consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality oreign Contribution Regulation Act (FCRA), 2010 has been enacted by the Parliament to by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest and for matters connected therewith or incidental thereto. FCRA 1976 was repealed after the coming of FCRA 2010.
Ideally, there are two ways in which an organization can obtain registration as per FCRA 2010:
- Normal registration
- Prior permission
In order to be eligible for the normal registration, there are a few prerequisites:
- The applicant must be registered under the Societies Registration Act, 1860
or the Indian Trusts Act, 1882 or registered as Section 8 Company as per the Companies Act, 2013 or any such Act as may be required.
- Must have made reasonable contributions by undertaking activities in its chosen field for the benefit of society.
- Must have spent a minimum of Rs. 10,00,000 in the last 3 years towards achieving its objectives (Excludes administrative expenditure).
- Must submit the copies of the financial statements of the last 3 years that are duly audited by qualified chartered accountants.
- If a newly registered entity likes to get foreign contributions, then an approval for a specific purpose, specific activity, and from a specific source can be made to the Ministry of Home Affairs via the Prior Permission (PP) method.
The Prior Permission route is ideally suited for those organizations which are newly registered and would like to receive foreign contributions. This is granted for receipt of a specific amount from a specific donor for carrying out specific activities/ projects.
The association must:
- Submit a specific commitment letter from the donor to the Ministry of Home Affairs which indicates:
– Amount of contribution given
– Purpose for which it is proposed to be given
- Where the Indian recipient organization and foreign donor organization have common members, the following conditions need to be met:
– The Chief Functionary of the Indian organization can’t be part of the donor organization.
– At least 51% of the members/office-bearers of the governing body of the Indian recipient organization should not be employees/members of the foreign donor organization.
When an organisation is placed on watchlist, it has an effect that any payment or foreign contribution by the donor and donor agency shall not be credited by the receiving banks into the accounts of beneficiaries/ recipients except with the prior permission of the ministry of home affairs.The MHA can place any NGO under ‘watch list’ and impose restrictions if NGOs are found violating rules. The MHA informs the RBI which then asks banks to alert any transaction to the accounts of the beneficiary NGOs from the foreign donors.
Over 1,800 NGOs and academic institutes found to be violating laws were banned by the government from receiving foreign funds in 2019. Among those whose registration had been banned included University of Rajasthan, Allahabad Agricultural Institute, Young Men’s Christian Association, Gujarat and Swami Vivekananda Educational Society, Karnataka. The FCRA registration of these organisations were cancelled mostly due to their failure to submit annual income and expenditure statements on foreign funding for up to six years despite repeated reminders. As per FCRA guidelines, registered associations are required to submit electronically an online annual report with scanned copies of income and expenditure statements, receipts and payment account, balance sheet, etc., for every financial year within nine months of the closure of the financial year.