Many say that the Bill, if passed, will gradually end smaller organisations in the country which cannot access funds.

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news Parliament Tuesday, September 22, 2020 - 12:13

On Sunday afternoon, Oxfam India’s CEO Amitabh Behar said that an upcoming amendment to an Act would be a “devastating blow”. He was referring to the amendment to the Foreign Contribution (Regulation) Act (FCRA), which, on Monday, was passed in the Lok Sabha, and will be coming up in the Rajya Sabha. 

The FCRA is a law that regulates foreign contributions to individuals or associations in India. As part of the Act, certain people are not allowed to receive foreign contributions, such as election candidates, political parties, judges, a newspaper’s editor or publisher, etc. Those who can receive foreign funds need a licence to do so. 

The major changes that the present amendment proposes are: 

> Aadhaar for receiving funds: The amendment seeks to make having an Aadhaar card mandatory for those who control the organisation — such as all office bearers, directors or key functionaries — receiving the funds, whether they are applying for registration or seeking to renew their registration

> Addition to those prohibited: Public servants, which include any person who is in the service or pay of the government, or paid by the government for any public duty, has now been added to the list of people who are prohibited from receiving foreign funds.

> Administrative expenses: The Act as it stands allows organisations to use up to 50% of their funds for administrative purposes. The amendment brings this ceiling down to 20%. 

> Bank account: The Bill seeks to make it mandatory all FCRA contributions only come to one specific State Bank of India in New Delhi as notified, from where it can be transferred to the organisation’s FCRA account in another bank for use. Up until now, the Act only states that the funds can be accepted by the recipient in a single branch of a bank that they have specified. 

> Prohibiting transfer of funds: Grants received under FCRA cannot be transferred to any person or organisation, as per the Bill. As per the Act, funds can be transferred to any organisation or individual if they can also receive foreign contributions. 

> Registration suspension: As things stand, an FCRA licence can be suspended for 180 days. The Bill seeks to increase this by 180 to 360 days.

Over Rs 58,000 crore foreign funds were received by NGOs registered under the FCRA between 2016-17 and 2018-19. There are around 22,400 NGOs in the country. 

Opposition to the amendment

In his tweet, Oxfam’s Amitabh Behar had said that this Bill is “stifling and squeezing the nonprofit sector by creating new hurdles for foreign aid which could help lift people out of poverty, ill health and illiteracy”.

He isn’t alone in this view. The Voluntary Action Network India, an association of non-governmental organisations in the country, called the Bill a “death blow”.

“The new FCRA Bill throttles the spirit of cooperation that had been ushered in earlier this year by the positive role played by development organizations in mitigating the lockdown and COVID-19 pandemic by virtually making it impossible for NGOs to function,” VANI said in a statement, adding that it assumed that all NGOs that receive foreign funds are guilty unless proven otherwise. 

Henri Tiphagne, founder and executive director of Madurai-based human rights organisation People's Watch, says that he is not against transparency or accountability, but that this goes beyond that. Firstly, it starts with the 20% cap on administrative expenses, that Henri says would paralyse programs in parts of rural India. This is because the 20% doesn’t just include salaries but all the salaries of those working on the ground — including field staff, implementation officers, outreach workers and others — to implement the program. By that definition, it would include their salaries, travel expenses, utilities and other engagements as well. 

“This amendment will be a major blow to organisations in terms of payment of salaries, professional fees, utility bills, travel and other such expenditure,” VANI said. 

Both VANI and Henri raise the point that the issue of sub-granting funds will hit the sector hard. Sub-granting funds, which is when one organisation which receives funds partners with others and sub-grants them funds, has been scrapped in this version of the Bill, where the funds cannot be transferred. 

Henri says that these smaller organisations, which received sub-grants, may all lose out on their funding because they might not have access to donors.

“When it is another organisation [that is granting funds to a smaller organisation], then [this Bill] is the killing of all small organizations in this country. I don't understand what you're going to get out of it. If it was going to contribute to better management, better accountability procedures for organizations, I would support it,” Henri says. 

“This amendment, which is coupling a 20% limit on administrative expenses with not being able to transfer money to other units to the country which are FCRA holders, is really going to be the end of smaller NGOs in the country,” Henri adds. . 

The move to make all NGOs move their FCRA accounts to a single SBI branch in Delhi has also been raised by organisations, with VANI called it “hugely disruptive” as people will not be able to operate these accounts properly with the home branch being in Delhi. 

“Is this not discrimination?” Henry asks, stating that businesses are allowed to receive funds wherever they would like.

“With limited domestic philanthropy, such guidelines that criminalise activities of even those certified as FCRA compliant, thousands of small NGOs which enable good work and are dependent on legal funds obtained internationally, will shut down, also endangering livelihoods of those dependent on them for a vocation,” VANI added. 

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