NGOs in India have a significant role to play in addressing social, economic, and environmental issues. Most of them operate at a grassroots level, working on the empowerment of marginalised communities, human rights, education, health, and disaster relief. Because of India’s vast population and so many problems, NGOs tend to serve as the connecting link between the government and the people.
From small grassroots organisations to large international ones, India has many NGOs. They remain crucial actors of social change, as they encourage policy reform, empower local communities, and guarantee sustainable development. These range from various activity-implementing NGOs registered under the Societies Registration Act, 1860, the Indian Trusts Act, 1882, and the Companies Act, 2013 (Section 8 companies); all these laws have a vision to ensure transparency and accountability in practice.
These include petty financial resources, administrative bottlenecks, and demanding, ever-increasing levels of transparency. But NGOs continue to thrive and make a change in India. In conjunction with government departments and agencies, corporations, and international bodies, the NGOs contribute their part towards positively influencing India’s developmental objectives. The catalyst for transformation in creating a fairer and more equitable society remains unquestionably an NGO.
What is FCRA? What is FCRA Registration?
The Foreign Contributions (Regulation) Act is popularly referred to as the FCRA. It was initially enacted in 1976 and then again amended in 2010 and 2020. The purpose of enacting these legislations was actually to control the receipt and utilization of foreign contributions or gifts by individuals, associations, and NGOs in India. The FCRA attempts to guard the land of India from the adverse effects of foreign funds on domestic security, sovereignty, or democratic processes.
So, in order to become eligible to accept foreign donations, all Indian NGOs or groups need to get registered under the FCRA. This registration is allowed by the Ministry of Home Affairs (MHA) after cross-verification of the applicant’s objectives, background, financial history, and adherence to Indian laws. To become eligible to obtain FCRA registration, organisations should have been operational for at least three years with a verified track record of having performed social services. Another option is for an organisation to apply for prior permission for a specific donor or project.
These organisations are required to maintain records, file annual returns, and open a separate account for their foreign contribution after getting registered. Large violations of FCRA may result in penalties, suspension, or even cancellation of registration. Thus, the FCRA registration gives accountability and transparency to handling foreign contributions.
Eligibility of an NGO for FCRA Registration
To be eligible for registration under the Foreign Contribution (Regulation) Act (FCRA), an NGO is expected to satisfy a set of preconditions laid down by the Ministry of Home Affairs (MHA), Government of India. The regulations would make it known to the NGOs from which FCRA registration is being sought that only those of sound character and accountability will be considered for the reception of foreign contributions. Some eligibility criteria will have to be satisfied before the registration under FCRA is applied for through online submission to the Ministry of Home Affairs.
1. Legal Status
The NGO should be duly registered in India under one of the following laws:
- Societies Registration Act, 1860
- Indian Trusts Act, 1882
- Companies Act, 2013 (limited to Section 8 Companies)
The organisation must possess a clearly defined charitable or social purpose explicitly mentioned in the memorandum of association or the trust deed.
2. Operational History
The organisation should have existed and been functioning for at least three years prior to the application. It must have conducted relevant activities concerning its area of focus during this time.
3. Proven Track Record
The NGO must prove beyond a doubt that it has been involved in genuine social activities, particularly through reports and documentary evidence. It should have spent at least ₹15 lakh on its primary activities during the past three years, any other expenses being exempt.
4. Financial Documentation
The NGO must submit three years of duly audited accounts signed by a Chartered Accountant, as well as a Utilisation Certificate with details of charitable expenditure.
5. Bank Account
According to the 2020 FCRA Amendment, the NGO now needs to create an FCRA bank account for receiving international donations, specifically at the State Bank of India, New Delhi Main Branch.
6. Non-Political Nature
The applicant organisation must not involve itself in any political activities, including acting as a front for any political party or in political fundraising or campaigning activities.
7. Clean Background of the Office Bearers
Officers, directors, and/or trustees of the NGO must have no criminal history and not have been engaged in any activity that jeopardizes national interest. They should also not be foreign nationals, though upon appropriate authorisation, an exception may be granted.
8. PAN and DARPAN ID
The organisation must also hold a valid Permanent Account Number (PAN). The organisation must also be registered on the NGO-DARPAN portal of NITI Aayog, providing a unique identification number in this regard for the FCRA application process.
Conditions for FCRA Registration for an NGO
To achieve FCRA registration, an NGO must satisfy the eligibility criteria and follow the restrictions mentioned under the Foreign Contribution (Regulation) Act, 2010, and its amendments. These have been used to ensure the appropriate utilisation of foreign contributions along with national interests. The said provisions should also be generally adhered to at the time of application and in the future for FCRA. The Act also prescribes the penalties and commensurate criminal liabilities for noncompliance, including suspension or cancellation of registration.
- Clear and Explicit Purpose: Clearly defined objectives pertaining to cultural, economic, educational, religious, or social activities are to be found in the foundational documents of the NGO. These objectives should be in line with achieving public interest and not working against national security, sovereignty, and the integrity of India.
- Prohibition of Ineligible Activities: The said organisation must not get involved in any political activities or act as a front organisation for any political party. Foreign funds must not be utilised in any case for activities prejudicial to the democracy, internal security, or international relations of India.
- Proper Utilisation of Funds: Foreign contributions shall be utilised within the terms for which they are given. Any such misuse or misappropriation or diversion or false representation relating to funds shall entail revocation of registration and legal action.
