Cancellation of FCRA Registration of NGOs

• 25 Jan 2024

For Prelims: Foreign Contribution Regulation Act, NGOs, Companies Act, 2013, Indian Trusts Act, 1882, Societies Registration Act, 1860, NGO-DARPAN Platform.

For Mains: Regulation of NGOs in India, Major Provisions of FCRA.

Source: TH

Why in News?

The cancellation of Foreign Contribution Regulation Act, 2010 (FCRA) registrations for two prominent non-governmental organisations (NGOs) - the Centre for Policy Research (CPR) and World Vision India (WVI) - has sparked discussions about the regulatory landscape governing foreign contributions in India.

What led to the Cancellation of the Registrations of CPR and WVI?

• 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• Additionally, the registration of World Vision India was revoked for alleged FCRA violations spanning from 2012-13 to 2020-21.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.

What is the FCRA?

• About: The FCRA was enacted in 1976 during the Emergency period due to concerns about foreign interference in India's affairs through financial support to independent organisations.
  • It was designed to regulate foreign donations to prevent any adverse impact on internal security, ensuring alignment with the principles of a sovereign democratic republic.
• Evolution of FCRA:
  • 2010 Amendment: Enacted to streamline regulations governing the acceptance and use of foreign contributions by specific individuals or associations, and to forbid such contributions for activities harmful to national interests.
  • 2020 Amendment:
    • Providing Aadhaar numbers of all key functionaries of NGOs, receipt of foreign contribution only through designated FCRA bank accounts with the State Bank of India
    • Complete ban on domestic transfer of foreign funds
    • Reduction of administrative expense limit from 50% to 20%
• Applicability: FCRA mandates registration for all associations, groups, and NGOs intending to receive foreign donations.
  • Initially valid for 5 years with the possibility of renewal upon compliance with prescribed norms.
• Purposes of Foreign Contributions: Registered associations can receive foreign contributions for social, educational, religious, economic, and cultural purposes.
• Monitoring Authority: Ministry of Home Affairs
  • In 2015, the MHA mandated NGOs to operate accounts in banks with core banking facilities for real-time security access.
  • In 2023, the MHA amended rules for FCRA-registered NGOs, now necessitating the disclosure of assets created using foreign funds in their annual returns.

How NGOs are Regulated in India?

• About:
  • As defined by the World Bank, NGOs refers to not-for-profit organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development.
    • However, the term NGO in India denotes a wide spectrum of organisations which may be non-governmental, quasi or semi governmental, voluntary or non-voluntary etc.
• Registration and Regulation: Majorly, NGOs can register as either trusts, societies, or companies under Section 8 of the Companies Act, 2013. Each form has its own set of rules and regulations for registration and governance.
  • Trusts: Governed by the Indian Trusts Act, 1882, or equivalent state laws, requiring registration with the Charity Commissioner's office.
  • Societies: Registered under the Societies Registration Act, 1860, or its state-specific variations, with the Registrar of Societies.
  • Section 8 Companies: Registered similar to commercial companies but with non-profit objectives.
• NGO-DARPAN Platform: It provides space for interface between NGOs and Central Ministries / Departments / Government Bodies.
  • This is a free facility offered by the NITI Aayog in association with National Informatics Centre to bring about greater partnership between government & voluntary sector and foster better transparency, efficiency and accountability.

UPSC Civil Services Examination, Previous Year Question:

Mains

Q. Can Civil Society and Non-Governmental Organisations present an alternative model of public service delivery to benefit the common citizen? Discuss the challenges of this alternative model. (2021)