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Transparency for thee but not for me: Here’s why foreign funded NGOs hate the FCRA amendment bill

The opposition that the amendment has received makes it clear that foreign-funded NGOs, although they seek transparency and accountability from others, are not willing to subject themselves to the same

The Foreign Contributions (Regulation) Amendment Bill, 2020 that was passed in the Lok Sabha on September 21 and Rajya Sabha on the 23rd of December had a chilling effect on several NGOs that are considering the amendment as blow to their financial freedom and functioning. The amendment to the Foreign Contributions (Regulation) Act, 2010 seeks to enhance transparency, accountability and to strengthen the compliance mechanism while allowing the genuine NGOs to continue working for the welfare of the society.

Salient features of the proposed amendment to the FCRA are:

  • It will prevent public servants from receiving foreign donations.
  • The NGOs registered under the FCRA will not be able to use more than 20% of their foreign funds towards meeting their administrative expenses (earlier the limit was 50%)
  • In order to be registered or renew license under the FCRA, all the directors, office bearers or primary functionaries of the NGOs will be mandated to provide their Aadhar number. In case these individuals are foreigners, they will be required to submit the copies of their passport or Overseas Citizen of India (OCI) card.
  • It provides for the surrender of license by NGOs post inquiry and clearance from the Central government.
  • The NGOs will be able to receive foreign contributions in their designated FCRA bank account in the State Bank of India in Delhi only.

During the Parliamentary debate on the proposed FCRA amendment. BJP MP SP Singh mentioned about the government reports on how in the northeastern parts of the country insurgency has increased through the foreign funds received under the FCRA. Few days ago, the Home Ministry had suspended the licenses of 13 NGOs after the allegations of forced religious conversion.

Opposition by NGOs

The amendment appears to have hit the expected targets as soon after the amendment was proposed in the Lok Sabha, several NGOs started opposing the bill. Oxfam India CEO Amitabh Behar took to Twitter and called the amendment a “devastating blow” that would create obstacles for the foreign aid that could uplift the poor. The Voluntary Action Network India (VANI) which is an umbrella body of voluntary organisations in India, had strongly opposed the proposed amendment and has demanded the Bill to be sent to a select or standing committee of Parliament for scrutiny. The organisation termed the amendment an attempt to stifle the NGOs.

In no time many similar voices joined the clamour against the amendment bill. Some went to call it an anti-poor bill alleging that it will make its impossible for the NGOs to function.

Some others registered their opposition by declaring the amendment as “the worst financial law” the country has.

An NGO named Arpan, registered in Mumbai, also opposed the amendment by supporting the demand of VANI for sending the for scrutiny to an Parliamentary Committee.

Another organistaion named the Population Foundation of India (PFI), also supported VANI’s call for scrutiny of the amendment.

NGOS in Tamil Nadu and Delhi likely to get affected

Expert on FCRA NGOs @by2kaafi has listed out some of the NGOs based in Delhi and Tamil Nadu that might be affected by the proposed amendment. As per the analysis by @by2kaafi, the NGOs that are likely to be affected in Delhi include:

  • Muneer Social Welfare Society
  • Appropriate Technology India
  • Action Aid Association
  • CDH International Foundation of India
  • Industrial Global Union
  • Ecoles de la Terre Welfare Society
  • Indian Olympic Association
  • Vision Foundation for Development Management
  • Saint Hardyal Educational and Orphans Welfare Society
  • Centre for Budget and Governance Accountability
  • Delhi Network of Positive People
  • Nand & Jeet Khemka Foundation
  • Indian Head Injury Foundation
  • Sightlife India
  • The Special Child Trust

The NGOs in Tamil Nadu that are likely to be affected include:

  • ECI Inter Church Aid & Service Association (Chennai)
  • In His Steps International Charitable Trust (Madurai)
  • Association for Rural Development (Madurai)
  • Institution for Rural Development Trust (Chingleput)
  • Faith Prayer & Tract League (Chennai)
  • Salvation Army India-South Eastern Territory
  • Integrated Research & Reconstruction Organization (Kumbakonam)
  • Oasis Ministries International (Chennai)
  • Families for Children (Coimbatore)
  • National Women Development Trust (Cumbum)
  • Boys Town Society (Madurai)
  • In New Democratic Integrated Action Trust (Okkur)
  • The Jesus Mission (Chennai)
  • Hope Public Charitable Trust (Chennai)
  • Bharathi Trust (Tiruvallur)

An Analysis of the Proposed Amendment

An analysis of the proposed amendment by @by2kaafi and @zeneraalstuff provides a glimpse of what the implications of the amendment will be.

  • Provision Preventing Public Officers from Receiving Foreign Aid: The will require the public officers to give up their positions in the FCRA-NGOs while holding a public office but it does not restrict them from doing so before or after their tenure. Since this will cause loss of extra income to many individuals, they might engage in malpractices to make up for that. Such public servants might find a way around by becoming members of non-FCRA NGOs and then making a member of such NGO a representative in an FCRA-NGO and thus control the latter through proxy. FCRA NGOs can also be run through Benamis.
  • FCRA Funds to be Spent Directly by the Organisation: In this case, the NGOs will be required to build their own capacity to deliver instead of relying on other partners for implementation. Large NGOs that have been liaising with foreign donors and have been coordinating the distribution of funds in India will be affected by in a way that may render them as pure administrative cost centres. This rule, however, could be bypassed by forming various for-profit entities that could work on contract with FCRA NGOs.
  • Administrative Expenses to be restricted to 20% of the Foreign Fund: This provision will reflect on the activities like soft conversions for which funds are distributed while accounting them under administrative expenditure. This will also lead to pay cuts, transition of full-time positions to contract based positions, reduction in rental expenses, etc. However, alternate means of income can be created in the form of travel and conference expenses and research grants.
  • Primary Inflow through an SBI Bank Account in Delhi: This will enable the government to keep a track of all the FCRA transactions and the sources of the fund flow allowing cross-verification with source organisation’s tax filings. However, the same entity can use multiple accounts for remittances.
  • Conditions to be Fulfilled for Registration as well as Renewal: The registration will be renewed every five years. Earlier there were no conditions required to be fulfilled for the renewal of the registration. This can put restrictions on renewal of registration of the NGO found in violation of the FCRA.

Why the opposition to the amendment?

Thus, the opposition that the amendment has received makes it clear that foreign-funded NGOs, although they seek transparency and accountability from others, are not willing to subject themselves to the same. Some of these NGOs appear to truly believe that they are so morally superior to the rest of us that they do not deserve to be held to the same standards as everyone else.

The amendment proposed, that awaits the President’s assent, should not elicit the manner of response that it has. Increase transparency and accountability from participants in the democratic process, and they are political organisations which regularly interfere in the internal affairs of the country, should be welcomed by everybody. But quite clearly, that is not the case.

Going forward, we can expect more incendiary criticism from the opposition and foreign-funded NGOs regarding the same. But nevertheless, it is a positive development that has long been required. However, it remains to be seen the precise effects that the new law forces on the operations of the NGOs on the ground.

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