Foreign-funded NGOs to have core bank a/c

The Ministry of Home Affairs (MHA) has written to 3,768 NGOs telling them that their bank accounts are not available as per the core banking format.

As many as 5,800 NGOs and other institutions registered under a law to receive foreign funds have been asked to open accounts in banks with core banking facilities.

Further, they have been asked to provide details to allow security agencies to monitor it on a real-time basis. The Ministry of Home Affairs (MHA) has written to 3,768 NGOs telling them that their bank accounts are not available as per the core banking format.

Another 2,077 NGOs have been asked to furnish bank account details as no such data is available with the MHA.

To check discrepancies

Official sources said the move is aimed at checking discrepancies in NGOs receiving foreign funds. They said the list does not mean that all these institutions have committed any irregularities.

The NGOs and organisations whose bank accounts are not available with the MHA also include Karnataka Holy Cross Sister's Society, Karnataka Rural Development Service Centre and Karnataka State Council For Child Welfare.

The list also includes Indira Gandhi National Open University (IGNOU), Jamia Millia Islami and YMCA. Those who have been told that their accounts do not conform to core banking facilities include Rajiv Gandhi University of Health Sciences, Bangalore Education Society, Karnataka Baptist Sabhegaha Sanaila, Karnataka Chinmaya Trust, Karnataka Labour Education Trust, Karnataka Navodaya Ashram and Karnataka Rural Employment Generating Association.

The list also includes Indian Council of Medical Research, Indian Institute of Chemical Biology (under CSIR), Indira Gandhi National Centre of Arts, PRIA and People for Animals.

The directive to the NGOs came after an examination found that many of them maintain their accounts in cooperative banks or those without core banking facilities.

Source: http://www.deccanherald.com/content/610929/foreign-funded-ngos-have-core.html

NGO barred from taking foreign funds: Ministry seized of it,

Elaborating about the National Health Policy, Nadda said that from disease centric, the government has made it preventive and promotive and there has been a strategic engagement with the private sector so that the common man is not deprived

New Delhi, May 10 Days after the Centre barred a Delhi-based health NGO from receiving foreign funding, Health Minister J P Nadda today said his ministry was "seized" of the matter and taking steps accordingly.

The government had recently barred Public Health Foundation of India (PHFI) from receiving foreign funding, including from the Bill and Melinda Gates Foundation, for alleged violation of the law.

"The ministry is seized of the matter and is taking steps accordingly. At this point of time, I would not be able to tell much about it. Ultimately, whatever will be in public interest, that will be done," he said during an interaction with reporters at Indian Women's Press Corps (IWPC).

The home ministry has cancelled the FCRA registration of PHFI, thereby barring the NGO from receiving foreign contribution.

Nadda was asked about the fate of programmes being run by the ministry along with PHFI, which is funded by foreign donors.

Nadda said that all the national programmes run by the government are "well intentioned".

Asked if his ministry was willing to amend the Medical Council of India (MCI) Act to make it a must for doctors to prescribe generic medicines, after Prime Minister Narendra Modi's push for it, he said his ministry was "on the job" and will come out with something very soon.

Elaborating on the issue, Nadda said the ministry will go ahead with the prime minister's vision.

On essential medicines, he said that his ministry was not working in silos and taking along other ministries and pharmaceuticals.

Whatever changes needed to be made for providing affordable and quality medicines, it would be taken, he said.

Asked that there were uncertainty among certain sections regarding the recently launched Measles Rubela vaccine, he said that his ministry was trying to allay all such apprehensions.

"All our programmes are brought after going through a long process of testing and committee reviews. We are trying to break all such apprehensions," he said, while giving the example of the ministry's cost effective programme of giving deworming tablets.

Elaborating about the National Health Policy, Nadda said that from disease centric, the government has made it preventive and promotive and there has been a strategic engagement with the private sector so that the common man is not deprived.

"The stress is on comprehensive healthcare," he said, adding that the government would start universal free health screening for six diseases, including hypertension and cancer, initially in 100 districts of the country.

