FCRA creates hurdles for social work in Karnataka


NGOs across the state are facing difficulties on account of the new FCRA rules

Rural Institute for Social Education (RISE), a grassroots non-governmental organisation (NGO) that worked for the education and upliftment of children of devadasis, sex-workers, dalits and tribals for over 40 years, shut down last year owing to “a decline in funding”. Education of these underprivileged children now depends on the government’s lacklustre education system, thus hampering any prospects of upliftment they may have had.

Ramkrishna N, director of RISE, which is now defunct, blamed the central government’s amendments to the Foreign Contribution (Regulation) Amendment Act for “hampering the good work that we do.”

2.94 percent of NGOs (registered as Societies) were already defunct in 2019. The study also referred to Karnataka government’s database of registered NGOs as “incompetent”.

According to a study titled Estimating Philanthropic Capital in India, Centre for Social Impact and Philanthropy, Ashoka University

New regulations by the government create bottlenecks for NGOs who need to access funding. “Recent amendments said that foreign funds cannot be transferred to implementing agencies like us. As we had no way of raising the funds on our own, we completely depended on organisations like HEKS (Hilfswerk der Evangelischen Kirchen Schweiz/Aid Organisation of the Swiss Evangelical Churches). Already, many donors have already left the country,” he said.

RISE used to be funded by HEKS/EPER, a Swiss organisation that provided funding for social work revolving around the underprivileged and marginalised population groups, mostly in southern India. HEKS/EPER left India at the end of 2020, shortly after the central government passed the controversial Foreign Contribution (Regulation) Amendment (FCRA) bill in September 2020.

“In the name of development, the government is saying that we don’t need any foreign funding. Drying up of funding has put the children we used to help in a bad spot,” he added.

A non-profit working in India has few options when it comes to securing funding. They can rely on foreign funds, corporate social responsibility (CSR) funds, the government or the general public. While the government is a big source of funding for developmental projects across India, CSR funds are usually given to the corporation’s foundations and are spent around their area of operation, according to an article in The Mint.

On the other hand, organisations like Dasra are engaging the general public in philanthropy to support nonprofits in their growth and social work.

Only 18 percent of foreign funds coming in the country went to NGOs, and 40 percent NGOs with an FCRA licence received no foreign funding at all.

According to a 2015 analysis commissioned by The Mint

Apart from making it difficult for NGOs to access foreign funding, the government also cancelled FCRA licences of more than 20,600 NGOs in the past decade, of which 1445 were from Karnataka. Union Minister of State for Home, Nityanand Rai, in a written reply in Lok Sabha, said that the licences had been cancelled for violation of various provisions of the Foreign Contribution Regulation Act (FCRA), 2010, and rules made thereunder. As per Ministry of Home Affairs data, 1808 FCRA licences were cancelled in 2019 alone, 93 of them were from Karnataka.

In an answer to a question asked in the Rajya Sabha, the Ministry of Home Affairs disclosed that foreign contributions of ₹16,902.41 crore in FY17-18 and ₹2244,77 crore in FY18-19 (as of November) were received. And more than ₹14,000Cr in foreign donations was received by nonprofits in FY16-17, according to a study, by Foundation Strategy Group.

Prominent NGOs like Oxfam India, Common Cause, Jamia Millia Islamia, and Mother Teresa’s Missionaries of Charity (reinstated after backlash) were also not spared. Amnesty International halted all work in India in 2020 over the government’s “incessant witch-hunt” campaign alleging money-laundering.

Mother Teresa’s Missionaries of Charity had their licence abruptly cancelled after they were booked under Sections 295A (deliberate and malicious acts, intended to outrage religious feelings of any class by insulting its religion or religious beliefs) and 298 (deliberate intent to wound the religious feelings of any person) of the Indian Penal Code. The licence was later reinstated on January 7, 2022 after outcry from West Bengal chief minister Mamata Banerjee who accused the home ministry of freezing the bank account of the charity based in Kolkata.

A sister from a children’s home run by Missionaries of Charity in Bengaluru, who refused to be named, said that they did not face problems for the few weeks when their FCRA licence was cancelled. “Everyone from all castes and creeds helped us. We were able to raise the funds locally,” she said.

Children’s home run by Missionaries of Charity in Bengaluru | Courtesy: Wikimapia

Not all organisations can raise funds locally. Oxfam India, an NGO that works towards eliminating inequality in the country, lost 80 percent of its funding after the government cancelled its FCRA licence. The United Kingdom recently raised the issue of renewal of the British charity’s licence with the Indian government.

Abhhir VP, public relations, Oxfam India said the Ministry of Home Affairs cited ‘public interest’ for the cancellation of the licence. “The Ministry of Home Affairs’ decision to deny the renewal of FCRA registration will have an impact on our work… to serve the vulnerable communities in the country. We have reached out to the Ministry of Home Affairs and have urged them to lift the funding restrictions to ensure vulnerable communities keep receiving the support they need at this critical time during the COVID-19 pandemic,” he said.

Zubair Ahmed of Action Society for Integral Development, an NGO based in Chikballapur that organises health and cultural programs in the community, said that the government cancelled their FCRA licence for non-submission of documents. “The government has restricted access to ₹30,000 of the organisation’s funds. I called the FCRA helpline and they told me to book an appointment with the home secretary and travel to Delhi. It makes no sense for me to spend multiple days and money only to ping-pong between offices. This government has made our life very difficult,” he said.

