How the Govt can further improve transparency in foreign contributions related to NGOs after the recent FCRA amendments

There has been significant fine tuning in recent years in regulations related to foreign contributions to private non-profit entities, the most recent of which has been the FCRA Amendments of 2020. In this article, we describe some remaining issues in the regulations as they stand now, and describe some suggestions for improving the transparency in operations of foreign-funded non-profits.

Public Interest Litigation

Existing FCRA regulations restrict use of foreign funds in conducting demonstrations, dharnas and protests. However, nonprofits engage in public interest litigation through courts for continuing in activism. Potential conflicts of interest are not made explicit as part of litigation.

All petitioners and lawyers holding brief – whether original writ petitioner or anyone that files an intervention petition – must submit an affidavit as part of the petition to declare any one/all of the following

1. The Trust, Company or Foundation that is filing the petition must furnish its registration details, FCRA Registration Number and latest FC4 Return.
2. Individuals on the board of directors, or board of trustees or founders/authors of a Trust or Foundation that is filing the petition must declare if they or a close relative are on board of directors, board of trustee or founder/author of a Trust that has FCRA Registration. Registration Number and FC4 return to be furnished
3. Individuals on the board of directors, or board of trustees or founders/authors of a Trust or Foundation that is filing the petition must declare if they or a close relative are in a position of profit in a Trust, Company or Foundation that is filing the petition that has FCRA registration. FCRA Registration Number and latest FC4 Return to be furnished.
4. An individual filing petition must declare if he/she or a close relative is on board of directors, board of trustee or founder/author of a Trust that has FCRA Registration. Registration Number and FC4 return to be furnished
5. An individual filing petition must declare if he/she or a close relative is in a position of profit in a Trust, Company or Foundation that is filing the petition that has FCRA registration, FCRA Registration Number and latest FC4 Return to be furnished.
6. Lawyer holding a brief must declare if he/she or a close relative is on board of directors, board of trustee or founder/author of a Trust that has FCRA Registration. Registration Number and FC4 return to be furnished
7. Lawyer holding a brief must declare if he/she or a close relative is in a position of profit in a Trust, Company or Foundation that is filing the petition that has FCRA registration, FCRA Registration Number and latest FC4 Return to be furnished.
8. Close relatives are defined as Spouse, Children, Parents and In-Laws

Policy Consulting and Government Projects

Policy decisions of the Government require studies, surveys and special expert committees. The composition of the committee and award of contracts for studies and surveys are currently not restricted by FCRA rules. Potential conflicts of interest may never be declared explicitly and not made part of the contracting or vendor selection process.

Any organization or individual that has been given a contract for carrying out a study, survey or report, or is part of an expert committee commissioned by the Union or State Governments in the fields of Women and Children Development, Education, Skill Development, Human Rights, Social Justice, Environmental Protection, Animal Rights must declare the following

1. Trust, Company or Foundation that is awarded the contract must furnish its registration, FCRA Registration Number and latest FC4 Return.
2. Individuals on the board of directors, or board of trustees or founders/authors of a Trust or Foundation that is awarded a contract must declare if they or a close relative are on board of directors, board of trustee or founder/author of a Trust that has FCRA Registration. Registration Number and FC4 return to be furnished
3. Individuals on the board of directors, or board of trustees or founders/authors of a Trust or Foundation that is awarded a contract must declare if they or a close relative are in a position of profit in a Trust, Company or Foundation that has FCRA Registration. Registration Number and FC4 return to be furnished
4. An individual given a contract or nominated for a committee must declare if he/she or a close relative is on board of directors, board of trustee or founder/author of a Trust that has FCRA Registration. Registration Number and FC4 return to be furnished
5. An individual given a contract or nominated for a committee must declare if he/she or a close relative is in a position of profit in a Trust, Company or Foundation that is filing the petition that has FCRA registration, FCRA Registration Number and latest FC4 Return to be furnished.

Donor Information

FCRA regulations include only sparse information about donors. The information must be extended. Entities that are restricted from receiving funds remit to another entity abroad, which in turn sends money to India.

FC 4 Returns must contain the following fields relating to all donors that cumulatively remit more than Rs 5 lakhs per annum:

1. Name of donor as registered in the home country
2. Address of donor as registered in the home country
3. Nature of business or enterprise of donor – one of Business, Charitable Trust, Religious Endowment or Charitable Trust, Government Agency, Political Trust, Political Party.
4. Primary source of funds of donor – Business, Other charitable institutions, Government Agency, Political Party, Political Trust
5. Does the donor or any entity that is the source of funds for the donor fall into any one of these categories
   1. An entity whose Indian arm that has had FCRA Registration cancelled or placed in Prior Permission category
   1. An entity related to a company or non-profit organization that has either been found guilty of or under investigation for foreign exchange violations.
   1. An entity whose key personnel have been found in violation of Indian visa rules.
6. The stated aims and goals of the donor or entity that is the source of funds for the donor.
7. An undertaking that these details that have been furnished are to the best of the respondent’s knowledge.

At least 100 entities will be taken up scrutiny at random, or upon receipt of question from the public. The MHA shall make the list of such entities taken up for scrutiny public information. MHA can send a show cause notice if information in FC4 return is insufficient or if shared information indicates violation of FCRA norms. After a hearing, if the explanation is not satisfactory, entity can be placed in Prior Permission Category

Feedback, complaints and comments from public on NGO functioning

Many FCRA NGOs and their foreign donors may engage in activities or in public communication that conflict with national interests.

MHA FCRA site must include a facility for public comments section to let the general public submit promotional materials and public communications of donors and NGOs that conflict with national interests.

The MHA will have 20 working days from receipt of comment to respond with determination if the submitted query has merit. If the query is found to have merit, the MHA shall institute an enquiry within the next 20 working days. If the MHA finds sufficient proof of the entity acting against national interest either in India or abroad, the entity can be placed in Prior Permission category. In case the activity is found to be in violation of Indian laws, the findings may be forwarded to the Ministry of Information and Broadcasting and any other competent authority for prosecution.