He also termed the Mental Health Policy and the Human Immunodeficiency Virus (HIV) and Acquired Immune Deficiency Syndrome (AIDS) (Prevention and Control) Bill as very "progressive" measures.

Nadda said that four more vaccines -- IPV, Measles Rubela, Rotavirus and JE Adults -- have been added into the Mission Indradhanush.

The Mission Indradhanush aims at covering all those children who are either unvaccinated, or are partially vaccinated against seven vaccine preventable diseases which include diphtheria, whooping cough, tetanus, polio, tuberculosis, measles and hepatitis B.

Elaborating on Affordable Medicines and Reliable Implants for Treatment (AMRIT) outlets, he said medicines whose cost was worth Rs 179 crore was sold at a cost of Rs 73 crore while under the PM's dialysis scheme, 11 lakh dialysis sessions have already taken place in nine months.

Source: http://www.outlookindia.com/newsscroll/raj-kundra-questioned-by-thane-police-in-cheating-case/1047697?scroll

NGO barred from taking foreign funds: Ministry seized of it,

New Delhi, May 10 (PTI) Days after the Centre barred a Delhi-based health NGO from receiving foreign funding, Health Minister J P Nadda today said his ministry was "seized" of the matter and taking steps accordingly.

The government had recently barred Public Health Foundation of India (PHFI) from receiving foreign funding, including from the Bill and Melinda Gates Foundation, for alleged violation of the law.

"The ministry is seized of the matter and is taking steps accordingly. At this point of time, I would not be able to tell much about it. Ultimately, whatever will be in public interest, that will be done," he said during an interaction with reporters at Indian Womens Press Corps (IWPC).

The home ministry has cancelled the FCRA registration of PHFI, thereby barring the NGO from receiving foreign contribution.

Nadda was asked about the fate of programmes being run by the ministry along with PHFI, which is funded by foreign donors.

Nadda said that all the national programmes run by the government are "well intentioned".

Asked if his ministry was willing to amend the Medical Council of India (MCI) Act to make it a must for doctors to prescribe generic medicines, after Prime Minister Narendra Modis push for it, he said his ministry was "on the job" and will come out with something very soon.

Elaborating on the issue, Nadda said the ministry will go ahead with the prime ministers vision.

On essential medicines, he said that his ministry was not working in silos and taking along other ministries and pharmaceuticals.

Whatever changes needed to be made for providing affordable and quality medicines, it would be taken, he said.

Asked that there were uncertainty among certain sections regarding the recently launched Measles Rubela vaccine, he said that his ministry was trying to allay all such apprehensions.

"All our programmes are brought after going through a long process of testing and committee reviews. We are trying to break all such apprehensions," he said, while giving the example of the ministrys cost effective programme of giving deworming tablets.

Elaborating about the National Health Policy, Nadda said that from disease centric, the government has made it preventive and promotive and there has been a strategic engagement with the private sector so that the common man is not deprived.

"The stress is on comprehensive healthcare," he said, adding that the government would start universal free health screening for six diseases, including hypertension and cancer, initially in 100 districts of the country.

He also termed the Mental Health Policy and the Human Immunodeficiency Virus (HIV) and Acquired Immune Deficiency Syndrome (AIDS) (Prevention and Control) Bill as very "progressive" measures.

Nadda said that four more vaccines -- IPV, Measles Rubela, Rotavirus and JE Adults -- have been added into the Mission Indradhanush.

The Mission Indradhanush aims at covering all those children who are either unvaccinated, or are partially vaccinated against seven vaccine preventable diseases which include diphtheria, whooping cough, tetanus, polio, tuberculosis, measles and hepatitis B.

