The Foreign Contribution Regulation Act, 2010

The Foreign contribution played a major role in the economic activities of every organization. The requirements which were listed made every organisation shrewd towards this foreign contribution application process. Many organizations faced heavy burden especially the Non-governmental organizations because of the hard implementation involved in the FCRA laws. This paper mainly deals with the superiority laid down by the FCRA laws over the NGOs.

Introduction

In the past three years, it has been reported that the license of nearly 6,600 NGOs was cancelled by the Central Government because of the violations of the provisions of FCRA, 2010. Even in this year till now it was reported that the license of 13 NGOs have been cancelled due to the non-compliance of the provisions of foreign contribution act, 2010 along with the termination of the FCRA approval certificate received by them and leading to the freezing of bank accounts. This signifies the inevitable role of Foreign Contribution Act in the business cycle of NGOs. The article mainly emphasise the dominance laid over by the Foreign Contribution act over the NGOs. The first part of the article deals about the objective, administration, restrictions, and the requirements imposed and whereas the second part of the article deals about the effects and consequences of the foreign contribution regulation act, 2010 upon the non-governmental organizations.

Origin And Scope Of Foreign Contribution Regulation Act, 2010

The Foreign Contribution Regulation act, 2010 was initially brought back in 1976. The framework of this 1976 act was brought in by the Delhi High Court in the case of Association for Democratic Reforms v. Union of India[1] where it was said that Foreign Contribution Regulation Act, acts as an immune system against the foreign powers in influencing the sectors of judiciary, journalism and politics. Due to the disadvantages found over the 1976 act, the government brought in the 2010 act. The foreign contribution regulation act mainly involves in monitoring the incoming of foreign contributions and to ensure the purpose for which the donation was received. The act also prevents the inflow of the foreign contribution or donation if it has sufficient reasons to believe that such contribution is for activities detrimental to the national interest and matters connected therewith.

Organizations Eligible To Receive FC Under Foreign Contribution Act, 2010

For an organization to receive foreign contribution, it must be working for a charitable purpose. The organization must comply with the procedure established under foreign contribution regulation act, 2010 in order to receive authorization for the utilisation of foreign contribution. The first rule in this process is registration followed by the fulfilment of the obligation of obtaining prior permission.

Registration

The charitable organization should first register under the foreign contribution act, 2010 in order to proceed further in receiving the foreign contribution. The main eligibility criteria under the registration process are that the organization should be in existence for a minimum period of three years. Every registration under this act is valid only for a period of five years after which renewal is a must. The organization should submit their Form FC-3 online and within 30 days they must send the hard copy of their application along with the other necessary documents.

The fee for this process would be Rs.2, 000/-. The approval or rejection of the application would be intimated within 90 days of their submission.

Prior Permission

The organization whose existence is less than three years should compulsorily obtain prior permission approval from the foreign contribution regulation department. The organization must specify the reason and purpose for receiving the foreign contribution. The organization cannot use the FC for any other purpose. The charitable organization cannot receive excess amount than specified in the approval. The organization must submit their form FC-4 by sending in their hard copy of the application. The fee for this process is Rs.1, 000/-. After 90 to 120 days, the acceptance or rejection would reach the organization. 

Restriction Under The Foreign Contribution Regulation Act, 2010

The Foreign Contribution Regulation Act, 2010 prevents and debars certain group of people from receiving foreign contribution. Any member of the legislature or member of the political party or Judge or government employee or the employee of any other entity controlled or owned by the government cannot accept any form of contribution from any foreign source.

Impact Of Foreign Contribution Regulation Act, 2010 On Non-Governmental Organizations

