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Growing Concerns about FCRA renewals.

Growing Concerns about FCRA renewals.

Growing Concerns about FCRA renewals.

“How long should we wait before getting agitated about this delay in FCRA renewal?” a nonprofit leader recently asked. We will be unable to pay our employees unless we have a valid FCRA certificate.”

The FCRA act 2010 governs the inflow of foreign contributions to Indian nonprofit organisations. The Ministry of Home Affairs is in charge of enforcing it (MHA). The FCRA Amendment Bill, 2020, has been introduced in the Lok Sabha in September 2020.

The severe restrictions imposed by these amendments have worried nonprofits. These include a 20% limit in administrative expense, a prohibition on sub-grant to any other organisation (even if the sub-grantee is FCRA-registered), and the precondition that all eligible nonprofits open their FCRA bank accounts at only one branch, namely the SBI on Sansad Marg in New Delhi.

Amidst these strict clauses, the most pressing issue today is the renewal of FCRA registration.

Concerns about the renewal of the FCRA

  • Numerous organisations’ FCRA renewals are due on October 31st, 2021. The Rapid Community Response to COVID-19 (RCRC), with which we collaborate, is a national coalition of civil society organisations that assists those most severely impacted by COVID-19.
  • An internal survey of 41 member organisations with yearly budgets ranging from INR 50 lakh to INR 130 crore yielded the following findings: The FCRA certification of 34 organisations is set to expire on October 31st, 2021.
  • Thirty-one of these 34 organisations have applied to renew their FCRA certificate. Only 11 institutions have started receiving calls or visits from Intelligence Bureau (IB) officials, who are in charge of reviewing and processing renewal applications.

Application review has not even begun, for 2/3 of the NGO’s.

  • This means that for two-thirds of the Ngo’s organisations, application review has not even begun. There is some ambiguity about the status of renewal in some cases where it has begun. “The entire process is fraught with uncertainty.”
  • We received an email in which it was stated that our “case is closed until the Intelligence Bureau report is submitted.” “What should we make of this?” asks one nonprofit executive whose organisation applied for FCRA registration renewal in September 2020. Their certificate was set to expire in April 2021.
  • “It is not possible to meet with anyone in the FCRA division/ The Ministry of Home Affairs to resolve our queries,” says another nonprofit leader. We are solely reliant on this email response.”

What happens after the 31st of October, 2021?

  • Based on the results of the RCRC survey, it is probable that several nonprofits will lack a legitimate FCRA certificate by November 1st, 2021.
  • This implies that after October 31st, 2021, it’ll be illegal for them all to receive foreign funds or spend the funds remaining in their FCRA bank accounts.
  • More than INR 115 crore is at risk for the organisations surveyed. This is due to the fact that approximately INR 70 crore of FCRA funding is anticipated to stay unused as of October 31st, 2021, and an additional INR 45 crore of FCRA funding is anticipated to be received after this date.
  • Nonprofits are clueless what will happen to the funds they have received to raise awareness about vaccinations and prepare communities for the third wave. “Are we expected to restructure our COVID-19 relief operations in order to spend all FCRA funds in the next five weeks?” a nonprofit leader inquires.

Nonprofits use the FCRA funds they receive to pay their employees and provide services at the grassroots level.

  • We’ve been told that the MHA’s FCRA division is under a lot of pressure because more than 20,000 renewal applications have to be reviewed.
  • The FCRA amendments enacted in September 2020 require that renewal applications to be treated as new applications.
  • This is due to a provision of Section 16 of the FCRA (inserted in September 2020) read in conjunction with Section 12(4), which requires that eligibility requirements to be validated before registration is given.
  • The Ministry of Home Affairs has added more documentary requirements, including affidavits from all directors and key functionaries, to increase the level of scrutiny.
  • The NPOs that we conducted a survey believe that this is the government’s right and privilege, and that it is necessary to root out organisations that are not meeting their set objectives. They also appreciate the efforts of the FCRA division and the IB.
  • However, if more clarification is not provided soon, NPOs anxiety is likely to rise, as the FCRA funds they receive are used to pay their employees and provide assistance at the grassroots level. Their work will be halted.

We make the following suggestions on about FCRA renewals:

suggestions on about FCRA renewals:

  • The Ministry of Home Affairs should extend the existing validity of FCRA certificates by one year, or to a date by which it can make sure that all FCRA renewal applications are thoroughly reviewed.
  • Home Affairs Ministry can issue a notice allowing NPOs to spend FCRA funds which have already been received and are still in their bank accounts till their FCRA certificate is revived.
  • To speed up the processing of renewal applications, civil society coalitions can offer to arrange camps where IB officials can simultaneously and efficiently review and process renewal applications.
  • Civil society coalitions could indeed collect and submit the necessary information from their member organisations to The Ministry of Home Affairs in order to speed up the processing of renewal applications.
  • Coalitions should assist member NPOs in seeking legal remedy while also requesting urgent action from The Ministry of Home Affairs.

A conversation between the Ministry of Home Affairs /FCRA division and NPOs will relieve concerns about postponed renewal and speed up application processing. This has the immediate effect of allowing critical ground-level work to continue.

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