The Centre has tightened rules governing foreign funding received by non-governmental organisations (NGOs) and other associations. The penalties have also been revised for several violations under the Foreign Contribution (Regulation) Act (FCRA), 2010.
The changes have been notified by the Ministry of Home Affairs (MHA) through separate gazette notifications issued on June 23. As per the gazette notification cited by PTI, stricter compliance requirements, additional disclosure obligations for organisations receiving foreign funds and purpose-specific registrations have been introduced.
Higher penalties for FCRA violations
The government has revised compounding penalties for several offences related to the receipt and usage of foreign contributions.
NGOs that utilize other than the permitted 20 percent of the foreign contributions on administrative expenses will now face a penalty of Rs 1 lakh or 5 percent of the excess amount spend, whichever is more.
Similarly, using foreign contributions for speculative activities will draw a penalty of Rs 1 lakh or 30 percent of the amount involved, whichever is higher. The gazette notification mentions that “110 percent of the returns earned therefrom shall be recovered” in such cases.
A fine of Rs 1 lakh or 30 percent of the amount involved, whichever is more, will also apply if foreign contributions are used for things other than those for which they were received or in areas not listed by an organisation’s registration.
NGOs must clearly define their purpose and area of work
One of the biggest changes relates to registration under the FCRA.
As per details reported by The Indian Express, organisations that are applying must clarify the exact purpose for which they seek permission to receive foreign funds. They will also be required to mention the states or Union Territories where they intend to work.
The notification stated, “Every application for registration shall mention the purpose or purposes for which registration is ought” and the states or Union Territories where the association proposes to undertake activities.
Applicants will have to choose their activities from a pre-defined schedule covering religious, educational, social purposes, cultural and economic. Existing organisations have been allotted one year to update the government on the purposes and geographical areas they want to retain under their registrations.
Religious activities allowed, but not proselytisation
The amended rules have made a clear distinction between religious activities and proselytisation. In simple terms, proselytisation means attempting to convert people from one religion or belief system to another through preaching or other forms of outreach.
As per the Indian Express report, activities such as construction and maintenance of places of worship, operation of dharmshalas, langars, preservation of scriptures and religious education come under the eligible category under the FCRA framework.
However, several categories now explicitly require being carried out “excluding proselytisation.” The condition applies to religious education, preservation of indigenous and tribal belief systems, mediation programmes and religious discourses.
Stricter rules for key functionaries and usage of funds
The government has widened the definition of a “key functionary” to include company directors, trustees, partners, the karta of a Hindu Undivided Family (HUF) and others who have control over association affairs.
As per PTI, associations with foreign nationals, other than persons of Indian origin as key functionaries will “ordinarily not be considered” for registration or proper permission to collect foreign contributions, although exceptions may be permitted by the government.
In another change, organisations will be considered to have undertaken “reasonable activity” only if they have utilised at least Rs 10 lakh of foreign contributions during the previous two financial years, according to the amended rules reported by The Indian Express.
More disclosures, greater accountability
NGOs will now have to disclose social media accounts, provide detailed activity reports with annual returns and reveal the ultimate donors if funds are routed through donor-advised funds or intermediary remittance vehicles.
For organisations receiving foreign funds through prior permission, the next installment will be released only after at least 75 per cent of the previous instalment has been utilised and verified through a field inquiry.
The amendments are aimed at strengthening transparency, accountability, and oversight in the use of foreign contributions by NGOs and associations operating in India.