- Financial History: Audited Accounts, the NGO is required to bring audited financial statements for the last three years into consideration from the date of application. Allocation for core functions should not be lower than ₹15 lakh during this period, while ignoring allocation for administration purposes.
- Foreign Contributions During FCRA Amendment 2020: All foreign contributions should be to one particular account in the New Delhi Main Branch (NDMB) of State Bank of India. One account is, however, allowed at the receiving end for foreign payments, provided the accounts are for project-related expenditures.
- Integrity of Office Bearers: Must be of high character and should not have a criminal conviction. Participants should not do anything to compromise public interest and/or national security. Foreigners are mostly prohibited, but exceptions can be made with prior approval.
- Registering on the NGO DARPAN Portal: This is a prerequisite for the NGO to ultimately obtain a DARPAN ID, which can be done with the portal of NITI Aayog. It is also required in the FCRA application as it is the unique identification number for the monitoring of NGO activities.
- Annual Compliance: The annual return of the NGO in respect of foreign contributions received must be submitted to the Ministry of Home Affairs on Form FC-4. It must specify the source, purpose, and utilisation of funds. These returns should be due on December 31 in the ninth month following the conclusion of the financial year.
- No Adverse Reports: There should not be any investigation/negative reports against the NGO or its officials by any government body (like CBI, ED, etc.)
- Limit on Administrative Expenses: An NGO may spend not more than 20% of the foreign contributions towards administration unless allowed to use a higher percentage by the Ministry of Home Affairs.
FCRA Registration Procedure
The process for registering an NGO under the FCRA in India has been a systematic and complete process regulated under the Foreign Contribution (Regulation) Act (FCRA) of 2010 and its amendments. This registration is put into the hands of the Ministry of Home Affairs (MHA) through an online platform. Though digitised, it is a highly stringent process through which registration for FCRA is made. NGOs have to maintain transparency, have proper documentation, and be highly compliant even during registration and even after registration, as any deviation may lead to suspension or cancellation of registration, or even legal consequences. To register the association further, these steps would need to be followed after checking the eligibility:
1. Gather Necessary Documents
- Proof of registration and incorporation documents (Trust Deed, Memorandum of Association, and Articles of Association)
- PAN card of the organisation
- Audited financials for the last three years (including Balance Sheet, Income and Expenditure Statement, and Receipt and Payment Account)
- Activity reports of the last three years
- PAN and Aadhaar details of all the key members (directors/trustees)
- Commitment letters from foreign donors (if applying with prior approval)
- Bank account details.
2. Go to the NGO-DARPAN Portal for registration. Register your profile and get a DARPAN ID for your FCRA application.
3. Create a designated bank account via the State Bank of India, New Delhi Main Branch (NDMB) situated on Sansad Marg for FCRA purposes. All forms of foreign contributions shall be deposited into this account. You can create other accounts for the use of any projects with any bank. But remember, all amounts must be sent up to the SBI NDMB account first.
4. Complete the online application on the FCRA portal. From there, get to your FCRA Online Services Portal, and either log in or register your organisation. Fill out either Form FC-3A for registration or Form FC-3B for prior authorisation. Such details include your organisation’s information, DARPAN ID, bank account details, members of the governing body, previous activities, and the use of the expected foreign funds.
5. The relevant documents have to be uploaded, and a fee paid before submission. Upload the scanned files in PDF format. The online registration fee is payable: the fee of ₹10,000 for registration under the FCRA and ₹5,000 for prior authorisation.
6. Scrutinising an Application by MHA (Ministry of Home Affairs). The application received is scrutinized by the FCRA Wing of the Ministry of Home Affairs. The verification process may also include field clarification by intelligence agencies or local government bodies. Cross-verification of documents is required. Background checks on individuals in office positions shall also be performed.
7. Appraisal of Application – Granting a unique FCRA Registration Number to eligible applications is subject to renewal after five years of validity. The MHA may also seek more clarification or ask for more documents, if any. Applications can be rejected with the reasons stated for the decision.
8. Post Registration Compliance – Organisations can receive foreign currency donations through this designated SBI account after approval. It is mandatory to maintain a comprehensive record of all incomes and expenditures. The annual return (through Form FC-4) must be submitted by December 31st each year. Administrative costs must not exceed 20% of total receipts.
Importance of FCRA Registration for an NGO
For an NGO to garner international support for its work, it needs to maintain legal and ethical standards. Thus, registration under the FCRA is relevant.
- Grants a legal basis for foreign donations.
- Extends access to international funding organisations, donors, and collaborators.
- Enhanced credibility and trustworthiness.
- Gain opportunities to provide finances for large-scale developmental projects.
- Facilitates international collaborations, multiplying their impact and outreach.
- Avoid penalties by regular compliance and a valid registration.
- Transparency and accountability are ensured through continuous documentation and reporting.
- Recognition in the national and international spheres.
Conclusion
The FCRA registration is a crucial regulatory step for NGOs that intend to receive and utilize foreign funds in India. The idea behind it is to aid the transparent and accountable flow of foreign donations while ensuring that the NGO acts within the limits set by integrity. Any compliance with FCRA is a yardstick that measures the NGOs’ concern for ethical norms and national dictates. This registration will help NGOs expand their scope of work, develop credible programs, and actively collaborate with international partners. Hence, achieving and sustaining FCRA registration carries significant importance for any NGO that intends to make a substantial difference in sustainable change.
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