Introduction

In recent developments, the Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organizations (NGOs), the Centre for Policy Research (CPR) and World Vision India (WVI), has been cancelled.

FCRA: Regulating Foreign Donations

Objective: FCRA regulates foreign donations to ensure they do not adversely affect India’s internal security.
Compulsory Registration: Any association, group, or NGO intending to receive foreign donations must register under FCRA.
Amendments: The FCRA was first enacted in 1976 and amended in 2010, with further changes in 2020.

Initial Registration: NGOs initially register under FCRA for five years, with the possibility of renewal if they adhere to the specified norms.
Scope of Usage: Registered groups can receive foreign contributions for various programs, including social, educational, religious, economic, and cultural.

Cancellations: Since 2015, over 16,000 NGOs have had their FCRA registrations cancelled due to violations.
Active NGOs: As of January 22, 16,989 FCRA-registered NGOs were active in India.
Expired Registrations: Nearly 6,000 NGOs’ FCRA registrations ceased from January 1, 2022, either due to the MHA’s refusal to renew or NGOs not applying for renewal.

Risk of Money Laundering and Terrorism Financing: The MHA’s 2012 report highlighted the vulnerability of the NGO sector to money laundering and terrorist financing risks.
Record Number of Registrations: In 2023, 1,111 associations received fresh FCRA registrations.
Reasons for Rejection: Out of 1,615 applications received for FCRA registration in 2021 and 2022, 722 were granted clearance, while 225 were rejected.
Foreign Contribution Amount: In 2019-2022, a total of 13,520 associations received ₹55,741.51 crore in foreign contributions.

CPR Allegations: The MHA accused CPR of diverting foreign donations to fund protests and legal battles against developmental projects, affecting India’s economic interests. CPR’s publication of current affairs programs using foreign funds was deemed a violation.
CPR’s Response: CPR deemed the ministry’s decision incomprehensible and disproportionate, challenging the reasoning behind equating policy reports on their website with current affairs programming.
WVI’s Allegations: WVI had its FCRA registration cancelled for alleged violations from 2012-13 to 2020-21. WVI received the highest amount of foreign donations among all NGOs registered under the Act in 1986.

The FCRA underwent significant amendments in 2020, introducing several restrictions:

Fund Transfer Prohibition: Section 7 of the Act prohibits the transfer of foreign funds received by an organization to any other individual or association.
Designated Bank Account: Recipients must open an FCRA bank account in a designated SBI branch in New Delhi, mandating that all foreign funds be received in this account.
Shared Information: The designated bank informs authorities about foreign remittances with source and receipt details.
Aadhaar Requirement: The Government can collect Aadhaar numbers of key functionaries of organizations applying for FCRA registration.
Cap on Administrative Expenditure: The portion of funds allowed as administrative expenditure was reduced from 50% to 20%.

Arbitrary Restrictions: NGOs criticize the prohibition on fund transfer as arbitrary and restrictive.
Non-Sharing of Funds: This prohibition hinders the sharing of aid received as material, impacting collaborative efforts.
Inconvenient Designated Bank: The requirement for a Delhi-based bank account is inconvenient for NGOs operating elsewhere.
Government’s Justification: The government maintains that these amendments are necessary to prevent foreign state and non-state interference in India’s internal affairs and to curb malpractices in fund utilization.

The FCRA plays a crucial role in regulating foreign donations to NGOs in India.
The recent cancellations of CPR and WVI registrations, coupled with the amendments, highlight the complex and evolving landscape of foreign contributions and their impact on Indian NGOs.
Understanding these developments is essential for comprehending the dynamics of funding, regulation, and accountability in the non-profit sector.