On July 24, 2018, the Union State Minister of Home Affairs in India, Kiren Rijiju announced that nearly 19,000 NGOs in the country have been banned from receiving foreign funds under the Foreign Contribution (Regulation) Act (FCRA) of the Government of India since the year, 2011.
Foreign funds are a major source of financial support for NGOs in India. Various private foundations, foreign governmental agencies, and individuals provide money for charitable causes in India in form of donations and project funding support. These grants are used by recipient organizations to implement welfare programmes for the needy and the poor across rural and urban areas of the country.
However, the process of receiving these grants has been subjected to law ever since the FCRA was drawn up in 1976 to regulate the acceptance of foreign contribution which includes financial donations as well as foreign hospitality.
In the recent years, the government has taken a strong interest in regulating the NGOs receiving foreign grants. The FCRA, 2010 was enacted in the Parliament of India by the 42nd Act of 2010 “to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”
(Ad) Stop getting irritated with excessing advertisements. View the information you want quickly on a clean, ad-free and exclusive Member Dashboard that offers tools to search for grants, view latest grant opportunities, upcoming deadlines, sample proposals, downloadable ebooks and also organize your favourites! Learn more.
A number of incidents generated enormous interest on the FCRA during the recent years. For example, Greenpeace India lost its FCRA license in 2015 for obstructing development activities in the country by organizing protests against thermal power, nuclear power, coal, and aluminum mining.
An Intelligence Bureau Report called ‘Impact of NGOs on Development’ published in 2014 warned that many nonprofit organizations in the country with support from international donors were planning to disrupt the developmental activities, endangering the Indian economy.
(Ad) Are you still finding it difficult to search for donors online? Join Premium and use our powerful Donor Search mechanism to find relevant donors based on your country and location or keyword. Our specially developed algorithm will search across the internet for the most relevant and useful donors of your interest willing to fund your work. Learn more.
Besides, the protests against Kudankulam Nuclear Power Plant in the southern part of India exposed deeper connections between protesting NGOs and the foreign funds received in their bank accounts from US-based donors.
These incidents led to increased monitoring and vigilance of the foreign flow of funds to NGOs in the country. According to a December 2017 news report, foreign funding for NGOs in the year 2015-16 was around Rs. 17,773 but it went down drastically to Rs. 6,499 crore due a high number of FCRA cancelations.
(Ad) Not able to keep track of so may different grant opportunities and their deadlines? No problem! fundsforNGOs Premium has a handy tool called "Deadline Calendar." This tool will help you keep track of all upcoming grant opportunities and their deadlines and view them in a beautiful calendar format. Learn more.
According to the Ministry, most NGOs get banned from receiving foreign funds is because of their failure to submit annual returns and completed balance sheets at the end of the fiscal year. Under the FCRA registration, it is mandatory for NGOs to submit their annual returns every year in order to continue receiving the foreign funds.
Below are some of the tips for NGOs to avoid cancelation of their FCRA registration:
(Ad) Are you looking for readymade proposals? fundsforNGOs Premium has a vast collection of Sample Proposals from successful grantees around the world. These proposals are available for viewing so that you can quickly get new ideas, best practices, lessons learned and develop your proposal in the perfect manner. Learn more.
Filing of Annual Returns
Under the FCRA, 2010, it is mandatory for all FCRA-registered NGOs to submit their annual returns online via https://fcraonlineservice.nic.in tithing a period of nine months from he closure of the year i.e. by 31st December every year.
(Ad) How to raise funds? Where can I find a list of donors for my area of work? How to write proposals? How can I submit a grant request to USAID, the European Commission or the Gates Foundation? How can I use Social Media to promote my work? We have developed powerful resources in the form of Ebook and Articles covering all this information and more. Learn more.
Separate Maintenance of Accounts and Records
NGOs have to maintain a separate set of accounts and records exclusively for the foreign contribution and submit the prescribed Form FC-4 duly accompanied with scanned copies of income and expenditure statement, balance sheet and statement of receipt and payment, which is certified by a Chartered Accountant.
Submit Annual Returns if you have not received any Foreign Funds
As per the Act, it is mandatory for FCRA-registered organizations to submit annual returns as ‘NIL’ if they have not received any foreign contribution during that financial year. Returns also have to be filed even when the NGO has not utilized any of the foreign funds received during the financial year.
Renewal of FCRA Certificate
(Ad) Are you fed up of receiving non-relevant, non-useful and pointless funding alerts and updates in your email? Not anymore! With fundsforNGOs Premium, you can configure what type of funding updates you want to receive, select specific countries and areas of work and receive information only about them. Save your time by getting the most relevant and useful updates in your email. Learn more.
It is recommended that if your FCRA certificate is due for renewal, try to apply for it at least six months prior to the date of expiry.
(Ad) How will you feel when you view grants for all countries around the world? fundsforNGOs Premium has a World Map of Grants that offers open and live grants for all the countries in one single view. Click on any country, and you can view the latest grants updated in real-time. Learn more.
Make sure that you report any change in your organization’s mission, objectives, work, key members, bank account, address etc to the Ministry.
Registration at DARPAN portal
(Ad) There are so many NGO Jobs, but what about for my country and area of work? fundsforNGOs Premium has a "Jobs Database" where you can not only search jobs but also receive job alerts in your email based on your country (or countries) and areas of your profession. Learn more.
NGOs under FCRA should register themselves separately at the DARPAN portal of the NITI AAYOG and obtain a DARPAN ID. This process has other advantages such as receiving local grants from the Government of India.
Avoid Use of Cash
(Ad) Get Assured responses from our Customer Support Team. Premium Members get assured responses to their questions regarding fundraising and resource mobilisation in addition any technical problems you encounter when using the premium website. Learn more.
Avoid use of ATM or Debit Cards or withdrawal of cash from bank accounts in which you have received the foreign funding. As these accounts are monitored closely, withdrawal of cash or transacting in cash can cause issues for the NGOs.
Avoid Using Foreign Funds for Investment purpose
NGOs should not try to divert foreign funding to other purposes such as for investment or for fixed deposits, mutual funds etc.
Transferring Foreign Funds to Other Organizations
Foreign funds under the FCRA should not be transferred to unregistered organizations without the prior approval from the Ministry
Foreign Contribution for Administrative Purpose
Avoid spending more than 50% of the foreign contribution towards administrative expenses.
Avoid Mixing of Accounts and Receipts
NGOs under FCRA should not mix their FCRA-approved bank accounts with their local bank accounts and the receipts should be kept separately. Only one separate bank account needs to be maintained for accepting foreign funds.