June 11, 2021

FCRA UPDATES FOR NGOs

By sameehaanwar Latest Article, Legal News 0 Comments

The government has made an important announcement regarding the Foreign Contribution Regulation Act for non-profit organizations (NGOs). It has decided to extend the validity of registration certificates for NGOs till September 30, 2021.

But what exactly is FCRA?

FCRA or Foreign Contribution Regulation Act 1976, is a law of Government of India which manages receipt of foreign contributions or help from outside India to Indian areas. First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations. The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA. The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

Over the years, the law has become more stringent, adversely impacting the work of non-profits, instead of creating an enabling environment for strengthening them.

The FCRA law was again amended in September 2020 to include a clause that mandated that all non-profits receiving foreign aid must necessarily open an account in State Bank of India’s New Delhi Main Branch. The government had initially set the deadline for this account opening as March 31st, 2021; it later extended it to June 30th, 2021 after several non-profits argued in court that there had been delays because necessary approvals from MHA had not been received.

With the new FCRA law, international donors will be discouraged from donating to India as the cost of fund disbursals will go up. People who might have earlier donated to one non-profit, which further sub-granted to another ten non-profits, will now have to disburse grants to these various non-profits individually.

The Ministry of Home Affairs has extended the validity of FCRA registration certificates which have already expired or will expire between September 29th, 2020 and May 31st, 2021 to September 30th, 2021. The decision to extend the deadline has been driven by the exigencies arising from the COVID-19 situation.

Several organizations have not been able to receive foreign funds during the crisis caused by the second wave, and this has impacted their COVID-19 relief efforts. Relaxing the foreign funding rules could significantly help organisations ramp up their operations to help individuals, supply critical healthcare equipment, and respond to communities in rural areas.

NGOs had submitted that they were facing tremendous difficulty both in the opening of the FCRA account, as also in the subsequent approval which is to be obtained from the MHA, as, without the approval of the MHA, no foreign contributions can be received by them.

Notably, The Ministry of Home Affairs on Wednesday extended time for FCRA account holders until June 30, 2021, to open their “FCRA Account” in the New Delhi Main Branch (NDMB) of the State Bank of India.