Elaborating on Affordable Medicines and Reliable Implants for Treatment (AMRIT) outlets, he said medicines whose cost was worth Rs 179 crore was sold at a cost of Rs 73 crore while under the PMs dialysis scheme, 11 lakh dialysis sessions have already taken place in nine months. PTI TDS SMN

Source: http://indiatoday.intoday.in/story/ngo-barred-from-taking-foreign-funds-ministry-seized-of-it/1/950808.html

54th NGO Union state conference from May 12 at Kannur

Chief Minister Pinarayi Vijayan will inaugurate the delegate meeting of the 54th state conference of the Kerala NGO Union, the largest organisation of civil servants in the state on May 13, at Dinesh Auditorium here.Talking to newspersons today, General Secretary of the NGO Union, T C Mathew Kutty said CPI(M) polit buro member Brinda Karat will inaugurate the public function, as part of valedictory function of the conference on May 15, at Town Square. Education Minister C Raveendranath will inaugurate the cultural meet on May 13, while Finance Minister T M Thomas Issac will deliver the note on "LDF government - one year" and Health Minister K K Shailaja will inaugurate the seminar on "public health, challenges and settlements" on May 14.Organising Committee Chairperson and MP P K Sreematy said this is the fourth state conference of NGO (after 1975, 1992 and 2000) being hosted in Kannur, which will witness participation from 820 selected delegates, including 290 women, representing 143733 members of the NGO Union. Mr Kutty claimed that 80 per cent civil servants are members of the NGO Union, out of 2.3 lakh civil servants in the state. The flag jatha will begin from Payyambalam and the flag post jatha will start from Karivellur on May 12 and would join at Caltex junction in the evening.He said the state conference will discuss the issue of limitation of civil servants due to the Union government's backward policy from welfare sector, contract system being introduced sporadically by ending the permanent employment, cutting of beneficiaries of the employees, and other organisational matters. UNI AK RJ 1731

Source:

Funds to parties: Govt. may amend FCRA again

To seek opinion of Attorney-General

After being pulled up by the Delhi High Court for not initiating any action against the Congress and the Bharatiya Janata Party, which received foreign funds from two subsidiaries of Vedanta, a U.K.-based company, the Home Ministry will seek the Attorney-General's opinion to amend the repealed Foreign Contribution Regulation Act (FCRA) 1976, which barred foreign donations to political parties.

The Representation of the People Act and the FCRA bar political parties from receiving foreign funds.

Definition changed

Last year, the NDA government had amended the FCRA through the Finance Bill route, which allowed foreign origin companies to fund NGOs here and also cleared the way for donations to political parties by changing the definition of "foreign companies."

The glitch was that although the amendment was done retrospectively it only made valid the foreign donations received after 2010, the year when the 1976 Act was amended.

Contempt petition

The retrospective amendment did not apply to donations prior to 2010 and the Association for Democratic Reforms, a political watchdog, moved a contempt petition against the Home Ministry in March pointing out that the directives of the High Court against the two political parties which received foreign funds were not followed.

Both the Congress and the BJP have been charged with illegally receiving foreign funds for political activities from Vedanta from 2004 to 2012. The ADR filed a PIL plea against the two parties for violating the FCRA. The Delhi High Court had held that the donations were illegal in 2014, but the two parties challenged the order in the Supreme Court but later withdrew the petition. In March this year, the ADR moved the contempt petition. The offence attracts an imprisonment of five years and fine or both to persons who assisted the political parties to receive the funds.

A senior Home Ministry official said that after the Foreign Direct Investment (FDI) norms were progressively relaxed, there have been anomalies regarding the definition of "foreign companies" under the FCRA which were never corrected. The original FCRA provision, which declared that any company with over 50 per cent FDI was a foreign entity, was inconsistent with the view of the Finance and Commerce ministries, which treated companies based in India and having Indian directors and employees as Indian subsidiaries.

"There are anomalies in the FCRA law and corrective measures need to be taken. We would write to the AG seeking an opinion on a way out since the original 1976 FCRA Act is already repealed," said a senior Home Ministry official.

Jagdeep Chhokar of the ADR said, "How can you make changes to a dead legislation? It is to only justify an earlier wrong. It's like saying that we will amend the abolished Sati Act."

