Recent cancellations of FCRA (Foreign Contribution Regulation Act) registration for several NGOs have raised concerns about regulatory compliance and governance. This overview delves into the key factors contributing to these cancellations, including violations of foreign fund utilisation rules, failure to adhere to reporting requirements, and lapses in compliance.
Introduction
The Foreign Contribution Regulation Act (FCRA) 2010 establishes the framework for how NGOs receive and manage foreign donations. The government can have an NGO’s FCRA registration cancelled if the organisation is found to misuse the funds by engaging in activities that deviate from its approved mandate or by participating in illegal activities. Such cancellations are a response to ensure compliance with FCRA regulations and to maintain the integrity of the foreign contributions received by NGOs. One of the most recent cancellations took place in the case of two household NGO names: Centre for Policy Research (CPR) and World Vision India (WVI).
FCRA Registration Cancelled For NGOs: What Does It Really Mean?
The cancellation of an NGO’s FCRA registration signifies that the organisation can no longer receive foreign contributions or utilise the funds it already possesses. More than 16000 NGOs have faced FCRA registration cancellations since the year 2015 for a range of violations. The Home Ministry had revoked the FCRA registrations of five major NGOs, including CNI, Synodical Board of Social Service and Voluntary Health Association of India in April 2024.
Statistics
- Since 2015, over 16,000 NGOs have had their FCRA registrations cancelled for violating the Act’s provisions
- As of January 22, there were 16,989 NGOs in India with valid FCRA registrations
- Nearly 6,000 NGOs lost their FCRA registrations starting 1 January 2022, either due to the Ministry of Home Affairs denying renewals or because the NGOs did not apply for renewal.
Regulating Foreign Donations
Any association, group or an NGO which is willing to take foreign donations ought to have compulsory FCRA Registration. The Act seeks to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations, with a view to ensuring that parliamentary institutions, political machinery create influence over India’s administrative mechanism. The FCRA was originally created in 1976, and experienced sweeping changes once again in 2010 with incremental follow-up amendments implemented in the new bill to strengthen oversight.
Reasons for Cancellation
The FCRA law and its earlier amendments have information about various circumstances under which the registration of an NGO can be cancelled. Knowing these reasons is essential for an NGO to stay compliant and not risk deregistration. Below are the grounds under which registration of FCRA may be cancelled:
- Offences under FCRA Provisions: defaulting in compliance with the provisions of the Act; misappropriation or non-recording/submission of funds; and not abiding by filing requirements
- Not maintaining proper accounts: Incorrect or inadequate accounts of the foreign contributions received
- False or misleading facts: Making untrue claims, providing inaccurate information during registration
- Belligerent Activity: Ridiculous and unworkable activities Contravening National Security, Public Order, or Prejudicial Activities
- Non-Compliance with Government Directives: Disobeying government directives and other regulations
- Non-Renewal of Registration: Failing to renew the registration before it lapses
- Other Specified Reasons: Cancellation based on other grounds as notified or amended by the government.
Renewals Of FCRA License
The FCRA licence must be renewed every five years. Submit the FCRA renewal application electronically in Form FC-3C to the Central Government at least six months before expiration. For entities involved in multi-year projects, apply at least 12 months before the registration expires. To renew, follow these steps:
- Go to http://fcraonline.nic.in.
- Log in to your account or create a new one.
- Fill in Form FC-3C for renewal.
- Upload the required documents.
- Pay the necessary fee and print the application.
Significance and Controversies
In reality, the FCRA regulations are important in combating money laundering and terrorism financing risks as seen from a report of the Ministry of Home Affairs In 2012. In 2023 the highest number of new FCRA registrations was given with approvals to 1,111 associations. Of the 1,615 applications received from January 2021 to February 2022 under Foreign Contribution Regulation Act (FCRA), India approved only for more than half or as many as that of rejected FCRA registration applications. 722 and later in another report mentioning callousness on part of MHA grounds number at least accounting to about one-third market share observation too. A total of 13,520 associations obtained foreign contributions amounting to ₹55,741.5 crores during these four years except in the departments where those acts were repealed highlighting the importance of rules on receipt and utilisation of funds received from abroad for organisations operating across India.
Recent Changes in FCRA Amendments
Fund Transfer Prohibition: Section 7 of the FCRA strictly prohibits any organisation from transferring foreign funds it receives to another individual or association, ensuring that foreign contributions are used only by the recipient organisation for the intended purposes.
Designated Bank Account: Mandating a designated bank account at SBI New Delhi for those organisations which have received foreign contributions (FCRA). It has been made mandatory for all the foreign funds to be deposited and handled via this account.
Shared Information: In order to maintain transparency and comply with FCRA regulations, the bank where one is registered has been entrusted with ensuring that foreign remittances receipt are reported by it alongwith source thereof for example.
Aadhaar Requirement: The government mandates the collection of Aadhaar numbers from key functionaries of organisations applying for FCRA registration, to enhance identity verification and accountability.
Cap on Administrative Expenditure: The FCRA now limits the percentage of foreign contributions that can be used for administrative expenses, reducing it from 50% to 20%, to ensure that more funds are directed towards the intended charitable activities.
Conclusion
How important it is to have the FCRA Act in place and how there are so many of these foreigners giving donations for NGOs here. Recent cancellations of registrations to organisations such as CPR and further amendments in the pipeline reflect an evolving, if rather convoluted, landscape on foreign contributions via Indian NGOs. Here’s why understanding these developments is crucial to understanding the power relationships of funding, regulation, and accountability in a non-profit sector. Consult a Vakilsearch expert on FCRA-related matters today. Get clarity on problems and get the help of a qualified person for your entire course.
Frequently Asked Questions
Are there any alternatives for NGOs if their FCRA registration is cancelled?
If an NGO's FCRA registration is cancelled, it can explore alternative funding sources such as domestic donations, grants from local foundations, or government schemes. Additionally, it may collaborate with other FCRA-registered NGOs to channel foreign funds indirectly, though this requires compliance with legal restrictions.
How often do NGOs need to renew their FCRA registration?
NGOs must renew their FCRA registration every five years. The renewal process involves submitting an application along with the necessary documents and fees within six months before the registration expires. Failure to renew on time can result in the suspension of the NGO's ability to receive foreign contributions.
Can an NGO operate without FCRA registration if it does not receive foreign funds?
An NGO can operate without FCRA registration if it does not receive foreign funds. Such NGOs can rely on domestic donations, grants, and other local funding sources. However, they are not permitted to accept any foreign contributions directly or indirectly unless they obtain the necessary FCRA registration.
How do recent amendments to the FCRA impact NGOs?
Recent amendments to the FCRA have tightened regulations, including reducing the limit on administrative expenses to 20%, requiring mandatory Aadhaar for key functionaries, and prohibiting the transfer of foreign funds to other FCRA-registered NGOs. These changes aim to enhance transparency but pose operational challenges for many NGOs.
