Q.There is much hue and cry with respect to the foreign funds received by the NGOs. In the context to Foreign Contribution (Regulation) Amendment Bill, 2020, examine the issues and impact of foreign funding. (15 marks, 250 words, GS-2)
- Starting para about the current context and stats.
- Next para to include about the FCRA and reports about the foreign funding.
- Third para could be about the amendment to FCRA.
- Concluding with the NGOs’ views and way forward.
Recently around 19000 NGOs are barred from receiving foreign donations in India under Foreign Contribution (Regulation) Act, 2010. Foreign funds are a major source of financial support for NGOs in India. Various private foundations, foreign governmental agencies, and individuals provide money for charitable causes in India in form of donations and project funding support.
The FCRA, 2010 was enacted “to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”
An Intelligence Bureau Report called ‘Impact of NGOs on Development’ published in 2014 warned that many nonprofit organizations in the country with support from international donors were planning to disrupt the developmental activities, endangering the Indian economy.
According to the Ministry, most NGOs get banned from receiving foreign funds is because of their failure to submit annual returns and completed balance sheets at the end of the fiscal year. Under the FCRA registration, it is mandatory for NGOs to submit their annual returns every year in order to continue receiving the foreign funds.
Recently the rules for foreign funding were amended by amending the FCRA, 2010. The centre says the changes are aimed at “strengthening the compliance mechanism, enhancing transparency and accountability” in a key funding source for the NGO sector. The amendment to FCRA 2010 includes–
- Every FCRA-registered NGO will have to open an FCRA-marked bank account with a designated branch of State Bank of India in New Delhi. These accounts will be the point of entry for all foreign grants. NGOs can subsequently route these funds to their existing FCRA-marked accounts across the country.
- The second change is stopping the practice of an FCRA NGO transferring foreign grants received by it to other FCRA NGOs.
- The third change is lowering the cap on administrative expenses from 50% of foreign funds received to 20%.
NGOs say the new rules place more discretionary powers in the hands of bureaucrats and increase their compliance burden. And it will further widen the trust deficit between NGOs and the centre.
The following measures could be taken including-
- Annual statement about income and expenditure for proper vigilance over activity.
- Separate accounts for domestic and foreign funding and expenditure.
- Rationalising the DARPAN Portal of Government of India.
- Directing the use of foreign funding for non-political activities.