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Context:

The Union Government announced new guidelines for NGOs under the Foreign Contribution (Regulation) Act (FCRA), 2010.

Details

The Ministry of Home Affairs new announcement has defined the circumstances under which NGOs FCRA registration will be canceled:

• Involved in anti-developmental activities or forced religious conversions.
• Disrupts social or religious harmony 
• Diverts foreign funds for anti-development purposes or incites violent protests.
• Uses foreign contributions for personal gain by the organization or its officers.
• Use foreign funds for illegal activities or maintain ties with terrorist or anti-national organizations.
• If an NGO does not use foreign funds for projects that are aligned with its stated aims and objectives

Foreign Contribution Regulation Act (FCRA) 2010

It was enacted to govern the acceptance and use of foreign donations by individuals, associations, and businesses.  It ensures that foreign contributions are used for legitimate purposes consistent with national interests.

Key Provisions of the FCRA 2010

Organizations and individuals have to register with the Ministry of Home Affairs to receive foreign contributions. Foreign contributions must be used exclusively for the purpose for which they were received. Registered entities are required to submit annual returns detailing the contributions received and their use. NGOs cannot transfer foreign contributions to another organization unless it is also registered under the FCRA. Noncompliance with the provisions can result in penalties such as cancellation of registration, fines, and imprisonment.

FCRA Amendment Act 2020

The amendment expanded the list of people and organizations who cannot accept foreign donations, including public employees, election candidates, media personnel, judges, and political parties.

NGOs must provide Aadhar numbers for key members and identification for foreign members.

Foreign contributions must be deposited in a "FCRA account" at a specific branch of the State Bank of India in New Delhi.

The Act limited administrative costs to 20% of foreign contributions, down from 50% previously.

NGOs must renew their registration within six months of its expiration, and the government may suspend or cancel it for violations.

Concern

The term "anti-developmental activities" is ambiguous and could be interpreted broadly to target NGOs engaged in legitimate developmental work or social campaigns that oppose specific government policies or projects.

Way Forward

NGOs should use foreign contributions only for the purposes outlined in their objectives and avoid any activities that may threaten social or religious harmony.  

NGOs must maintain transparency in their operations and ensure that their officers and essential staff have no ties to any radical or terrorist organizations. 

NGOs should establish strong internal monitoring systems to ensure proper documentation and conduct regular assessments to ensure that foreign funds are being used in accordance with their objectives. 

Must Read Articles: 

CRACKDOWN ON NGOS IN INDIA

FCRA

Source: 

Indian Express

Vakilsearch

PRACTICE QUESTION Q.Critically analyze the effectiveness of the Foreign Contribution Regulation Act (FCRA) in maintaining national security and preventing misuse of foreign funds by NGOs. (150 words)