In another development, the Home Ministry asked as many as 5,845 NGOs and organisations to open their accounts in banks having core banking facilities and furnish details for real time access to security agencies.

In a communication, 3,768 NGOs have been told that their bank accounts are not available as per core banking format while 2,077 NGOs have been asked to furnish bank account details as no such data is available with the Ministry.

The move came after it was detected that many NGOs have their bank accounts in cooperative banks or State government-owned apex banks or banks which do not have core banking facilities, an official said.

Source: http://www.thehindu.com/news/national/funds-to-parties-govt-may-amend-fcra-again/article18421352.ece

Government asks NGOs to open accounts in PSBs

NEW DELHI: In its bid to further tighten monitoring of foreign funding to voluntary organisations, the Union home ministry has directed nearly 6,000 of the 13,000 registered NGOs in the country receiving foreign donation to open accounts in nationalised banks with core banking facilities.  
The move is aimed at tracking any suspicious use of the banking channels by the NGOs who usually maintain accounts in cooperative banks or state government-owned banks which do not have core banking facilities and generally lack modern scrutiny systems .

"To keep surveillance on the suspicious activities of NGOs receiving foreign funding, the ministry wants that all NGOs registered under the Foreign Contribution Regulation Act have their accounts only in either nationalised banks or in a few private banks having core banking facilities," said a senior ministry official.  
Over the past two years, the Narendra Modi government had cancelled the FCRA licence of 20,000 NGOs out of 33,000 NGOs receiving foreign donations for violating various provisions of the Foreign Contribution (Regulation) Act.

Over 1,300 other NGOs were denied renewal over the last three years for various violations under the FCRA. At present, there are 13,000 active NGOs in the country that are entitled to receive foreign grants.
Under the core banking system, all the branches of the natioanalised banks are interconnected and adhere to the standing guidelines of the Reserve Bank of India. Any suspicious activity can be detected by the inbuilt system and alert can be sounded to agencies including the I-T Department on real-time basis.

Source: http://www.newindianexpress.com/nation/2017/may/11/government-asks-ngos-to-open-accounts-in-psbs-1603469.html

Govt tightens rules for NGOs: Home ministry asks non-profits to open bank accounts in core banking format

New Delhi: Tightening the rules for NGOs, the Ministry of Home Affairs has asked as many as 5,845 organisations to open their accounts in banks having core banking facilities and furnish details for real-time access to security agencies in the case of any discrepancy.

It is the latest in a series of steps taken by the NDA government aimed at checking "errant" NGOs, especially those receiving foreign funding. Registration of more than 10,000 NGOs have been cancelled and more than 1,300 have been denied a renewal over the last three years for various violations.

As of now, there are around 24,000 active NGOs in the country as against 40,000 in 2014-15.

In a communication, 3,768 NGOs have been told that their bank accounts are not available as per core banking format while 2,077 NGOs have been asked to furnish bank accounts details as no such data is available with the home ministry.

The move came after it was detected that many NGOs have their bank accounts in cooperative banks or state government-owned apex banks or banks which do not have core banking facilities, official sources said.

The home ministry wants that all NGOs registered under the Foreign Contribution Regulation Act mandatorily have their accounts in either nationalised banks or in a few private banks which have core banking facilities.

Under core banking system, all the branches of the networked banks are interconnected. This would allow the security agencies to access the accounts of the NGOs on real time basis, the sources said.

The government has already cancelled the registration of more than 10,000 NGOs in the last three years for allegedly non-filing of annual returns as mandated in the FCRA.

In addition, renewals of more than 1,300 NGOs have been denied or closed in recent past for allegedly violating various provisions of the FCRA.

In November 2016, the government had directed more than 11,000 NGOs to file applications for renewal of registration by 28 February 2017.

Of the above, 3,500 NGOs have filed applications for renewal till February 2017. Registration of more than 7,000 NGOs were deemed expired due to non-filing of renewal applications.

