Analysis of  Foreign Contribution Regulation Act Amendments

By Arya Gupta

The Ministry of Home Affairs (MHA) stated it has received “severe unfavorable inputs” about the activity of various NGOs in tribal areas that are covered by the FCRA. The difficulty is, according to the World Bank, what constitutes an NGO. Non-profit organizations that seek to alleviate suffering, promote the interests of the poor, protect the environment, provide essential social services, or engage in community development are NGOs. We will discuss the benefits and drawbacks of the FCRA Bill, which has raised a variety of strategic and operational challenges. 

As a result, the Foreign Contribution Regulation Amendment Bill of 2020 modifies the Foreign Contribution Regulation Act of 2010. The amendment combines both financial and security legislation. The Foreign Contribution Control Act (FCRA) monitors foreign donations and ensures that they do not jeopardise national security. It was first implemented in 1976, but it was updated in 2010 with a plethora of new regulations to restrict foreign donations. The FCRA applies to all associations, groups, and non-governmental organisations (NGOs) that want to receive foreign contributions. The FCRA requires all such NGOs to register with the government. The registration is valid for five years at first and can be renewed after that.  

Changes in FCRA Law:- Prohibition to Accept Foreign Contribution

Under the statute, certain individuals such as election candidates, newspaper editors and publishers, judges, government employees, and others are forbidden from accepting any foreign contributions. The Bills expands this category to include public employees. Any person in the government’s service or pay, or remunerated by the government for performing any public duty, is considered a public servant.

Anyone requesting prior permission, registration, or renewal of registration must provide all of their office bearers’ Aadhaar numbers. For identification, a foreigner must present a copy of their passport or an Overseas Citizen of India card.

Foreign contributions must be received only in an account designated by the bank as a “FCRA account” in such State Bank of India branch in New Delhi as the central government has notified.

This account should not receive or deposit any funds other than the foreign contribution. The individual may create a new FCRA account in any scheduled bank of their choice to maintain or use the contribution received. The funding criterion for administrative expenses has been cut from 50% to 20%.

Every person who has been issued a certificate of registration must renew it within six months of its expiration date, according to the act.

The government may suspend a person’s registration for a term of up to 180 days under the Act. The bill also states that the suspension can be prolonged for up to another 180 days.

Concern Against the Bill

• The question is why the government wanted to limit administrative expenses to 20% when it could cause inefficiency in the NGO or organization’s working system. The government claims that these changes will avoid the extra expenses and the rest of the money will be used to achieve the organization’s goals. 
• The opposition also expressed alarm about the government’s proposal to make Aadhaar an obligatory identification card for all office-holders, despite the Supreme Court’s ruling that Aadhaar is not mandatory.
• The applicability of this modification is unclear, with no indication of whether it will be prospective or retrospective.
• What will happen to the ongoing sub-grant subcontract that is currently in place? There’s a chance that some of the amounts of money have already been distributed to the sub-grantees, which might be a regulatory source of concern. 
• Poonam Muttreja, the executive director of the Population Foundation of India, raised her concern as she said “If you are getting foreign funding, you cannot work in partnership with anyone, you will now not be able to give the money to an individual or another NGO or collaboration partner. All large NGOs collaborate with smaller NGOs which are there at the grassroots level – they do not have the capability of raising money or writing reports but do the real work. We support them to do the real work and we raise funds and write reports and support them as an intermediary organization. So this would mean the end of the small NGOs”
• International organizations working for Advocates for Justice and Human Rights, such as the International Commission of Jurists in Geneva, have stated that the FCRA Amendments 2020 will stifle civil society’s efforts. India’s international legal duties and constitutional provisions to respect and preserve the rights to freedom of association, expression, and assembly are not met by the legislation.

On the one hand, the bill is intended to “increase openness” and “prevent persons from misusing foreign contributions.” The proposed revisions, on the other hand, will raise the cost of doing business for India’s non-profit organizations, perhaps making them even more vulnerable and powerless.