendments in FCRA

Earlier this month, the ministry brought in certain changes to the FCRA rules to decrease the "compliance burden on NGOs" through a gazette notification. It increased the time limit given to NGOs to inform the MHA about opening of one or more new utilisation bank accounts, from 15 days to 45 days.

The government also increased the limit up to which legislators, government servants, judges and media personnel can receive funds from family or relatives abroad without intimating the MHA from Rs 1 lakh to Rs 10 lakh. Violation of this law has been made a compoundable offence rather than a prosecutable one, with 5% fine charged on the total amount if the government is not intimated of a foreign transfer of more than Rs 10 lakh within 90 days.

In 2020, the FCRA Amendment Bill was passed in both Houses. Later, it was challenged in the Supreme Court, but the bench upheld most of the amendment's provisions.

It cut the share of foreign funds an NGO is allowed to use for administrative purposes from 50% to 20%. It also stipulated that MHA can extend an organisation's FCRA certificate suspension by another 180 days after initial suspension.

Additionally, the rule that categorises an association of a 'political nature' has been amended. Organisations receiving foreign contributions shall be considered to be of political nature "if they participate in active politics or party politics".

According to the 2010 Act, no association could transfer funds or make sub-grants to any other institution from the foreign contributions received in its designated FCRA Bank account, except for institutions with a valid FCRA certification. The amendment prohibits even that exchange.

In 2015, the NDA government notified NGOs under the FCRA to give an undertaking that the acceptance of those funds will not affect the sovereignty and integrity of India.

FCRA Licence Cancellations

Until 2011, there were around 40,000 NGOs in India registered under the FCRA. According to the data on the FCRA dashboard, this number has reduced to 16,762 active registrations as of today. Also, 20,679 registrations have been cancelled till date and 12,673 have expired.

In the three years between 2019 and 2021, the government cancelled FCRA certificates of 1,811 organisations, stated Nityanand Rai, Minister of State for the MHA, in a Lok Sabha response in March 2022. In fact, the year 2015 saw cancellation of more than 10,000 FCRA registrations by the Centre "for not filing annual returns continuously for three years", according to Kiren Rijiju's response, who was then Minister of State for MHA, in the Rajya Sabha in August 2015.

Several international and prominent NGOs such as Greenpeace India, Sabrang Trust, Amnesty International and Compassion International have come under the government's scanner for alleged violations of the FCRA. Most of them have been accused of financial irregularities or political activity. Last year, the FCRA licence of nearly 5,900 NGOs, including prominent ones like Missionaries of Charity and Oxfam India, lapsed either because the Centre did not renew their registration or they failed to apply for renewal in a timely manner. Some of these licences were restored later.