Source: http://www.firstpost.com/india/govt-tightens-rules-for-ngos-moh-asks-non-profits-to-open-bank-accounts-in-core-banking-format-3436702.html

Draft norms for NGOs seeking aid released

All voluntary organisations have to register with NITI Aayog

If aid and voluntary organisations (VOs) want funding from the Central government, they will have to adhere to a set of guidelines that have been drawn up by the Ministry of Rural Development.

These guidelines were drafted by a committee set up by the Supreme Court (SC) in pursuant to a January 10 order. The government had constituted a six-member committee under the chairmanship of ex-Secretary, Ministry of Rural Development, on February 2, 2017, for framing guidelines/rules for accreditation of voluntary organisations /non-governmental organisations (NGOs).

Pursuant to the recommendation of the committee, instructions have been issued to CAPART, state governments and offices under the Comptroller and Auditor General to take appropriate action in regard to the audit of the NGOs.

Additional Solicitor General Tushar Mehta submitted these guidelines in court, and on direction from a Bench comprising Chief Justice JS Khehar and Justice DY Chandrachud, a copy was also given to amicus curiae Rakesh Dwivedi.

Apart from Dwivedi, all states and Union Territories have been invited to pursue these guideline and give suggestions accordingly.

The order for the guidelines came on the heels of a petition by advocate ML Sharma, who submitted that NGOs should be monitored. According to the draft, all NGOs/VOs are expected to register themselves on the Niti Aayog website http://ngodarpan.gov.in , with NGO Darpan acting as a nodal agency. All requests for registration and accreditation and funds from the Union will be done through this website.

Upon registration, each NGO will be provided a unique ID. The organisations would be subjected to the laws under Income Tax Act and the Foreign Contribution Regulations Act. The NGOs will be monitored and their past track record will be taken into account before any accreditation is granted. In the event no work is done, they money granted for that specific purpose will be refunded along with a 10 per cent interest. If funds are misappropriated, criminal investigations against key officials associated would be initiated and the NGO blacklisted.
NEW ROUTE TO GET FUNDED
NGO Darpan( http://ngodarpan.gov.in) will act as a nodal agency. Info on NGO’s will be available on Niti Aayog website.
All requests for registration and funds will be done through Niti Aayog website http://ngodarpan.gov.in .
The CBI had said that there are more than 20 lakh NGOs receive funding from the Cente.
Only 10 per cent of them filed annual income and expendicture statements.

Please Register your NGO at: http://ngodarpan.gov.in

Source: http://www.dnaindia.com/india/report-draft-norms-for-ngos-seeking-aid-released-2383220

Foreign Funding for NGOs: Regulatory Compliances

The Foreign Contribution (Regulation) Act, 2010 and rules framed under it (the "FCRA" or "Act") regulate the receipt and usage of foreign contribution by non-governmental organisations ("NGOs") in India. NGOs play an important role in the upliftment of the weaker sections of the society and their overall development. This is especially true in the case of India, where a vast majority of its population continues to remain under the poverty line and have little or no access to even basic facilities provided by the government.

Being non-profit organisations, operations of NGOs are entirely reliant on donations, both domestic and foreign. In recent times, many NGOs have come under the government scanner for alleged contravention of FCRA. As per news reports, as many as 11,000 NGOs have even lost their permit to receive foreign contribution. While, the government claims that the licenses were cancelled due to violation of the act, the NGOs are contending that the government is wrongly using its discretionary powers under the act to suppress voices of dissent, especially those against government policy. Since foreign aid is often paramount for the expansion or sometimes even for the survival of an NGO, it is important for an NGO to have a clear understanding of legal compliances prior to availing and using such funding. With this in mind, we have in this article set out a brief snapshot of the Act and its provisions relevant for an NGO intending to raise foreign aid.

Scope and objective of the Act

The intent of the Act is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest. It has a very wide scope and is applicable to a natural person, body corporate, all other types of Indian entities (whether incorporated or not) as well as NRIs and overseas branches/subsidiaries of Indian companies and other entities formed or registered in India. It is implemented by the Ministry of Home Affairs, Government of India (the "Authority").

