Updated : June 12, 2023Overview of the Foreign Contribution Regulation Act (FCRA)
The Foreign Contribution Regulation Act (FCRA) is a crucial piece of legislation that non-governmental organizations (NGOs) operating in India must understand and abide by. The Act, enacted in 2010 by the Indian Parliament, regulates the inflow of foreign contributions with the aim of ensuring transparency, accountability, and national security. By complying with the FCRA, NGOs can improve their standing and increase their chances of qualifying for government grants and foreign-funded projects.
Key features of the FCRA include
- It applies to all foreign contributions, encompassing donations, grants, and loans.
- Foreign contributions can be allocated towards social welfare, education, and religious activities among others.
- To receive foreign contributions, organizations must be registered with the Ministry of Home Affairs (MHA) or gain prior permission from the MHA.
- Organizations are required to use separate designated bank accounts for receiving and utilizing foreign contributions.
- The Act mandates submission of annual returns and audited financial statements to the government, providing a clear record of the receipt and utilization of foreign funds.
- The MHA is responsible for overseeing the registration process, granting or denying permissions, and regulating activities of organizations that receive foreign contributions. Non-compliance or violation of the FCRA can lead to penalties, suspension, or cancellation of registration/permission.
In essence, the FCRA serves as a balance, facilitating legitimate foreign contributions for developmental activities while also preventing misuse of such contributions that could potentially compromise national interests or security.
Applicability
The Foreign Contribution Regulation Act (FCRA) 2010 is an essential law applicable to all associations, groups, and non-governmental organizations (NGOs) in India receiving foreign donations. This Act extends its jurisdiction across India and also includes Indian citizens abroad, as well as associate branches or subsidiaries of foreign companies operating in India. It’s important to understand the specific entities that the FCRA applies to:
- Associations : This includes both registered and unregistered associations that are established for religious, charitable, social, cultural, or educational purposes.
- Groups : This category includes any group of individuals, whether registered or unregistered, formed for religious, charitable, social, cultural, or educational purposes.
- Non-governmental organizations (NGOs) : These are organizations that are not government entities and are registered under the Societies Registration Act, 1860, the Companies Act, 2013, or any other applicable law.
- Political parties : FCRA also applies to any political party that is registered under the Representation of the People Act, 1951.
- Candidates for election : This includes any individual who is a candidate for election to any legislature or local authority.
- Members of legislatures and local authorities : This category comprises individuals who are members of any legislature or local authority.
- Public servants : FCRA applies to any individual who is a public servant under the Central Government, State Governments, or any local authority.
- Media : This includes correspondents, cartoonists, editors, owners, printers, or publishers of a registered newspaper.
It should be noted that the FCRA does not apply to The Government of India, State Governments, Local authorities, and Government Bodies whose books are audited by the Controller General of India (CAG). By understanding the applicability of the FCRA, organizations can better navigate their responsibilities and requirements concerning foreign contributions.
What it Regulates
FCRA regulates the acceptance and utilization of foreign contribution or foreign hospitality by individuals and associations. It prohibits acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest.
How the Regulations are Enforced
The enforcement of the FCRA is undertaken by the Ministry of Home Affairs, Government of India. They have the power to prohibit any organizations believed to be against the public interest from receiving foreign contributions. The Ministry maintains a database of all organizations to which FCRA is applicable, and all such organizations are required to maintain account of all receipts and usage of foreign contributions, failing which they could lose their registration and face other penal consequences.
Services SetIndiabiz can Provide to an NGO
- Consultation : Understanding the provisions and applicability of FCRA can be complex. SetIndiabiz can provide comprehensive consultation services to ensure your NGO understands its obligations under this law.
- Registration Assistance : For an NGO to accept foreign contributions, it must first be registered under the FCRA. SetIndiabiz can help with this registration process.
- Compliance and Reporting : SetIndiabiz can assist your NGO in maintaining proper accounts relating to foreign contributions, prepare and submit necessary filings, and ensure your organization remains in compliance with FCRA provisions.
- Legal Support : In case of any legal disputes related to FCRA compliance, SetIndiabiz can provide legal support and representation through their renowned panel of advocates and law firms.
