Navigating the FCRA: Key Insights for NGOs

Understanding FCRA and Its Importance for NGOs

The Foreign Contribution (Regulation) Act (FCRA), 2010, is a crucial legislation that governs how NGOs and other entities in India accept and utilize foreign funds. Its primary objective is to ensure that these contributions are not misused in ways that could jeopardize national interests, internal security, or democratic institutions.

Recent Trends in FCRA Renewals

In recent years, FCRA renewals have experienced notable fluctuations:

• In 2019–20, only 41.2% of renewal applications were approved, while 53.3% were denied.
• Approval rates improved significantly in 2020–21, reaching 76.3%.
• By 2022–23, approvals hit a peak of 97.9%, with only 2.1% denied.
• However, in 2023–24, there was a decline, with approvals dropping to 75.8% and denials rising to 24.2%, indicating tighter regulatory oversight.

Major Services Under FCRA Scrutiny in FY 2023–24

During the fiscal year 2023–24, applications for changing committee members faced the highest level of scrutiny. Out of the applications, 4,185 were approved, while 4,162 were denied. This pattern suggests an increased focus on internal governance and the transparency of leadership within NGOs.

FCRA Renewal Applications Processed in 2023–24

This year saw a significant volume of FCRA renewal applications being processed:

• A total of 8,306 renewal applications were reviewed.
• Of these, 6,293 were approved and 2,013 were denied.

This marks the highest number of FCRA renewals in recent years.

High-Profile NGOs Affected by FCRA Regulations

• Oxfam India: Recently faced a license denial after being flagged for allegedly forwarding funds to smaller organizations without the necessary clearances. This practice has raised concerns about engaging in "unregistered sub-granting," violating FCRA regulations.
• Centre for Policy Research (CPR): The organization’s FCRA registration was suspended due to issues concerning funds used for research and advocacy deemed to exceed its authorized scope. CPR has been influential in national policy discussions.

Implications of High Scrutiny on Change-of-Committee Applications

The nearly equal number of approvals (4,185) and denials (4,162) for change-of-committee applications indicates that the government is carefully evaluating structural changes within NGOs, particularly in terms of leadership and governance practices, to prevent the misuse of foreign contributions.

Current Status of FCRA Licences in India

According to data from the Ministry of Home Affairs (MHA) as of March 23, 2024:

• There are currently 16,123 active FCRA licences.
• 20,717 licences have been cancelled.
• 14,965 licences are classified as expired.

NGOs Facing Stricter Scrutiny

Organizations working in areas such as governance, human rights, environment, and social justice are subject to more rigorous scrutiny. Activities involving foreign collaborations, advocacy efforts, or public mobilization are more likely to be closely examined under the FCRA framework.

Precautions for NGOs Applying or Renewing Under FCRA

• Ensure accurate and timely submission of annual returns.
• Avoid transferring funds to unregistered partners.
• Maintain transparency in governance and leadership structures.
• Keep comprehensive documentation of fund usage and program outcomes.
• Ensure that all foreign funds are utilized for permissible purposes only.

Consequences of FCRA Violations

Non-compliance with FCRA regulations can lead to severe repercussions:

• Suspension or cancellation of FCRA licences.
• Freezing of bank accounts.
• Disqualification from receiving foreign funds.
• Potential legal proceedings and financial penalties.

"Those who serve society must be fearless, but also fully compliant with the law — for accountability is the foundation of public trust."