In order to achieve the above objective, the Act:

(i) Prohibits acceptance and use of foreign contribution or foreign hospitality by a certain specified category of persons such as a candidate for election, judge, journalist, columnist, newspaper publication, cartoonist, et al.

(ii) Regulates the inflow to and usage of foreign contribution by NGOs by prescribing a mechanism to accept, use and report usage of the same.

It defines the term 'foreign contribution' to include currency, article other than gift for personal use (not exceeding the value of INR 25,000) and securities received from foreign source. While foreign hospitality refers to any offer from a foreign source to provide foreign travel, boarding, lodging, transportation or medical treatment cost. The term 'foreign source' also has an extensive ambit and includes:


· Foreign citizens

· Foreign companies, corporations and MNCs

· Foreign government and their agencies

· International agencies other than specified and government notified agencies

· Foreign trusts, foundations, trade unions, societies, clubs or any other associations of individuals formed outside India

Acceptance of foreign funds

The Act permits only NGOs having a definite cultural, economic, educational, religious or social programme to accept foreign contribution, that too after such NGOs either obtain a certificate of registration or prior permission under the Act.
Registration and prior approval under FCRA
In order to be registered under the FCRA, an NGO must be in existence for at least three years and must have undertaken reasonable activity in its field for which the foreign contribution is proposed to be utilised. Further, it must have spent at least INR 1,000,000 over three years preceding the date of its application on its activities. The registration certificate is valid for a period of five years and must be thereafter renewed in the prescribed manner.
NGOs not eligible for registration can seek prior approval from FCRA for receiving foreign funding. This permission is granted only for a specific amount of foreign funding from a specified foreign source for a specific purpose. It remains valid till receipt and full utilisation of such amount.
In both of the above cases, the applicant must file the application in a prescribed format with the Authority and submit all the documents as required under the Act. Further, it must have a separate bank account exclusively for the deposit of foreign contribution. No other fund can be credited to this account.

Timelines and eligibility criteria

Within ninety days from the date of receipt of the application for registration or prior approval, the Authority is required to conduct appropriate investigation and if satisfied that the applicant fulfills all the eligibility criteria, grant the registration certificate or prior approval as the case may be. Some of these criteria include:


1. The applicant must be a bonafide entity.

2. The applicant must not have been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country.

3. The applicant must not have been found guilty of diversion or mis-utilisation of its funds.

4. Neither the applicant nor any of its office bearers must have any records of conviction under any law or be under prosecution for any offence.

5. Acceptance of foreign contribution by the applicant must not prejudicially impact the sovereignty and integrity of India.

6. In case the registration or approval is not granted within ninety days, the Authority is required to record its reason for refusal and intimate the applicant of the same. However, the Authority is not bound by this requirement in cases where there is no obligation to provide information under the Right to Information Act, 2005 ("RTI Act"). Under the RTI Act, certain information is exempt from public disclosure and includes:

7. Information which may have a prejudicial effect on the security, strategic, scientific or economic interests of the state.

8. Information which has been expressly forbidden to be published by judiciary.

9. Information, the disclosure of which would cause a breach of privilege of the legislature.

10. Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information.

Thus, if the reason for refusal to register or grant prior approval under the Act (in the opinion of the Authority) relates to above information, the same will not be disclosed to the applicant NGO.

Use of foreign funding

The Act imposes various conditions on the use of foreign funds and some of them are as follows:


1. All funds received by a NGO must be used only for the purpose for which they were received.

2. Such funds must not used in speculative activities identified under the Act.

3. Except with the prior approval of the Authority, such funds must not be given or transferred to any entity not registered under the Act or having prior approval under the Act.

