FOREIGN CONTRIBUTION REGULATION ACT (FCRA)
1. Context
The Ministry of Home Affairs has canceled the Foreign Contribution (Regulation) Act (FCRA) license of the Rajiv Gandhi Foundation (RGF) and Rajiv Gandhi Charitable Trust (RGCT), organizations that are associated with the Nehru-Gandhi family, for alleged violations of the provisions of the act.
2. Foreign Contribution Regulation Act
- 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".
- Foreign funding in India is regulated under the FCRA act. Individuals are permitted to accept foreign contributions without the permission of MHA. However, the monetary limit for acceptance of such foreign contributions shall be less than Rs. 25,000.
- It is implemented by the Ministry of Home Affairs. 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 organizations. These concerns were, in fact, even older- they had been expressed in Parliament as early as 1969.
3. Provisions of the Act
- The FCRA requires every person or NGO wishing to receive foreign donations to be registered under the act, to open a bank account for the receipt of foreign funds in the statute Bank of India, Delhi, and to utilize those funds only 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 newspapers and media broadcast companies, judges and government servants, members of the legislature and political parties or their office-bearers, and organizations of a political nature.
4. Key Highlights of the 2020 Amendment
- It bars public servants from receiving foreign contributions. It prohibits the transfer of foreign contributions to any other person.
- Aadhar number is mandatory for all office bearers, directors, or key functionaries of a person receiving foreign contributions, as an identification document.
- The foreign contribution must be received only in an account designated by the bank as an FCRA account in such branches of the State Bank of India, New Delhi.
- No funds other than foreign contributions should be received or deposited in this account.
- It allowed the government to restrict the usage of unutilized foreign contributions. This may be done if, based on an inquiry the government believes that such a person has contravened provisions of the FCRA.
- While NGOs earlier could use up to 50 percent of funds for administrative use, the new amendment restricted this use to 20 percent.
5. Registration under FCRA
- NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation. FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programs.
- Following the 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 is expected to inform the NGO of the reasons for the same.
- Once granted, FCRA registration is valid for five years. 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.
6. Who can receive foreign contribution?
Under the Foreign Contribution (Regulation) Act, 2010 (FCRA), only certain persons and organizations are permitted to receive foreign contributions. The Act regulates foreign funding to ensure it is used for legitimate purposes and does not adversely affect national interests.
The following categories can receive foreign contribution:
- Individuals can receive foreign contributions, provided they comply with the provisions of the FCRA. If the contribution is for a definite cultural, educational, economic, religious, or social programme, they generally need FCRA registration or prior permission, unless a statutory exemption applies.
- Associations, NGOs, Trusts, and Societies established for cultural, educational, religious, economic, or social purposes may receive foreign contributions after obtaining either:
- FCRA Registration, or
- Prior Permission from the Ministry of Home Affairs for a specific donor and project.
- Section 8 Companies (non-profit companies registered under the Companies Act, 2013) can also receive foreign contributions after complying with FCRA requirements.
7. Who cannot receive foreign contribution?
Under the Foreign Contribution (Regulation) Act, 2010 (FCRA), Section 3 specifies the categories of persons who are prohibited from accepting foreign contributions.
The following cannot receive foreign contribution:
- Candidates for election.
- Correspondents, columnists, cartoonists, editors, owners, printers, or publishers of a registered newspaper.
- Judges.
- Government servants and employees of any corporation or any other body controlled or owned by the Government.
- Members of any Legislature (Members of Parliament, Members of State Legislatures, etc.).
- Political parties and office-bearers of political parties.
- Organizations of a political nature, as may be specified by the Central Government.
- Associations or companies engaged in the production or broadcast of audio news, audio-visual news, or current affairs programmes through any electronic mode or other mass communication media.
- Correspondents, columnists, cartoonists, editors, owners, or publishers associated with such electronic news or current affairs media.
8. What is Non-governmental Organizations?
- A Non-Governmental Organization (NGO) is a voluntary, non-profit organization established by individuals or groups of citizens to work for the welfare of society.
- As the name suggests, an NGO is not a part of the government and functions independently in its decision-making and administration.
- Its primary objective is to serve the public by addressing social, economic, educational, cultural, environmental, religious, or humanitarian issues rather than earning profits.
- Although NGOs operate independently, they may collaborate with governments, international organizations, and private institutions to achieve their objectives.
- There is no single legal definition of an NGO in India. Instead, the term generally refers to organizations that are formed for charitable or developmental purposes and are registered under different laws depending on their organizational structure.
- An NGO may be registered as a Trust, a Society under the Societies Registration Act, 1860, or a Section 8 Company under the Companies Act, 2013.
- Regardless of the form in which they are registered, all NGOs share the common goal of promoting public welfare.
- The need for NGOs arises because governments alone often find it difficult to address every social and developmental challenge.
- India, with its vast population and geographical diversity, faces issues such as poverty, illiteracy, unemployment, malnutrition, environmental degradation, gender inequality, and inadequate healthcare.
- NGOs work alongside the government by reaching vulnerable communities, creating awareness, mobilizing local participation, and implementing developmental programmes at the grassroots level.
- In many cases, NGOs are able to reach remote and marginalized populations more effectively because of their flexibility and close engagement with local communities.
- NGOs undertake a wide range of activities. In the field of education, they establish schools, provide scholarships, and conduct literacy campaigns. In healthcare, they organize medical camps, vaccination drives, and awareness programmes on diseases and sanitation.
- In rural development, they promote sustainable agriculture, livelihood opportunities, and self-help groups. Many NGOs work towards women's empowerment by providing vocational training, legal assistance, and financial literacy.
- Others focus on child welfare, environmental conservation, human rights, disaster relief, skill development, and the protection of vulnerable sections such as tribal communities and persons with disabilities.
- To carry out these activities, NGOs require financial resources. They receive funds from various sources, including donations from individuals, grants from governments, contributions from companies under Corporate Social Responsibility (CSR), membership fees, and support from international organizations.
- If an NGO intends to receive funds from foreign sources, it must comply with the provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA).
- Under this law, eligible NGOs must obtain FCRA registration or prior permission from the Ministry of Home Affairs before accepting foreign contributions
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For Prelims: FCRA, Rajiv Gandhi Foundation, Rajiv Gandhi Charitable Trust, NGO, Ministry of Home Affairs (MHA). For Mains: 1. What is the Foreign contribution regulation act and discuss the new restrictions introduced by the Foreign Contribution (Regulation) Amendment Act, 2020. |
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Previous Year Questions
1.Examine critically the recent changes in the rules governing foreign funding of NGOs under the Foreign Contribution (Regulation) Act (FCRA), 1976. (Please refer GS-II Paper, 2015) |
Source: The Indian Express
