The Centre is going from regulation to control mode: NGOs

Updated: 22 September, 2020 09:37 IST | Vinod Kumar Menon | Mumbai

NGOs say proposed foreign contribution regulation bill seeks to strangle them, and will destroy charitable institutions in India

Institutions are allowed to spend up to 50 per cent of foreign funds received during the fiscal year on administrative expenditure. The bill proposes to reduce it to 20 per cent
Institutions are allowed to spend up to 50 per cent of foreign funds received during the fiscal year on administrative expenditure. The bill proposes to reduce it to 20 per cent

Thousands of registered NGOs across the country, who have FCRA account will be directly impacted with the latest FCRA amendment bill 2020, debated and passed in the Loksabha on Monday, it now awaits the nod of the Rajyasbha for approval and subsequent enactment in the FCRA norms, which will directly impact lakhs NGO, in the country, who were getting funds, for doing various development and charity work, as the new bill lays down its own restrictions on receiving and usage of foreign funds.

Noshir Dadrawalla, Program Director, Legal and CSR Compliance at Centre for Advancement of Philanthropy (CAP), said, "We can understand the role of the government is to regulate charity coming to NGO's, but unfortunately, the present government in centre is going from regulatory mode to control mode, by introducing the Foreign Contribution (Regulation) Amendment Bill 2020, tabled in Loksabha on Monday. The Bill proposes a number of drastic changes to the law governing receipt of foreign contribution and which will have a detrimental impact on charitable institutions in India."

The FCRA amendment bill was passed in the LS on Monday and awaits the RS nod. Pic/PTI
The FCRA amendment bill was passed in the LS on Monday and awaits the RS nod. Pic/PTI

"The Ministry of Home affairs, had earlier allowed foreign funds to come in any of the sixty two PFMS banks in the country, that they had shortlisted. But now, in the new amendment, they have specifically stated that FCRA account, should hereafter be opened with State Bank of India, New Delhi, and this is a classic example of switching over from regulatory to control mode," explained Noshir.

"The very government applauded the role of NGO's taking proactive steps, during the covid 19 pandemic outbreak, for the proactive steps taken by NGO's in providing roti, kapda and makan to the migrant workers and those affected with pandemic, and today, the same NGO's are being punished by the government by introducing new FCRA amendment bill, which is nothing but a draconian and cumbersome bill, which the fund raisers and fund givers," said Noshir.

Nishit Kumar, Centre for Social and Behavioural Change
Nishit Kumar, Centre for Social and Behavioural Change

He added, "The new amendment bill brings cap on administrative expenses- Currently institutions are allowed to spend up to fifty per cent of foreign funds received during the fiscal year on admin expenditure. The Bill now proposes to reduce it to twenty percent. This amendment will be a major blow to organisations in terms of payment of salaries, professional fees, utility bills, travel and other such expenditure."

Noshir, added, "While this amendment will prove to be a boon for organisations no longer interested in receipt of foreign funds, it will be a bane for organisations which may have created assets (e.g. schools, hospitals, vocational training centers) out of foreign funds."

Dr Girish Kulkarni, founder, Snehalaya
Dr Girish Kulkarni, founder, Snehalaya

"On surrendering FCRA registration, assets created out of foreign contributions may also have to be surrendered to the competent government authority. Isn't this unfair and another classic way of switching over to control mode from regulatory mode." Also, the proposal in new bill, is that the NGOs registered under FCRA, cannot make any sub grants to any other registered NGO, which is another blow to collaborative initiatives within the sector," Noshir concluded.

Nishit Kumar, Founder and Managing Director, Centre for Social and Behavioural Change Communication, said, " At the outset let me state that the organisation I am associated with has only just qualified to be eligible to apply for FCRA. Having said that I share the pain of hundreds of ngos/non profits who are going to be radically impacted by the Foreign Contribution Amendment Bill 2020.

Noshir Dadrawalla, Program Director, Legal and CSR Compliance at Centre for Advancement of Philanthropy (CAP)
Noshir Dadrawalla, Program Director, Legal and CSR Compliance at Centre for Advancement of Philanthropy (CAP)

"The FCRA Act is a legacy from the days of Emergency (1975-77). In actual practice there is no need for this act. All foreign remittances in India either personal or for industry are controlled by the Finance Ministry (under FEMA). Only contributions to non-profits (Societies, Trusts and Sec 8 companies) are controlled by the Ministry of Home Affairs via FCRA ostensibly to control financial transactions that feed terrorism. But the FATF (Financial Actions Task Force) that all countries are bound by is good enough for that," he said.

