Foreign Funding For Indian NGO's
What does an NGO or NPO stand for?
Non-Government Organisation (NGO) or Non-Profit Organisation (NPO) refers to a non-profit establishment, a group, an organization or entrepreneurship undertaken by the activists, voluntary and social individuals. Non-governmental Organizations (NGOs) play a vital role in shaping society and elevating the weaker sections. Almost all major sectors have thousands of NGOs that operate throughout the country, ranging from health, education, food security, etc. The list of potential sectors is abounding.
The individuals working in the non-profit sector are faced with a constant conquest to stay buoyant in times of scarcity of funds. However, acquiring capital is fairly difficult and they often turn towards Donations, Government-funded campaigns, Charity, CSR, and Foreign Funding. The locally-sourced funds don’t have to pass through serious perusal, whereas foreign funding for Indian NGO’s faces scrutiny; owning to concerns about the source of the capital to the ultimate goal, everything is viewed under the lens.
FCRA & Foreign Funding for NGOs in India
The Foreign Contribution (Regulation) Act, 2010 regulates the utilization and the reception of foreign donations for churches, foreign funding for Indian NGO’s, and other similar foreign contributions made to the non-government organizations in the country. The objective is to ensure that the foreign contribution doesn’t get consumed in any malignant activity. The ministry of home affairs mentions that not all the NGOs are working truthfully towards their specific goal. Some of them are deviating funds just to uphold private profit-making ventures. This is why the Ministry of Home Affairs, Government of India has laid down rules. The defined law on foreign donations are:
- Candidates for election, journalist, columnist, judge, newspaper publications, etc are prohibited from accepting or utilizing any form of capital foreign contribution or foreign hospitality.
- There is a set mechanism laid out that regulates the inflow, usage, and reporting of foreign funding for Indian NGOs.
The term ‘foreign contribution’ used above, essentially means currency, articles whose price exceed INR 25,000. While ‘foreign hospitality’ majorly refers to an offer that is presented from a foreign source incorporating travel, boarding, transportation, lodging, or medical treatment cost. The term ‘Foreign source’ encompasses Foreign citizens, Foreign MNCs, Corporations, government agencies, trusts, trade unions, societies, etc. It also includes in its ambit international agencies that don’t fall under the scope of government specified and verified agencies, as well as individuals residing outside India.
Acceptance of foreign funding for Indian NGOs and foreign funding for churches in India
How to get foreign funding for NGO’s?
The Act declares specific NGOs that exhibit a definite cultural, economic, religious, educational, or social programme, only after the NGO acquires permission or certificate of registration as specified under the Act. The eligibility criteria for NGOs and foreign donations for churches are-
- Minimum operational experience of the NGO must be three years.
- An amount of INR 1,000,000 must have at least be spent over the three years preceding the date of application.
- Proven experience in the relevant field proposed for foreign contribution is required.
- The registration certificate must be renewed every five years in a prescribed manner.
The NGOs that don’t fulfill the criteria for registration can seek approval from FCRA to receive funding for a specific amount from specified source for a particular purpose.
In both situations, the applicant is required to file an application in the format prescribed with the Authority and submit relevant documents. Also, it is imperative that a separate bank account is dedicated to the specific purpose of foreign contribution. No other fund must be credited to this dedicated account.
The eligibility Criteria
The authority is required to conduct an investigation within a time frame of ninety days from the date of receipt of application. If the investigation comes clean with no issues the Authority grants the registration certificate. Some of the criteria that require fulfillment are:
- The applicant’s identity must be unalloyed.
- No charges must be held against the applicant. This includes being involved in communal tension, disharmony acts or convicted for any.
- The applicant’s past experience with funds utilization must be clean, with no charges of diversion of funds.
- The acceptance of any foreign contribution must not prejudicially affect the integrity & sovereignty of India.
- In case the approval is not granted within ninety days, the Authority records a reason for the refusal and shares the same with the applicant. However, the authority is not abiding to follow this. Under the RTI Act, it is provisioned that certain information can be exempted from public disclosures, this includes:
- Information that affects the strategic, scientific, security or any sort of economic interests of the state.
- Information is forbidden to be published by the judiciary.
- Information that causes a breach of legislature privilege.
- Information that includes trade secrets, confidence, and intellectual property.
Use of Foreign Funding for Indian NGO
- The funds received by the NGO must be utilized for a relevant purpose.
- The funds must not be used in any malicious activity.
- Such funds require prior approval of the Authority before you transfer the entity to an unregistered entity.
- Every asset purchased must be in the name of the NGO and not in the office bearers.
Requirement for Reporting
Every NGO that holds prior approval under the Act is liable to file an annual report. The report must have the details of income, expenditure statement, payment account, receipt, and balance sheet for the financial year of the relevant year. The financial years with no foreign contribution must still be furnished with a ‘NIL’ report.
Cancellation of Registration Certificate
FCRA holds the authority to cancel the registration certificate of an NGO under the following circumstances:
- If the NGO is found to have violated the terms & conditions of registration.
- If the NGO has made any statement that doesn’t hold true.
- If the authority feels that cancellation of registration is necessary for the public interest.
- If the NGO has disobeyed any of the provision of the Act or any order.
- If the NGO has not indulged in any activity consecutively for 2 years in its chosen field of service.
Prior to passing any order, the concerned person is provided reasonable opportunity to present their piece of mind, it is under principles of natural justice. The Authority holds the right to suspend the registration of the concerned NGO for up to 6 months, in case, the cancellation of registration goes on the pending state. Restrictions are inflicted upon the NGO, during the suspension period. These include prohibition from accepting any foreign contribution. In case of cancellation of its registration, the concerned NGO would lose its eligibility for a period of three years, after the specified period the NGO can reapply for approval and registration under the Act.