In another instance of the tyranny of the new laws, Sudarshan, who ran a home for underprivileged boys in Chikkaballapur, had his licence revoked last year. St. Paul’s Education Trust was a charity registered under the Juvenile Justice (Care and Protection of Children) Act responsible for the education, healthcare, housing and nutrition of more than 15 boys. “As soon as the licence got cancelled I had to close the home and shift the boys to other homes,” said Sudarshan.

St. Paul’s Education Trust’s licence was revoked because Sudarshan failed to register the NGO on the DARPAN portal. The NGO-DARPAN portal was launched by NITI Aayog “to create and promote a healthy partnership between NGOs and the Government of India”, according to its website. Sudarshan however complained that trying to register on the portal was “a horrible experience”. “I received only about ₹1 lakh yearly from my friends from abroad so I could run the home. I used to file my returns on time but failure to register on the portal got my licence revoked,” he said.

Sri Nidhi Charitable Trust, which now provides shelter and education to underprivileged boys in Kengeri, Bangalore from local donations, had its FCRA licence cancelled because Praveen Kumar failed to submit the required documents. “Nobody told me that the rules had changed,” he said. “The quality of food and clothing we provide to the kids has suffered because the donations from local donors are not enough,” he added.

Children studying at an educational institute run by Sri Nidhi Charitable Trust in Bengaluru | Credit: Arshreet Singh

Shri Manik Prabhu Shikshan Samiti, a rural NGO that works towards education of blind, physically challenged and destitute children, was in the process of building a school for blind children in Bidar in North Karnataka when its FCRA licence was abruptly cancelled by the Ministry of Home Affairs.

“One day we got a message from the Ministry of Home Affairs saying that our licence has been cancelled because we failed to file FCRA returns under the new provisions. People had assured us funds but they got held up because of the cancellation. We have applied for a new licence but it is still under process,” said A M Prabhu of the NGO.

Stricter over the years

Foreign Contribution (Regulation) Act was first enacted during the peak of the ‘emergency’ in 1976 by the Indian National Congress government headed by Indira Gandhi. The act’s initial purpose was to regulate foreign donations to political parties and media (editors, correspondents, columnists, printers, publishers and cartoonists) on the pretext that it may adversely affect the national security of India.

Later in 1984, an amendment made it mandatory for non-profit organisations to register before receiving foreign donations, and banned the transfer of such donations to other unregistered organisations. It was after the 1984 amendment that the law shifted its focus on non-profit organisations.

Credit: Arshreet Singh

The United Progressive Alliance government headed by Dr. Manmohan Singh then repealed the law in 2010 and replaced it with a much tougher one, limiting the duration of an FCRA licence to five years. Deficiencies in the working of the 1976 Act were cited at the time. More than 10,000 NGOs lost their licence at the time.

The act was further amended in 2020 after the Foreign Contribution (Regulation) Amendment Bill was introduced in the Lok Sabha in September of 2020. The bill was then passed three days later in both the houses. The new amendments introduced several new provisions aimed at restricting the flow of foreign donations coming into the country, thus curbing an NGOs capacity to access funding. 

How will the new amendments impact NGOs?

Credit: Arshreet Singh

Imprecise language opens avenues for abuse

According to a 2020 briefing paper released by the International Commission of Jurists, the Act uses imprecise and broad language, “which has left it open to abusive and arbitrary application by the Indian authorities”. The paper also argues that the law is “unlawfully obstructing the critical work of non-governmental organisations,” while adding that “the repressive law must be revised or scrapped.”

Credit: Times of India

The high commissioner for human rights at the UN, Michele Bachelet, regretted the crackdown on NGOs working for human rights by the Indian government. “The FCRA has been invoked over the years to justify an array of highly intrusive measures, ranging from official raids on NGO offices and freezing of bank accounts, to suspension or cancellation of registration… I am concerned that such actions based on the grounds of vaguely defined ‘public interest’ leave this law open to abuse, and that it is indeed actually being used to deter or punish NGOs for human rights reporting and advocacy that the authorities perceive as critical in nature. Constructive criticism is the lifeblood of democracy,” she said.

Misappropriation of funds curtailed

Sanjay Agarwal, who wrote the Accountable Handbook on FCRA 2010 and is a council member at the Institute of Chartered Accountants, favoured the recent amendments saying that they have instead made the law tighter for those engaged in diversion or misappropriation of funds.

“The government has reduced the administrative expenses quota from 50 percent to 20 percent, while also defining what constitutes administrative work. Now, an organisation cannot divert funds to pay off journalists, politicians or lawyers engaged in unrelated public interest litigations. Earlier people used to buy cars from foriegn funding earmarked for development works, but now the government has better oversight thanks to centralised information,” said Agarwal.

He compared giving money to his son for a night-out to NGOs receiving foreign funding. “If I give my son money to go have fun, and then ask him for details of where he spent all of his money, ofcourse he is going to grumble. This is why all the NGOs are up in arms, they don’t want to give accountability.”

“Four NGOs may misuse the funds, but the remaining 96 get the punishment. Of Course, black sheep are everywhere but the act does not hinder the activities of those engaged in good, honest work,” he added.

Recently, the Supreme Court of India, taking the government’s side, in a 132 page verdict said that receiving foreign donations cannot be an “absolute or even a vested right” and added that taking foreign donations shows that a nation is incapable of looking after its own needs.


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