Union Government Proposed Changes In FCRA; Know How It Affects NGOs?

by Shatakshi Gupta

The Union Government is all set to amend the Foreign Contribution (Regulation) Act (FCRA).  For this, the FCRA Amendment Bill, 2020 was tabled in Lok Sabha today. In this context, it is important to know what are the major changes proposed.

 There will be a provision, that the Central Government can approve the withdrawal of its FCRA certificate to a non-governmental organization (NGO) or association.  The draft bill states that organizations under FCRA should not use more than 20 per cent of the total foreign funds in administrative expenses. Currently, this limit is 50 per cent.

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FCRA has been amended twice

The Foreign Contribution (Contribution) Act, 2010 was enacted to regulate the use of foreign donations of people or associations or companies.  Under this, there is a prohibition on the taking or use of foreign funds for any activity that threatens national security.

The Act came into the force on 1st  May 2011. Since then, it has been amended twice.  The first amendment was done through Section 236 of the Finance Act.  Later, the second amendment was made through Section-220 of the Finance Act, 2018.

What is new in the Bill?                                                      

The FCRA Amendment Bill, 2020 states that ‘genuine’ Non-government organizations (NGOs) who use thousands of crores of foreign funds and work for social welfare every year should be more accountable. Amendments are necessary to increase transparency and accountability in the payments of organizations or associations.  The draft bill states that any person requesting prior permission or registration under FCRA or renewal of the certificate of FCRA will now have to provide the Aadhaar Number of all his office bearers or Directors.

 Secondly, The amendment bill states that it will be necessary to give a copy of the passport or copy of OCI card if you are a foreign national.

Bill also proposes to include public servants and the government or a corporation under its control in the list of units that cannot receive foreign grants. In simpler terms, no government department or officer will be able to take foreign funds.  

As per the data, NGOs registered under FCRA received foreign funds of more than INR 58,000 crore between 2016-17 and 2018-19.  Currently, there are about 22,400 NGOs in the country.