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FRCA changes hindering NGOs’ Covid relief works

Last Updated 29 July 2021, 20:40 IST

Voluntary agencies or Non-Governmental Organisations (NGOs), which supplement government welfare efforts in normal times, play a crucial role during disasters and catastrophes. In the present context, NGOs are reaching out to the needy and vulnerable sections affected by Covid-19.

The recent amendments to the Foreign Contribution Regulation Act (FCRA) have, however, hampered the flow of funds and consequently the delivery of timely service in the second outbreak of the pandemic.

Before going into the impediments created by FCRA amendments, let us have a glimpse of the nature of NGOs and their funding pattern. Voluntary agencies in India, having a history of over a hundred years, have come to play a dominant role in the fields of relief, socio-economic development and social action. Hundreds and even thousands of NGOs are involved in a wide variety of activities and are spread all over the country.

NGOs are characterised by: a) non-profit orientation, b) initiative from the civil society and governed by its own members, c) autonomy from state and its direct control, d) an apolitical organisation, and e) working for public good on the basis of mutual aid.

The basic Act governing the registered societies was enacted in 1860, and since then, many groups were formed for social, cultural and economic reforms, and included charitable societies and educational movements. The British also patronised these voluntary initiatives. After Independence, many groups were formed inspired by Gandhian principles. The 1970s and 1980s saw mushrooming of NGOs which was attributed, among other things, to the failure of the ‘system’ and the state being unable to deliver the goods.

Funds are the fuel for running the organisation and, therefore, fundraising is an important activity in the development sector. NGOs mobilise financial resources for smooth functioning of their projects and programmes. It is a process of seeking voluntary financial contributions from individuals, businesses and charitable foundations.

The process of fundraising includes not only raising money but also relationship building with philanthropists, corporates and international donor agencies.

Most of the NGOs in India suffer from a perpetual hunger for funds. Sources of funds for NGOs are from local, national and international agencies and foundations as well as government bodies.

In recent years, CSR (Corporate Social Responsibility) funding is an alternative source. As per the Companies Act, it is mandatory for companies with a net worth of Rs 500 crore, or turnover of Rs 1,000 crore or a net profit of Rs 5 crore or more to provide a contribution of 2% of the average net profits for CSR activities.

With regard to international funding, an FCRA registration is mandatory to receive foreign funds which can be utilised for social, educational, economic, cultural and religious purposes. The Act was implemented in 1976 during the Emergency and was essentially meant to keep a check on foreign influence in social, political, economic and religious discussions. The 1976 Act allowed non-profits to freely receive foreign donations, although they were required to report the amount received and spent each year.

In 2010, the 1976 Act was repealed and replaced by an even stricter law— Foreign Contribution (Regulation) Act, 2010 along with the Foreign Contribution (Regulation) Rules, 2011.

On September 20, 2020, the Foreign Contribution (Regulation) Amendment Bill, 2020 introduced in the Lok Sabha broadly redefined terms related to acceptance, transfer and utilisation of foreign contributions. According to the amended FCRA Act after 1 April 2021, NGOs can only receive foreign contributions after opening an account in New Delhi’s Parliament Street Branch of State Bank of India.

As per the new Act, it is mandatory to register the Aadhaar details of the chief functionaries, trustees and office-bearers. It has capped the administrative expenses at 20% — earlier the upper limit being 50%. Besides, the amendment has also barred sub-granting by NGOs to smaller NGOS who work at the grassroots.

Problems galore

The Amendments, as expected and feared, are curtailing relief efforts. Many NGOs are knocking on several doors, trying to convince the authorities of the urgent need to relax the regulations that are hindering Covid relief work. There is also the difficulty in putting together and submitting personal documents of the Governing Board members who are located in different parts of the country and facing challenges of travel restrictions on account of lockdowns.

Several NGOs are yet to activate their bank accounts and despite applying before March 31, their papers are not processed. While commenting on the damaging effect on foreign-funded NGOs engaged in Covid relief, the New York Times recently stated that “international donors are raising millions, but the Modi administration has erected hurdles for overseas organisations...”

The NGOs continue to face problems even as the National Disaster Management Authority wrote to all states to involve NGOs, faith-based organisations, religious and social trusts at local level to handle the unprecedented Covid crisis. RTI activists’ requests seeking reasons for the amendments were dismissed on the pretext of “national interest” by the Ministry of Home Affairs.

The government, following multiple petitions by NGOs in various courts, has extended the deadline for conforming to the new rules to June 30. In another order, the government extended the deadline for the renewal of FCRA registration certificates of NGOs whose certificates expired between September 2020 and May 31, 2021 to September 2021.

Despite the enormous resource crunch, the voluntary sector is working committedly and effectively to provide relief and rehabilitation as well as healthcare support to those affected by the pandemic and subsequent lockdowns. Let us ensure the smooth functioning of their noble deeds.

(The writer is retired Dean, School of Social Work, Roshni Nilaya, Mangaluru; he is also on the Board of several NGOs)

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(Published 29 July 2021, 19:24 IST)

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