Under this act, every organisation including NGOs can get Foreign Contribution. During 2015, according to the rules notified by the MHA, every NGO must give an undertaking that the activities for which the contribution is received should not be against the sovereignty and integrity of the state. The NGOs are also under an obligation to maintain the amount in the Nationalised Banks or any of the private banks for quick access of the security agencies. During November 2016, the FCRA licenses of more than 25 NGOs were cancelled by the Central Government and the reason was that the organisations have engaged themselves in activities detrimental to the national interest. The major reasons for these effects on the NGOs are because of the change implemented in the Foreign Contribution Regulation Act, 2010. The first change is that under the old act, the license once bought need not be renewed but whereas under the 2010 act, the license has to be renewed every five years. During 2016, the licenses of nearly 11,319 NGOs have been cancelled due to expiry of their licenses as the deadline passed. The second change was having a cap of 50% on the proportion of foreign funds received for the administrative expenses. The third degrading effect was that the main focus of target has been completely changed from the political parties to the Organizations of Political Nature under which the Non-Governmental Organizations got stuck up. The major reason for making severe and stern laws in regulating the NGOs was because of the International donors who would if allowed would take entire control of the economy. Most of the NGOs in India mainly depend on the International Donors because of the lack of political power or inadequate financial capacity. Some of the immense, enormous, and huge situations under which the license of certain NGOs was cancelled are,

  • It was held that some NGOs who receive contribution from a US based NGO has been planning to increase the protest in the Kudankulam Nuclear Power Plant issue.
  • According to the Intelligence Bureau report, an NGO named Greenpeace India was accused of indulging in the obstructing activity of destabilising the India’s energy mix by joining hands with US group. Hence, the license of Greenpeace India was cancelled.
  • Certain educational institutions like Jawaharlal Nehru University, IIT- Kanpur, etc., were also registered for FCRA license but their registration for cancelled
  • The foreign contribution done by an International NGO was cancelled due to the reason that it has been funding an unregistered NGO which is engaged in the activity of encouraging religious conversions.

The FCRA act held that the government can refuse to grant license to the NGO if it is under an impression that the activity of that particular organisation affects the public interest or the economic interest of the state but still there’s no line of difference between the economic and public interest. The FCRA restrictions have serious repercussions on the fundamental right guaranteed by the Constitution of India. The right to freedom of speech and expression under Article 19(1)(a) of the Constitution has been violated in the following way:

The right to free speech is affected as NGOs need to maintain their criticism in a decent tone so that their existence is not much damaged. The FCRA guidelines can suppress the NGOs from raising their voices against the Government by declaring them as against the public Interest. This can give rise to situations of self-denial. The best-known example for the chilling effect on the freedom of speech and expression was made in the case of Shreya Singhal v. Union of India[2] (2015). The Supreme Court in that case struck down the Section 66A of Information Technology act as it could be used in a way detrimental to the freedom of speech and expression.

Conclusion

The existence of strict laws should be restricted. There are certain NGOs which operate against the national interest but there are certain other ways to regulate by imposing fine, temporary cancellation of the license etc. Back in 2009, the National Accreditation Council of India (NACI), which is a seven member task force, was about to set to monitor and accredit all the foreign contribution related activities and even the report was submitted to the planning commission for its approval but in vain. There was no information of the national level self-regulatory agency again. Finally, the Foreign Contribution Regulation Act was brought in and then started to impose its aggressive administration. Hence, it is time to consider repealing the FCRA laws and bringing in self-regulatory national bodies to administer the process of Foreign Contribution.

FAQs

What Are The Objectives Of The FCRA, 2010?

The main objective of the Foreign Contribution Regulation Act, 2010 is to regulate the amount or contribution which is received from the foreign sources.

What Are The Eligible Criteria For Receiving The Foreign Contribution Under The FCAR, 2010?

The major eligibility criteria for receiving foreign contribution are registration and prior permission and the organizations satisfying these conditions alone are allowed to receive foreign contribution.

What Are The Restrictions Imposed Under The FCRA, 2010?

The restriction is mainly imposed on the entity which is owned and controlled by the government an also on the individuals who are with the power and authority.

What Kind Of Dominance Does FCRA Exhibit Over The NGOs And Whether There Is Any Violation Of Fundamental Right?

The one and only way by which the FCRA exercises its dominance over the NGOs is by imposing a

References

  1. https://www.thehindu.com/news/national/the-hindu-explains-what-is-foreign-contribution-regulation-act-and-how-does-it-control-donations/article32590504.ece

[1] Association for Democratic Reforms v. Union of India; AIR 2001 Delhi 126

[2] Shreya Singhal v. Union of India; AIR 2015 SC 1523.

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