Government Cites 17 Reasons to Deny or Cancel Foreign Fund Registration of NGOs

1. In November 2024, The Ministry of Home Affairs (MHA) issued a notice highlighting 17 reasons for which the Foreign Contribution (Regulation) Act (FCRA) registration of an NGO may be denied or canceled.
2. The reasons range from misuse of foreign funds for anti-development activities, inciting protests, religious conversions, to having links with terrorist or anti-national organizations.

What is the FCRA?

1. The Foreign Contribution (Regulation) Act (FCRA) was enacted in 1976 during the Emergency period.
2. Its primary purpose was to address concerns about foreign interference in India's domestic affairs through the financial support of independent organizations.
3. Key Objective: To regulate the acceptance and utilization of foreign contributions, ensuring they do not negatively affect India's sovereignty, internal security, or democratic values.

Evolution of the FCRA

1. 2010 Amendment:

   1. Streamlined regulations for receiving foreign contributions.
   2. Prohibited the use of foreign donations for activities deemed harmful to national interests.

2. 2020 Amendment:

   1. Aadhaar Mandate: Required the submission of Aadhaar numbers of key NGO functionaries.
   2. Designated Bank Account: Foreign contributions can only be received in an FCRA-approved account with the State Bank of India.
   3. Domestic Transfer Ban: Completely prohibited the transfer of foreign funds to other domestic organizations.
   4. Administrative Expense Limit: Reduced the limit for administrative expenses from 50% to 20% of the foreign contributions received.

Applicability of FCRA:

1. Who needs FCRA Registration?

   1. All organizations, associations, or NGOs intending to receive foreign donations must register under FCRA.

2. Validity and Renewal:

   1. FCRA registration is initially valid for 5 years, after which it can be renewed if the organization complies with the necessary norms.

3. Permissible Uses of Foreign Contributions:

   1. Foreign contributions can be used for activities that serve social, educational, religious, economic, and cultural purposes.

Monitoring Authority

1. The MHA is responsible for overseeing FCRA implementation, including ensuring compliance by NGOs.

2. Key Developments:

   1. In 2015, the MHA required NGOs to operate their accounts in banks with core banking facilities for real-time monitoring.
   2. In 2023, an amendment was made requiring NGOs to disclose assets created using foreign funds in their annual returns.

17 Reasons for Denying or Cancelling FCRA Registration

1. Anti-Development Activities: If an NGO is found using foreign funds for activities that are anti-development or work against India's progress.
2. Inciting Malicious Protests: If the foreign funding is used to incite malicious protests or disrupt public order.
3. Religious Conversion Activities: If an NGO is involved in induced or forced religious conversion or proselytisation.
4. Links with Terrorist or Anti-National Organizations: If any key functionary or the organization itself has links with terrorist or anti-national organizations.
5. Misuse of Foreign Funds: If the funds are diverted for undesirable activities, including those that threaten national security or public order.
6. Personal Gain by Office Bearers: If the NGO's office bearers use foreign funds for personal gain.
7. Defunct or Non-Operational NGOs: If no activity has been carried out by the NGO for an extended period or it is found to be defunct.
8. Failure to Upload Annual Returns: If the NGO has not submitted its annual returns as required by law.
9. Non-Compliance with NGO's Objectives: If the foreign funds are not being used as per the official aims and objectives of the NGO.
10. Adverse Inputs from Field Inquiry: If field inquiry reports suggest the NGO's activities affect social or religious harmony or contribute to religious conversions.
11. Prosecution Pending: If an office-bearer, member, or key functionary faces criminal prosecution or is under investigation for unlawful activities.
12. Lack of Transparency: If the NGO does not respond to clarifications sought by authorities or fails to provide the required documents.
13. Non-Cooperation with Investigations: If the NGO does not cooperate with investigations or does not comply with government directives.
14. Failure to Maintain Accountability: If the NGO fails to maintain proper financial records or provide audit reports for foreign contributions.
15. False Representation of Activities: If the NGO misrepresents its activities or inflates its claimed impact to justify foreign funding.
16. Radical Organisation Links: If key functionaries are found to have associations with radical organizations.
17. Involvement in Anti-National Activities: If any foreign funding is linked to anti-national activities that threaten India’s sovereignty or security.

Consequences of FCRA Cancellation:

1. Prohibition from Re-Registration: If an NGO’s FCRA registration is canceled, it is prohibited from applying for re-registration for three years.
2. Suspension: The government can suspend an NGO's registration for up to 180 days during investigations and can freeze its financial assets.
3. Legal Recourse: NGOs that have their FCRA registration canceled can appeal the decision in the High Court.

Other Important Aspects of FCRA:

1. No Foreign Contributions from NRIs: Contributions from Non-Resident Indians (NRIs) from their personal savings through normal banking channels are not considered foreign contributions under FCRA.
2. Transparency and Monitoring: The FCRA mandates NGOs to disclose all foreign donations and how these funds are utilized. This enhances transparency and ensures that foreign funds are not misused.
3. Government Oversight: The MHA plays a crucial role in monitoring the activities of NGOs receiving foreign contributions and ensures compliance with the FCRA.

Way Forward:

1. Stronger Oversight and Accountability: The government must ensure that NGOs receiving foreign funds maintain the highest standards of transparency and are accountable for their activities.
2. Engagement with Civil Society: The government should also engage with civil society organizations to address concerns about the restrictive nature of the FCRA and explore ways to balance national security with the freedom of civil society.
3. Legal Reforms: While FCRA regulations aim to prevent misuse of foreign funds, there is a need for greater clarity on the rules to avoid the cancellation of FCRA registrations due to unintended compliance issues.

Conclusion:

The Foreign Contribution (Regulation) Act (FCRA) plays an essential role in ensuring that foreign funds received by NGOs in India are used for legitimate and socially beneficial purposes. However, the MHA’s recent list of 17 reasons to deny or cancel FCRA registration highlights the government's intention to tighten controls over foreign donations, particularly when linked to activities that may harm national interests or disturb social harmony. NGOs must adhere to the law and ensure their activities align with the regulatory framework to avoid penalties and loss of registration.

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