NGOs to disclose assets originating from foreign funds: New FCRA Guidelines

The Union Ministry of Home Affairs (MHA) modified the rules for non-government organizations (NGOS) that are registered under the Foreign Contribution Regulation Act (FCRA) on Monday, requiring them to report information about the moveable and immovable assets they create with foreign funds each year.

By adding two clauses to the Form FC-4, (ba) details of movable assets created out of foreign contribution (as of March 31 of the financial year) and (bb) details of immovable assets created out of foreign contribution (as of March 31 of the financial year), the ministry changed the Foreign Contribution Regulation Rules, 2011, which were established in 2011.

Two additional amendments to the current regulations requiring NGOs to register the specifics of their assets by March 31 of each fiscal year have been made, according to the Foreign Contribution (Regulation) Rules Amendment Rules, 2023, which were notified on Monday. The most recent changes to the since 2011 regulations were made in 2022.

An asset description, the size and location of an immovable asset, such as land or a building, the value of movable assets at the start of the financial year, the value of assets acquired and sold throughout the financial year, and the value of movable and immovable assets as shown on the balance sheet at the end of the financial year are all details that must be included in the form.

For the purpose of completing their yearly returns, NGOs and organizations with FCRA licenses must complete Form FC-4.

The ministry agreed on Monday to extend the FCRA licenses of those organizations whose licenses were set to expire on September 30 but whose renewal was still pending until March 31, 2024.

Data obtained by HT shows that between 2019 and 2022, MHA conducted audits or inspections of 335 NGOs and groups that were registered under the FCRA or that had been given prior approval in order to verify that the regulations governing foreign funding were being adhered to. By holding NGOs responsible for accepting and utilizing foreign contributions, the government has strengthened FCRA compliance. According to MHA data, NGOs have received foreign donations of Rs. 55,449 crore over the past three years.

As of July 17 of this year, 16,301 NGOs in the nation had FCRA licenses that were still active, while over 6,600 NGOs had their FCRA licenses terminated in the previous five years due to legal violations. In all, 20,693 NGOs’ FCRA licenses had been revoked as of this writing.

The FCRA Act, which was revised in September 2020, made Aadhaar essential for all office holders of NGOs and prohibited public employees from taking foreign donations. The new regulation also prohibits organizations receiving foreign funding from using more than 20% of the money for administrative needs. 50% used to be the upper limit.

According to the new FCRA regulations, organizations that may not be formally affiliated with any political party but yet participate in political action such as bandhs, hartals (strikes), or rasta rokos (road blockades) will be regarded as having a political nature. This type of organizations includes caste-based organizations, organizations for farmers, students, or laborers.

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