The foreign contribution act, 2010 (FCRA, 2010) is a ratification that is rather unknown.

It was felt that the former act of 1976 (FCRA, 1976) required an absolute repair as it had been unsuccessful to maintain swiftness with the shifting visage of the Indian economic growth. In fact, there was a lobby that felt that the law had outlived its utility and needed to be scraped. Chiefly after the prologue of the Prevention of Money Laundering Act, 2002, it was considered that FCRA did not dole out any significant rationale.

In this article we will discuss the basic provisions of FCRA 2010 with particular spotlight on the alterations brought about and its effects on NGOs and resolutions.

The basic purpose of FCRA 2010 as mentioned in the preamble to the act is “to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”

The affirmed purpose of the Act is to control and proscribe recognition and employment of foreign involvement for any activities unfavorable to national interest. As such the provisions of FCRA 2010 can be largely classified in the subsequent three sorts:

(1) Prohibition on certain persons from accepting foreign contribution.

(2) Restriction on certain persons from accepting foreign hospitality.

(3) Regulating the acceptance of foreign contribution by persons having a definite cultural, economic, educational, religious or social program. NPOs are covered under this category.

Comportment of the Act

The organizations on the lookout for foreign backing are now required to acquire registration and aforementioned authorization from the Ministry of Home Affairs by making application in the set format and endowing details regarding the activities of the Organization and the financial records. This act has fetched the Foreign Funding of the NGOs registered in India under scrutiny by the Central Government. The Ministry of Home Affairs has been authorized under Section-9 of the Act to forbid any institution from receiving foreign funding on several grounds stated therein. The organizations are required to have a track record of three years of its activities prior to obtaining permission from the Ministry.

The brunt was felt when the endowment to several NGOs were inquired and even cancelled or barred under this Act by the bureau affirming the safeguarding of public interest as the rationale following such annulment. The government lately revoked permissions of more than a dozen NGO’s to obtain contributions from foreign sources and the request of about 4000 small NGOs were turned down on the argument of non realization of reporting requirements under FCRA.

Denigration of the Act

Under the Rule 3(vi) of the FCRA the government can exclude any group which organizes bandhs, or strikes to support their demands. Under Section-13 of FCRA the government has got the power to suspend the certificate of registration by any NGO for any reasons in writing. Hence this section gives a blanket power to the government to suspend the registration of any NGO. Ironically Insaaf[1] an NGO which petitioned in Supreme Court against Section -13 for giving an unimpeded power to the Central Government was suspended under that very provision.

Solutions for the NGOs

The FCRA 2010 is on the whole an old wine in a new bottle. In a lot of respects the provisions have been made far more rigorous than what they were under FCRA 1976. Philanthropy is embedded in the Indian consciousness and a cosmic number of organizations do yeoman work, they serve the most indispensable problems of the neediest of the needy, where government tackle has mournfully failed. Such organizations need to be buoyant and endowed with a scaffold where they can function competently and successfully. Conversely the actuality is that charitable trusts have found themselves beleaguered from numerous sides in current years. It is ill-fated that for the misdemeanors of a few, all charitable entities have to covenant with castigatory legislation. The Foreign Contribution Regulation Act, 2010 is one more of such regulations that is only going to add to the already arduous burden that such trusts have to tolerate.

For healthy and a smooth execution, we hence suggest the NGOs to:

  • Keep a track record of the three years of its activities prior to obtaining approval from the ministry.
  • File annual returns before the authority under this Act.
  • Maintain all the regulatory requirements and compliances required under the Act.

[1] Insaaf is a coalition of 700 organizations active in anti-communal mobilizations, anti-displacement struggles, and campaigns against destructive projects such as Posco, Koodankulam Vedanta, and Special Economic Zones.