Increased Government Scrutiny of NGOs through Foreign Contribution Regulations (Amendment) Act, 2020
The Foreign Contribution Regulations Act is the regulator of the foreign donations coming inside the country and ensures that the said donations do not harm the internal security of the country. First enacted in 1975, it was amended in 2010 when a lot of new measures were adopted to regulate foreign donations. The FCRA is applied to all such entities which receive foreign donations. All NGOs must register themselves under the FCRA. The registration is valid for 5 years and can be renewed subsequently. As said in the objective, the Government mentions that the Act aims to strengthen compliance, enhance transparency and accountability in the receipt and utilization of foreign contributions, and facilitating genuine NGOs working for the welfare purpose. The Alteration has originated to strength on 29 September 2020 amidst numerous examples where governments unsuccessful to safeguard basic constitutional obedience such as upkeep of proper books, proposal of returns, and it led to a situation where the Government had to cancel registrations of various organizations.
The Act will regulate the foreign donations received by the different associations and entities. The Act defines 'foreign contribution' as "donation, delivery or transfer made by any foreign source- of any article, of any currency or any security." The Act links the definition of foreign sources as the sources of the funds established in foreign territory. For the organizations receiving foreign donations, they have to be eligible with certain cultural, economic, educational, religious, or social responsibility. Such foreign donations will be accepted only if it is approved by the Government through the Ministry of Home Affairs. Prior permission has to be made by the organization before receiving any foreign donations or they can get a long-term registration valid for 5 years. Then they have to open a bank account which has to be authorized by the Central Government and that bank account can be utilized only for receiving foreign donations. The donations have to be used only for that specific purpose for which it was made and cannot be transferred through any means.
Prohibition to accept contributions
Under the Act, certain persons like the election candidates, editors or publishers of newspapers, judges, government servants, etc. are prohibited to accept any contribution. The Act adds public servants to this list. Public servants include the persons in-service or the pay of the Government or paid by the Government for the performance of any public duty.
Aadhaar for registration
Aadhaar is a must for anyone who seeks permission under the registration. This Act says that the foreign contribution can be accepted only if you have a valid certificate of registration by the Government and if not registered then prior permission has to be sought from the Government. Any person who seeks the registration, prior permission or renewal, etc. has to provide the Aadhaar number of all the office bearers for identification purposes. In the case of foreigners, they must provide a copy of the passport or the Overseas Citizen of India card for identification.
FCRA account
The Distant Influence can be conventional only in the "FCRA explanation" in exact twigs of the State Bank of India, New Delhi, as official by the Administration of India. In this account, only the funds of the foreign donations must be included. Another FCRA account in any scheduled bank of the choice can be opened for managing the foreign contribution.
Administrative expenses
The Amendment of Section 8 of the Act has reduced the utilization of funds for administrative expenses from 50% to 20%. It seems that it has been done for promoting the utilization of funds towards the objective of the grant. The 20% margin seems to be an appropriate threshold and according to the market standard. This is a good move as many philanthropists refrain from NGOs due to high administrative expenses.
Renewal of license
Under the Act, every person who has been given a certificate of registration must renew the certificate within 6 months of expiration. The Bill has the provision which includes the inquiry made by the Government before renewing the certificate to see that the person-
Surrender of Certificate
The Act enhances a provision letting the Central Administration license a being to submission their registering diploma. The Administration may do so if, post a review, it is satisfied that such being has not broken any supplies of the Act.
Suspension of Registration
Under the Act, the Government may suspend the registration of a person for a period not exceeding 180 days but also mentions that such registration can be exceeded to additional 180 days.
Concerns raised
There have been certain concerns raised regarding the Act where it has been asked by the Government that why it wants to limit the administrative expenses to 20%. Concerns have been also raised regarding making the Aadhaar mandatory identification for all the office-bearers. According to the government's stats, there are about 22,447 active FCRA registrations in India presently. In 2018-2019, 915 annual returns were filed, a compliance rate of 97.6%. It can hardly be argued that non-compliance is a concern here. Making Aadhaar mandatory is another step towards expanding the use and coverage of the unique identity and does little to improve the transparency or oversight by the Government. Similarly, the stipulation that all foreign donation receipts need to use SBI bank accounts will only increase the transaction costs for the organization.
Conclusion
Hence, it can be said that on one hand, the Act is meant to bring transparency and stop misuse of foreign contributions by people and on the other hand, the planned alterations will upsurge the cost of responsibility commercial for India's non-profits and may make them additional susceptible to pestering. This amendment comes as a big respite for NGOs. Nevertheless, the FCRA registered entities must liaise with the SBI branches to get the registered accounts to avoid last-minute hassles.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.
Footnotes:
https://fcraonline.nic.in
