Impact of new regulations on Indian NGOs: FCRA amendments and license extensions

The non-profit sector in India is faced with yet another amendment and change to the controversial Foreign Contribution Regulation Act (FCRA). According to a notification issued on September 25, by the Ministry of Home Affairs (MHA) of India, NGOs are now obligated to provide comprehensive details about movable and immovable assets funded by foreign contributions.  

On the same day, the MHA also decided to prolong the validity of FCRA licences for entities facing expiration on September 30 with pending renewals, extending it until March 31, 2024. This is the ninth extension provided by the MHA to NGOs whose renewals are pending.

These newly announced adjustments to the Foreign Contribution Regulation Rules, 2010 involve the incorporation of two clauses into Form FC-4—(ba) outlining movable assets created from foreign contributions (as of March 31 of the financial year) and (bb) detailing immovable assets created from foreign contributions (as of March 31 of the financial year).

The revised Form FC-4 now requires NGOs to detail their movable assets, including their initial value at the start of the financial year, the value of assets acquired and disposed of during the year, and their value as per the year-end balance sheet. Additionally, for immovable assets, NGOs are obligated to disclose details such as land and buildings acquired from foreign contributions, including size, location, and value, as per the balance sheet on March 31 of the relevant financial year.

Originally enacted in 1976, the FCRA has undergone several transformations. It was introduced to serve as a regulatory framework to prevent foreign interference in India’s internal affairs by monitoring foreign donations to NGOs and governs the inflow of foreign funds to non-profit organisations in India and determines the sources of funding, recipients of these funds, their permissible uses, and other related aspects. The act explicitly prohibited certain individuals and entities, including political parties, government employees, and media outlets, from accepting foreign contributions.

Over the years, amendments have been introduced to enhance the regulatory framework. In 1984, non-profit organisations were mandated to register before receiving foreign donations, with restrictions on transferring funds to unregistered entities. The 1976 Act, primarily focused on nonprofits receiving foreign contributions, was eventually replaced by the more comprehensive Foreign Contribution (Regulation) Act, 2010, along with rules in 2011.

The 2010 Act brought about significant changes, introducing a five-year validity for FCRA registration, mandatory renewal, and limitations on the utilisation of foreign funds for administrative expenses. Notably, in 2018, an amendment made foreign funding to political parties legal retrospectively.

The last development, the Foreign Contribution (Regulation) Amendment Bill, 2020, further strengthened regulations. Key changes include restrictions on accepting foreign contributions by public servants, Aadhaar requirements for registration, a blanket ban on transferring foreign contributions, reduced limits for administrative expenses, and the mandate for a designated FCRA account.

Earlier in March 2023, the Central government had disclosed that Indian NGOs had received a total of Rs 55,449 crore (6,666.33 million USD) in foreign funding over the past three years. As of July 17, there were 16,301 NGOs in the country with valid FCRA licences, but strict enforcement by the government had led to the cancellation of licences for over 6,600 NGOs in the past five years.

Many prominent organisations like Save The Children, Srinivas Malliah Memorial Theatre Crafts Museum, and SEWA have lost their FCRA licences earlier this month. Other organisations that also lost their FCRA registrations have been Oxfam India, Centre for Policy Research (CPR), Commonwealth Human Rights Initiative (CHRI) and Centre for Equity Studies (CES).