Nishit added, "The proposed amendment says all organisations receiving International grants must first receive then in a particular branch of SBI in Delhi, that only 20 percent (from the earlier 50 percent) of the money received can be used on admin such as salaries, travel, etc. and so on. Even before this amendment organisations were required to register with Niti Aayog and use a specified software.

CRY – Child Rights and You, stated, "CRY an Indian organisation, stands in solidarity with civil society organisations, Voluntary Action Network of India, (VANI) and all grassroots level organisations working with underprivileged communities and children in India, in expressing a deep concern over the proposed FCRA bill, 2020. This bill will have severe repercussions on the wide range of development relief and community support work done by the non-government sector."

CRY further stated, "We as part of the larger civil society network oppose the Bill and believe that it will hugely restrict community outreach work that benefits vulnerable communities. The Bill in its current form will suddenly disconnect grassroots level organisations from the communities for whom they are implementing programs in vulnerable and remote areas. Curtailing sub- granting will impact small organisations that have turned out to be the 'real heroes' during the pandemic, especially with far flung communities. It might also impact the livelihood of many social workers engaged in social development work. With the future of so many underprivileged communities and genuine civil society organisations at stake, and while the government is working closely with the non-profit sector during the COVID-19 pandemic and encouraging national and international collaborations, such a move will be against the best interests of the underprivileged population."

Snehalaya founder Dr Girish Kulkarni, who runs Snehankur Adoption Centre and an Orphanage, Ahmednagar said, "Our Institution, would get nearly nine percent of foreign funding, and the remaining ninety one percent, would come from in the form of donation from Indian's and local philanthropists from Ahmednagar and neigbouring areas, who have now settled overseas. However, a major chunk would be from corporate CSR initiative, which has been adversely affected due to covid 19 pandemic, with no funds coming in from any corner, including government."

Kurlkarni added, "The fact remains, for last three years, we have not got any government fund, from both state and central, under various projects run by the social justice and Social welfare department, and it is difficult to meet the day to day expenditures, at times, like covid 19 pandemic, with resources getting exhausted."

"The government move to introduce the new FCRA bill, might have an adverse impact, as only large NGOs can survive, and smaller NGOS and trusts, working in welfare, health, education, sectors in rural areas of the country, who would rely on funds from bigger NGOs may get completely wiped off. The government should not have hurried passing the bill, as this is not an apt time, when the entire country and globally, covid 19 pandemic has adversely impacted economy badly," explained Kulkarni.

Delhi based organisation, Voluntary Action Network India (VANI), being an apex body/national association of Indian voluntary development organizations strongly feels that the FCRA bill, 2020 will be a death blow to the development relief, scientific research and community support work of the NGO community as it prohibits collaboration with other Indian organizations.

"At a time like this, when India is battling a deadly disease, with so much at stake and collaborations internationally that are to be encouraged, this would be a model of control, over and above the rules, regulations and certification processes, that stifles this important sector. The new FCRA Bill throttles the spirit of cooperation that had been ushered in earlier this year by the positive role played by development organizations in mitigating the lockdown and COVID-19 pandemic by virtually making it impossible for NGOs to function," a source revealed.

"These amendments assume that all NGOs receiving foreign grants are guilty, unless proved otherwise. This makes NGOs open to possible harassment via queries which can be raised on almost any activity. This would impede collaborations and any other constructive activity they do. This restriction, when added to the existing restrictions which prohibit Indian organizations which win foreign research grants from sub-contracting a foreign institution (which, in essence, means that no Indian organization can be the lead institution in an international consortium), runs against the core mission of the government's desire to strengthen India's science/research performance," the source said.

Nishit has raised some questions, which may make the readers think..

- In the days when every bank has every customer online all it needs is one computer in MHA to know everything about any consumer in India. So what is this about one branch of SBI in Delhi?

- How will ngos and societies that run schools and colleges and trusts that run shelter homes now manage to do their work? Build a toilet but please dont pay the labourers who built it??

- Further organisations receiving foreign grants are now prohibited from transferring parts of that to implementing partners ! How strange that the pandemic taught us to collaborate but this Act says no to collaboration! What is achieved by this control other than to cause distress to non-profits?

- What's behind this open hostility to non profits when existing controls ( Income Tax and 12A certification, 80G certificate, Charity Commissioner, Registrar of Companies) are already over regulating non-profits? Particularly when the Niti Aayog actually acknowledged the role of ngos during the lockdown!

- Why stifling a sector that is responsible for so much good in society?"

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First Published: 22 September, 2020 07:01 IST

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