Foreign Contribution Regulation Act (FCRA) Explained

In recent developments, the Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organizations (NGOs), the Centre for Policy Research (CPR) and World Vision India (WVI), has been cancelled.

Key Points

• The Ministry of Home Affairs (MHA) accused CPR of redirecting foreign donations to support protests and legal challenges against development projects, claiming misuse of funds to impact India’s economic interests.
• The allegation includes the violation of FCRA norms through the production of current affairs programs, citing CPR’s report on air pollution as an example.
• The MHA asserts that publishing such programs with foreign funds contravenes Section 3 of the FCRA.
• Additionally, the registration of World Vision India was revoked for alleged FCRA violations spanning from 2012-13 to 2020-21.
• WVI is the recipient of the highest amount of foreign donations among all NGOs registered under the Act in 1986.
• CPR is recognised as a not-for-profit society by the Government of India, and contributions to the Centre are tax exempt.
• CPR receives grants from the Indian Council for Social Science Research (ICSSR), and is a Department of Science and Technology (DST) recognised institution.

The Role of the Foreign Contribution Regulation Act (FCRA):

• The FCRA was enacted during the Emergency in 1976 amid apprehensions that foreign powers were interfering in India’s affairs by pumping money into the country through independent organisations.
• The law sought to regulate foreign donations to individuals and associations so that they functioned “in a manner consistent with the values of a sovereign democratic republic”.
• An amended FCRA was enacted under the UPA government in 2010 to “consolidate the law” on utilisation of foreign funds, and “to prohibit” their use for “any activities detrimental to national interest”.
• The law was amended again by the current government in 2020, giving the government tighter control and scrutiny over the receipt and utilisation of foreign funds by NGOs.

Key Features of the FCRA:

• Broadly, the FCRA requires every person or NGO seeking to receive foreign donations to be
• (i) registered under the Act,
• (ii) to open a bank account for the receipt of the foreign funds in State Bank of India, Delhi, and
• (iii) to utilise those funds only for the purpose for which they have been received and as stipulated in the Act.
• They are also required to file annual returns, and they must not transfer the funds to another NGO.
• The Act prohibits the receipt of foreign funds by candidates for elections, journalists or newspaper and media broadcast companies, judges and government servants, members of legislature and political parties or their office-bearers, and organisations of a political nature.

How Is FCRA Registration Granted?

• NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation.
• The registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes.
• Post application, the MHA makes inquiries through the Intelligence Bureau into the antecedents of the applicant, and accordingly processes the application.
• The MHA is required to approve or reject the application within 90 days — failing which it is expected to inform the NGO of the reasons for the same.
• Once granted, FCRA registration is valid for five years.

For How Long Is Approval Granted?

• NGOs are expected to apply for renewal within six months of the date of expiry of registration.
• In case of failure to apply for renewal, the registration is deemed to have expired.
• Many NGOs do not apply for renewal for a variety of reasons, which include either completion of the project for which the FCRA registration had been taken or the NGO itself folding up.

Cancellation of FCRA Registration

• The government reserves the right to cancel the FCRA registration of any NGO if it finds it to be in violation of the Act.
• Registration can be cancelled
• if an inquiry finds a false statement in the application;
• if the NGO is found to have violated any of the terms and conditions of the certificate or renewal;
• if it has not been engaged in any reasonable activity in its chosen field for the benefit of society for two consecutive years; or if it has become defunct.
• if in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate,” the FCRA says.
• if an audit finds irregularities in the finances of an NGO in terms of misutilisation of foreign funds.
• Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years.
• All orders of the government can be challenged in the High Court.

Implications of FCRA Violations:

The Foreign Contribution Regulation Act (FCRA) plays a critical role in ensuring that foreign donations are used responsibly and do not harm India’s interests. The recent cancellation of CPR and World Vision India’s FCRA registration highlights the strict enforcement of the Act and serves as a reminder to NGOs about the importance of complying with FCRA norms.

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