The Centre is going from regulation to control mode: NGOs

Thousands of registered NGOs across the country, that have Foreign Contribution (Regulation) Amendment Bill 2020 accounts, will be impacted by the FCRA amendment bill 2020, debated and passed in the Lok Sabha on Monday, as it has restrictions on receiving and the usage of foreign funds. The bill awaits the Rajya Sabha nod for subsequent enactment of FCRA norms.

Noshir Dadrawalla, programme director, Legal and CSR Compliance at Centre for Advancement of Philanthropy (CAP), said, "We can understand the role of the government is to regulate charity funds coming to NGOs, but unfortunately, the present Central government is going from regulatory mode to control mode, by introducing the FCRA Bill 2020. The bill proposes a number of drastic changes to the law governing receipt of foreign contribution and which will have a detrimental impact on charitable institutions in India."

The FCRA amendment bill was passed in the LS on Monday and awaits the RS nod. Pic/PTI

"The Ministry of Home affairs had earlier allowed foreign funds to come in any of the 62 Public Financial Management System (PFMS) banks in the country, that they had shortlisted. But in the new amendment, they have specifically stated that the FCRA account, should hereafter be opened with State Bank of India, New Delhi. This is a classic example of switching over from regulatory to control mode," added Dadrawalla.

'Payments to be affected'

He added, "The new amendment bill brings a cap on administrative expenses. Currently institutions are allowed to spend up to 50 per cent of foreign funds received during the fiscal year on administrative expenditure. The bill proposes to reduce it to 20 percent. This amendment will be a major blow to organisations in terms of payment of salaries, professional fees, utility bills, travel and other such expenditure."

Nishit Kumar, Centre for Social and Behavioural Change

He said, "While this amendment will prove to be a boon for organisations no longer interested in receipt of foreign funds, it will be a bane for organisations which may have created assets (e.g. schools, hospitals, vocational training centers) out of foreign funds. On surrendering FCRA registration, assets created out of foreign contributions may also have to be surrendered to the competent government authority. Also, the proposal in new bill, is that the NGOs registered under FCRA, cannot make any sub grants to any other registered NGO, which is another blow to collaborative initiatives within the sector."

Nishit Kumar, founder and managing director, Centre for Social and Behavioural Change Communication, said, "The organisation I am associated with, has only just qualified to be eligible to apply for FCRA. I share the pain of hundreds of NGOs/non profits who are going to be radically impacted by the bill. The FCRA Act now is a legacy from the days of the Emergency. In actual practice there is no need for this act. All foreign remittances in India either personal or for industry are controlled by the Finance Ministry (under FEMA). Only contributions to non-profits (Societies, Trusts and Sec 8 companies) are controlled by the Ministry of Home Affairs via FCRA ostensibly to control financial transactions that feed terrorism. The FATF (Financial Actions Task Force) that all countries are bound by is good enough for that. Even before this amendment, organisations were required to register with Niti Aayog and use a specified software."

Dr Girish Kulkarni, founder, Snehalaya

'Severe repercussions'

An official from CRY – Child Rights and You - said, "This bill will have severe repercussions on the wide range of development relief and community support work done by the non-government sector. The bill will suddenly disconnect grassroots level organisations from the communities for whom they are implementing programmes in vulnerable and remote areas. Curtailing sub-granting will impact small organisations that have turned out to be the 'real heroes' during the pandemic, especially with far flung communities. It might also impact the livelihood of many social workers. With the future of so many underprivileged communities and genuine civil society organisations at stake, while the government is working closely with the non-profit sector during the COVID-19 pandemic and encouraging national and international collaborations, such a move will be against the best interests of the underprivileged population."

Snehalaya founder Dr Girish Kulkarni, who runs Snehankur Adoption Centre and Orphanage at Ahmednagar said, "Our institution gets nearly nine percent of foreign funding, and the remaining 91 per cent, in the form of donations from Indians and philanthropists from Ahmednagar and neighbouring areas. However, a major chunk was from CSR initiatives, which have been adversely affected due to the COVID-19 pandemic."

Kulkarni added, "For the past three years, we have not got any state or central government fund, and it is difficult to meet the day-to-day expenditures. The new FCRA bill might have an adverse impact, as only large NGOs can survive, and smaller NGOS and trusts, working in welfare, health, education, sectors in rural areas of the country, which rely on funds from bigger NGOs may get completely wiped off."

A source from the Delhi-based organisation, Voluntary Action Network India (VANI), strongly feels that the FCRA bill, 2020 will be a death blow to the development relief, scientific research and community support work of the NGO community as it prohibits collaboration with other organizations. "The new FCRA bill throttles the spirit of cooperation that had been ushered in earlier this year by the positive role played by development organisations in mitigating the lockdown by virtually making it impossible for NGOs to function," the source revealed.

"These amendments assume that all NGOs receiving foreign grants are guilty, unless proved otherwise. This makes NGOs open to possible harassment via queries which can be raised on almost any activity. This would impede collaborations and any other constructive activity they do," the source said.

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