4. Every asset purchased with such fund must be in the name of the NGO and not its office bearers or members.

Reporting requirement

Every NGO registered or having prior approval under the Act must file an annual report with the Authority in the prescribed form. This report must be accompanied by an income and expenditure statement, receipt and payment account, and balance sheet for the relevant financial year. For financial years where no foreign contribution is received, a 'NIL' report must be furnished with the Authority.

Cancellation of registration certificate

Under the Act, the Authority is empowered to cancel the registration certificate of a NGO in the following circumstances:


· It has made false statement in any of its applications or submissions under the Act.

· It has violated any of the terms and conditions of registration.

· Authority is of the view that cancellation of registration is necessary in the public interest.

· It has violated any of the provisions of the Act or any order passed under it.

· It has been inactive for two consecutive years in its chosen field of service.

The Act follows the principles of natural justice and requires the Authority to provide the person concerned reasonable opportunity of being heard prior to passing any order. During the pendency of proceeding for cancellation of registration, the Authority can also suspend the registration of the concerned NGO for a period of upto six months. During the suspension period, the concerned NGO is placed under several restrictions including prohibition from receiving any foreign contribution except with the prior approval of the Authority. In case of cancellation of its registration, the NGO concerned would be ineligible for a period of three years to apply for prior approval or registration under the Act.

Source: http://www.businesstoday.in/opinion/columns/foreign-funding-for-ngos-regulatory-compliances/story/246270.html

Why India’s Non-Profit Sector Needs Comprehensive Legal Reform

With a number of NGOs losing their licenses on allegations of non-compliance and malpractice, or for differing with the government and its policies, new legislation is required to regulate the sector.

There was a time when no discourse on poverty, development, globalisation, democracy or governance was complete without the term ‘NGO’ (non-governmental organisations, also called non-profit organisations or charities) figuring in it. But lately, they have been in the news for all the wrong reasons – partly due to the misdeeds of a few organisations and partly because of a right-leaning government hardening its stance on foreign aid.

Recently an NGO as respectable as the Public Health Foundation of India was inexplicably denied its Foreign Contribution (Regulation) Act (FCRA) registration on grounds that it had lobbied for anti-tobacco policies. If this is the fate of an NGO that supposedly has governmental backing, both at the centre and in the states, one can only imagine the fate of NGOs not similarly fortunate. Foreign aid has become a punitive instrument for the government to use on NGOs critical its policies.

NGOs who have no foreign funding but have availed government grants have come under fire for an entirely different, but more justifiable reason – a lack of accountability. It is an unfortunate fact that there are several errant orgnisations in the sector and their misdeeds are well known. But because of these few, those doing good work – and there are many still – have been tainted.

In a recent hearing, the Supreme Court asked the Centre to explore the possibility of a new law to regulate fund utilisation by NGOs who receive government grants because, “after all it is the tax payers’ money”. Noting that less than 10% of 35 lakh NGOs file their audited accounts regularly, the government had framed guidelines requiring NGOs and other voluntary organisations to register with Niti Aayog for accreditation to receive public funds.

The guidelines have also proposed that NGOs must furnish a bond equivalent to the grant given to them, to be encashed by the government in case the funds are misused or misappropriated. But instead of just issuing such guidelines the Supreme Court is in favour of a new legal enactment to bring accountability.

No one will quarrel with the Supreme Court’ anxiety that tax payers money should not be wasted. Indeed tax payers’ money should not be wasted, either by the government or by NGOs. What is needed is not just a law to regulate NGOs, but a comprehensive reform of the entire NGO charity sector. This reform should include a new institutional mechanism to implement the law and reform already existent institutions.

The role of a charities regulator (I use ‘charities’ here onwards to include not only NGOs, but all charitable non-profit organisations such as trusts, Section 25 companies, associations etc), should be to effectively secure compliance with the charity laws of the land in a fair, transparent and non partisan manner, free from political influence to enhance public trust and confidence in both the regulator and the charities. Moreover, it should make the regulatory process as simple and cost effective as possible.

