The Foreign Contribution (Regulation) Act came into being originally in 1976 to largely gauge and safeguard the societal, community, political, economic, and religious domains from the foreign interests, their impact, and interference. This law was slightly tweaked in 1984 by making the registration of the organisations engaged in non-profit activities as mandatory for being eligible to receive any foreign funding. The Act was then passed in the Lok Sabha on 21 st September 2010 and in the Rajya Sabha on 23 rd September 2010. The Act received the assent of the President on 26 th September 2010, and it came into force on 1 st May, 2011.
Need for FCRA:
- The objective of Foreign Contribution (Regulation) Act, 2010 is primarily to regulate the acceptance and utilization of foreign contribution or foreign hospitality by specified persons and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activity detrimental to national interest.
- The intent of the Act is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest.
- It has a very wide scope and is applicable to a natural person, body corporate, all other types of Indian entities (whether incorporated or not) as well as NRIs and overseas branches/subsidiaries of Indian companies and other entities formed or registered in India. It is implemented by the Ministry of Home Affairs, Government of India.
Major provisions of the Foreign Contribution (Regulation) Act (FCRA):
- Under the Act, organisations require to register themselves every five years.
- As per the amended FCRA rules, all NGOs registered or granted prior permission under FCRA are now required to upload details of foreign contributions received and utilized by them every three months on their website or the FCRA website.
- NGOs now need to file their annual returns online, with the hard copy version dispensed with. The annual returns must be placed quarterly on the NGO’s website or the FCRA website maintained by the home ministry.
Eligible entities for Foreign Contribution:
- A person having a definite cultural, economic, educational, religious or social programme can accept foreign contribution after getting registration or prior permission from the Central Government.
Entities not eligible for Foreign Contribution:
- Election candidate
- Member of any legislature (MP and MLAs)
- Political party or office bearer thereof
- Organization of a political nature
- Correspondent, columnist, cartoonist, editor, owner, printer or publishers of a registered Newspaper.
- Judge, government servant or employee of any corporation or any other body controlled on owned by the Government.
- Association or company engaged in the production or broadcast of audio news, audio visual news or current affairs programmes through any electronic mode
- Any other individuals or associations who have been specifically prohibited by the Central Government.
Eligibility criteria for grant of registration:
- The Association must be registered (under the Societies Registration Act, 1860 or Indian Trusts Act 1882 or section 8 of Companies Act, 2013 etc.) normally be in existence for at least 3 years.
- Has undertaken reasonable activity in its field for the benefit of the society.
- Has spent at least Rs.10,00,000/- (Rs. ten lakh) over the last three years on its activities.
The FCRA regulates the receipt of funding from sources outside of India to NGOs working in India. It prohibits receipt of foreign contribution “for any activities detrimental to the national interest”.
- The Act specifies that NGOs require the government’s permission to receive funding from abroad.
- The government can refuse permission if it believes that the donation to the NGO will adversely affect “public interest” or the “economic interest of the state”.
This condition is manifestly overbroad. There is no clear guidance on what constitutes “public interest”.
Definition of foreign contribution:
It defines the term ‘foreign contribution’ to include currency, article other than gift for personal use and securities received from foreign source. While foreign hospitality refers to any offer from a foreign source to provide foreign travel, boarding, lodging, transportation or medical treatment cost.
Suspension or cancellation of license:
- The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days. Until a decision is taken, the association cannot receive any fresh donation and cannot utilise more than 25% of the amount available in the designated bank account without permission of the MHA.
- The MHA can cancel the registration of an organisation which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.
A regulatory mechanism to keep a watch on the financial activities of NGOs and voluntary organizations is the need of the hour. Citizens today are keen to play an active role in processes that shape their lives and it is important that their participation in democracy go beyond the ritual of voting and should include promotion of social justice, gender equity, inclusion etc.