How the Government is tightening its grip on foreign funding under FCRA for NGOs of India

The Indian government has significantly tightened its regulations concerning foreign funding for Non-Governmental Organizations (NGOs) through the Foreign Contribution (Regulation) Act (FCRA). Here's a breakdown of the key aspects:  

• FCRA Regulations:

• The FCRA aims to regulate the acceptance and utilization of foreign contributions by individuals, associations, and companies.  
• The government has been increasingly scrutinizing the flow of foreign funds to ensure they are not used for activities that could compromise national security or disrupt public order.  

• Increased Scrutiny and Cancellations:

• There's been a noticeable increase in the number of FCRA licenses being canceled.
• The government has been more stringent in the renewal process of FCRA registrations.  
• The government has increased its monitoring of how NGO's are utilizing received foreign funds.  

• Key Factors Leading to Cancellation:

• Failure to submit annual returns and audited financial statements.  
• Misuse of foreign funds.  
• Activities deemed to be against national interest.
• Non compliance with the rules set forth in the FCRA act.

• Emphasis on Transparency and Accountability:

§  The government emphasizes the need for NGOs to maintain transparent and accurate records of their financial transactions.

§  There's a strong focus on ensuring that foreign funds are used for the intended purposes.

• Impact:

• These measures have led to concerns among some NGOs about restrictions on their operations.
• The government maintains that these regulations are necessary to safeguard national interests.

In essence, the government's actions reflect a drive to ensure greater accountability and control over the flow of foreign funds to NGOs in India.

Tough norms for NGOs seeking government funds

NEW DELHI: Draft guidelines outlining stringent regulations intended to enhance accountability of lakhs of NGOs and voluntary organisations receiving nearly Rs 1,000 crore of government grants every year were submitted by the Centre to the Supreme Court on Wednesday .

The guidelines may seem exhaustive for most NGOs and VOs as they said organisations wanting to get government funds must register afresh online with Niti Aayog's `NGO-Darpan' portal giving details of past work, fund utilisation, yearly audit reports and key persons managing the NGO or VO.

It said the government would have the right to initiate criminal prosecution and blacklist an NGO for not meeting the deadline for completing a project for which grant was given or if money was misused.

"The registration system should facilitate seamless operation of applicable provisions of the Income Tax Act and Foreign Contribution Regulation Act (FCRA) with respect to NGOs without the need for cumbersome... processes, which create mutual distrust and scope for misuse," the draft guidelines said.

Another provision mandates NGOs and their office-bearers to execute a bond, equivalent to the money received, promising to refund the amount with 10% interest if funds are misused or not used for the sanctioned purpose. The members of the executive committee of the organisation shall execute a bond in favour of the President of India, for the sanctioned amount in the prescribed format, binding themselves jointly and severally to the terms & conditions," it said.

"In the event of the grantee (NGOVO) failing to comply with the conditions or committing breach of the conditions of the bond, the signatories to the bond shall be jointly and severally liable to refund to the President of India, the whole or part amount of the grant with interest at the rate of 10% per annum thereon or the sum specified in the bond," the guidelines proposed.

The guidelines were placed by additional solicitor general Tushar Mehta before a bench of Chief Justice J S Khehar and Justice D Y Chandrachud, which on January 11 had asked the Centre to frame regulatory guidelines after being informed by CBI that more than 33 lakh NGOs and VOs operated in India but less than 10% (3.07 lakh) filed audited accounts before the competent authority .

Taking umbrage at years of inaction on the part of governments in fastening accountability on NGOs on fund utilisation, the SC had said: "The governments are not aware of their responsibility to audit the NGOs as provided under the General Finance Rules, 2005."

Source: http://timesofindia.indiatimes.com/india/tough-norms-for-ngos-seeking-government-funds/articleshow/58038748.cms

Centre Formulates New Guidelines for Regulating NGOs

Niti Aayog has been appointed to accredit and register NGOs that are seeking Govt funding.

NEW DELHI -- The Centre on Wednesday told the Supreme Court that it has framed guidelines for regulating the activity, registration and grants to over 32 lakh voluntary organisations (VOs)/NGOs in the country.

A bench of Chief Justice JS Khehar and Justice DY Chandrachud was informed by Additional Solicitor General Tushar Mehta that in compliance with the apex court order, a high-level committee under the chairmanship of S Vijaykumar, ex-secretary, the Ministry of Rural Development has framed the guidelines/rules for accreditation of VOs/NGOs.

The apex court took the affidavit of the Centre detailing the guidelines on record and asked Mehta to serve the copy to petitioner advocate ML Sharma and amicus curiae Rakesh Dwivedi, who is assisting the court in the matter.

Under the new guidelines, Niti Aayog has been appointed as the nodal agency for the purpose of registration and accreditation of VOs/NGOs seeking funding from the Government of India.

The Aayog has been also tasked with maintaining of data- base systems to manage and disseminate information relating to NGOs/VOs.

"The existing portal at Niti Aayog (NGO-Darpan) shall be strengthened and aligned with accreditation-like functions which should also provide a snapshot of the NGO with regard to its ongoing and past work, particularly with respect to public and foreign funds so as to facilitate grant making authorities on the bonafides," the affidavit said.

It said that all VOs/NGOs, aspiring to be funded by the government, shall register themselves in NGO-Darpan through online process which would enable them to get a unique ID.

"The registration system should facilitate the seamless operation of the IT Act and FCRA with respect to NGOs without the need for cumbersome and intrusive processes, which create mutual distrust and scope for misuse," it said.

Regarding accreditation of NGOs and VOs, the affidavit said a process of evaluating, consistency of compliance to statutory requirements and of the registration including accounts and audit requirements will be in place.

"In future, all funds to NGOs/VOs should be released through the public fund management system (PFMS)," it said, adding that a three-tier monitoring system shall be instituted uniformly for the central government and ministries.

The formulated guidelines stipulate a tough monitoring mechanism by which the grantee institutions shall upload photographs in support of the performances and should geo-tag the assets, if applicable.

"The periodical progress reports from grantee institutions should be incorporated in the NGO scheme workflow on the website of the ministry, with the grantee institution making data entry under a login and password. The progress report in a processed form shall also be available in the public domain preferably with a GIS interface," the affidavit said.

It said that fund-based accounting may be introduced for earmarked/designated funds by the VOs/NGOs and all grants received from the governments should be separately accounted for.

On January 10, the apex court had pulled up the government for failing to evolve a regulatory mechanism to monitor thousands of crore worth of funds of over 32 lakh NGOs, societies and voluntary organisations.

Source: http://www.huffingtonpost.in/2017/04/05/centre-formulates-new-guidelines-for-regulating-ngos_a_22027891/