All You Need To Know About: Foreign Contributions Regulation Act (FCRA)

Published on March 22, 2024

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In today’s globalized world, philanthropy and charitable activities are no longer confined by national boundaries. This has led to an increase in cross-border giving and receiving by both organisations and individuals. The Foreign Contribution (Regulation) Act, or FCRA, is at the forefront of regulating such activities in India. It is designed to oversee the inflow and utilization of foreign contributions for social, cultural, economic, educational, and religious purposes, playing a crucial role in safeguarding national interests while promoting international cooperation.

Understanding the intricacies of FCRA is essential for both domestic and foreign entities engaged in philanthropic endeavors within India. Compliance with its provisions ensures transparency, accountability, and legal adherence. This article provides a comprehensive insight into FCRA, including its regulations, implications, and procedures, empowering organisations and individuals to navigate the realm of cross-border philanthropy with confidence and integrity.

What?

FCRA was enacted during the Emergency in 1976 amid apprehensions that foreign powers were interfering in India’s affairs by pumping money into the country through independent organizations.

Why?

It aims to regulate foreign donations to individuals and associations so that they function in a consistent manner with the values of a sovereign democratic republic.

How?

All NGOs must register themselves under the FCRA to become eligible for funding from foreign sources.

FCRA compliance

The FCRA requires every person or NGO seeking to receive foreign donations to be:

Registered under the Act
Preferably structured as a Trust, Society, or Section 8 Company
Minimum existence of three years at the time of FCRA application
No prior receipt of foreign contribution is possible without government approval
To open a bank account for the receipt of foreign funds in the State Bank of India, Delhi
To utilize these funds only for the purpose for which they have been received and as stipulated in the Act
These registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programmes
The applicant should not be fictitious or benami and should not have been prosecuted

Financial requirements

Minimum expenditure of INR 10,00,000 over the last three years on stated objectives, excluding administrative costs.
Submission of audited Income & Expenditure statements for the past three years by a Chartered Accountant.

Process for newly registered entities

Newly registered entities can apply for specific foreign contributions through Prior Permission (PP).
Approval required for a particular activity, purpose, and source must be obtained from the Ministry of Home Affairs.

Applying for FCRA Registration

Applications for FCRA registration can be made using Form FC-3. Along with the application, the following documents must be submitted:

Self-certified copy of registration certificate/Trust deed, etc., of the association
Self-certified copy of relevant pages of Memorandum of Association/ Article of Association showing aim and objects of the association.
Activity Report indicating details of activities during the last three years;
Copies of relevant audited statement of accounts for the past three years (Assets and Liabilities, Receipt and Payment, Income and Expenditure) clearly reflecting expenditure incurred on aims and objects of the association and on administrative expenditure;
Once FCRA registration is granted, it is valid for a period of five years. An application for renewal of FCRA registration can be made 6 months prior to the date of expiry, to keep the registration valid.

Online Portal – https://fcraonline.nic.in/home/index.aspx

Documents to be uploaded with the application for grant of registration

For all FCRA services provided through the online portal, Aadhar Number & Darpan ID are mandatory. The applicant should be ready with scanned copies of the following documents before filing the application online:

JPG file of signature of the chief functionary (Size: 50KB)
Self-certified copy of registration certificate/Trust deed etc., of the association (Size:1MB). If not in English/Hindi, a copy translated into English/Hindi has to also be uploaded
Self-certified copy of relevant pages of Memorandum of Association/Article of Association showing the aim and objectives of the association (Size: 5MB). If MOA/Article of Association is not in English/Hindi, a copy translated into English/Hindi has to also be uploaded
Activity Report indicating details of activities during the last three years (Size: 3MB)
Copies of relevant audited statement of accounts for the past three years (Assets and Liabilities, Receipt and Payment, Income and Expenditure) clearly reflecting expenditure incurred on aims and objectives of the association and on administrative expenditure (Size: 5MB)
A fee of INR 10,000/- is to be paid online through a payment gateway
Affidavit from each office bearer in Proforma AA

Validity

Once granted, FCRA registration is valid for five years
NGOs are expected to apply for renewal within six months of the date of registration expiration.
Registration can be canceled if an inquiry finds a false statement in the application

FCRA Amendment Highlights

FCRA Amendments Bill 2020

Government to keep check on Donations: To lower the cap on administrative expenses that can be funded by FCRA funds from 50% to 20%
Aadhar is to be mandatory: Proposal to make Aadhar a mandatory identification document for all office-bearers, directors and other key functionaries of NGOs or associations eligible to receive foreign donations
Accounts to be opened in SBI: Foreign grants can only be received in designated FCRA account at State Bank of India, New Delhi

FCRA Amendment Rules 2022

Increased threshold for reporting foreign contributions from relatives

Previously: INR 1 lakh

Now: INR 10 lakhs

Indians can receive foreign contributions from foreign relatives up to INR 10 lakhs without informing authorities.

Extended timeline for reporting foreign contributions from relatives

Previously: 30 days

Now: 3 months

Allows more time to report receipt of foreign contributions from foreign relatives using Form FC-1

Extended timeline for opening an FCRA bank account notification

Previously: 15 days

Now: 45 days

It applies to organizations seeking FCRA registration or prior permission.

Removal of the quarterly reporting requirement

Previously: Quarterly reporting on the official or FCRA website.

No longer is it required to report foreign contributions received quarterly on official websites.

Increased timeline for intimating changes

Changes in name, address, aims, objects, designated bank, office bearers, etc.

Previously: 15 days

Now: 45 days

The required forms are FC-6A to FC-6E.

Got more questions? Check out these FAQs on the Ministry of Home Affairs website.

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