In order for it to be effective in fulfilling its role, there should be clarity in the scope and mandate of the regulator. The office should have adequate autonomy and integrity in its operation and the capacity to educate the public. It must also have the authority and the competence to review and interpret charity law to meet the needs of an evolving society.

Some years ago, the erstwhile Sampradaan Indian Centre for Philanthropy, whose director I had been at the time, had been commissioned by the Planning Commission to report on charities administration in India (comprising the IT department, Registrar of Societies, Charities Commissioners in the states, and the Company Law Department) with recommendations for reform. A comprehensive report based on a nation wide survey was submitted in 2004. But, as is the fate of such reports, the recommendations did not see the light of day. However, in light of the Supreme Court’s interest, the recommendations made by the report are as relevant today.

While the enactment of a new law and new institutions to administer it remain pending, the report had recommended short term measures to facilitate charities to comply with the existing laws for the sake of good governance. The crux of the report lay in simplifying procedures, checking malpractice and effectively monitoring the application of sanctions. It also suggested self-regulation by the voluntary sector to complement legal regulation.

It had also recommended a public register of charities to serve as a central record, like they have in Hong Kong, UK and other countries. It is the only record of organisations which has been officially accepted as being for public benefit and which, therefore, receive privileged tax treatment. It allows charities to provide conclusive proof of their status to funders and others; gives members of the public up-to-date information about charities, and allows the regulator to monitor charities and their affairs on an annual basis. Apart from a physical public register, the government could also maintain the data in a digital portal.

However, noting that while the above measures may, if they are adopted, enhance the efficiency of individual agencies which regulate NGOs currently, they will not overcome some of the basic problems which are systemic. Anticipating the Supreme Court’s recent observations, the report had recommended the enactment of a comprehensive central law to legally incorporate non-profit organisations, perhaps along the lines of the Charities Act in the UK.

In England and Wales, the Charity Commission administers the Charities Act, which gives it jurisdiction over all matters concerning charities, including regulatory powers, that in Canada and the US fall under provincial jurisdiction.

The main difference between the UK, the US and Canada’s institutional arrangement is that while in UK registration is done by the Charity Commission, in the US-Canada model, it is the income tax department which has the main regulatory responsibility. The Charity Commission concerns itself not only with the financial aspects, but also with the administrative aspects of organisations, modernising them to keep abreast of new developments.

The Indian law could be called the law for non-profit public benefit organisations. Because charity is a concurrent subject, the parliament can make laws with respect to charities and charitable institutions under entry 28 of the concurrent list in the seventh schedule of the constitution. The states could, enact the same law using the central law as a model, for their jurisdictions.

It was proposed that the new uniform law should be flexible enough to offer registration for different types or organisations (trusts, societies and companies) under different sections, just as the Companies Act deals with a particular types of companies. It also suggested a section to distinguish development organisations from chambers, and other such professional membership bodies, as has been demanded often by the NGO sector.

The Income Tax Act, suitably amended, would continue to be responsible for tax exemptions.

The Supreme Court, disagreeing with the government about using either Niti Aayog or the Lokpal or Lokayukta as the agency to register and oversee NGOs, has rightly noted that it would prevent them from focusing on their core responsibilities. For this reason, the Sampradaan report had suggested that the administration of the new law should be the responsibility of an agency specially created for this purpose, which could be called the National Charities Commission, as in the UK. Alternatively, a non-profit organisations directorate can function alongside state directorates. Taking into account the present climate for NGOs, I feel it might be better to give the independent commission comprehensive powers currently exercised by the FCRA department in the home ministry and the income tax department, to ensure not only good governance and management, but also financial compliance.

The report had also recommended a non-profit organisation advisory agency with representatives from the NPO sector and professionals such as lawyers, to provide the charities directorate policy guidance and feedback from the sector.

Hopefully with the Supreme Court’s backing and supervision, such a comprehensive reform of NGOs will ensure both accountability and impartiality in the NGO sector, free from political pressures.

Source: https://thewire.in/133780/ngo-fcra-legal-reform/