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FCRA and Civil Society Organisations

  Feb 06, 2022

FCRA and Civil Society Organisations

Q What is the context  ?

A Recently, the Missionaries of Charity established by Nobel Laureate Mother Teresa was in the news for the cancellation of its permission under the FCRA.

Q Why is there issue with FCRA permissions ?

  • The levels of due diligence and the information sought on the one hand and the annual declarations to be given by the board members of civil society organisations on the other have increased significantly.
  • The mandatory opening of bank accounts for foreign contributions has been centralised in one branch of the State Bank of India.
  • The linking of Permanent Account Number (PAN), Aadhaar number and mapping it with the bank account/s of the individual board members are happening.
  • The registrations under Foreign Contribution (Regulation) Act (FCRA) have been long necessitated in order to undertake due diligence of the causes for which the organisation is working for and also to have a handle on the traceability of funds.
  • The dashboard shows a little under 17,000 active organisations — which have either got permission or will know their fate by March 2022, while around 33,000 organisations have either lost their permission or it has expired.

Q What are the various restrictions ?

  • Restriction on sub-grant: In the past, the amendments in the FCRA that restricted the ability to sub-grant, killed many of the niche organisations working in very remote areas which had no direct access to international funding but were doing it through larger non-governmental organisations.
  • Restriction on administrative expenses: The other amendment restricting the proportion of expenses on administration almost choked organisations that worked for the rights of the disposed.
  • The increasing level of surveillance type of data sought has resulted in many organisations losing people on their governance structure and resulting in problems in funding.

Q Why do we need Civil Society Organisations?

  • We need them because they usually work on what can be called an unreasonable agenda.
  • This unreasonableness falls in three large verticals.

1. Ensuring efficiency and accountability from state: The first is that they ask for greater efficiency, delivery and accountability from the state.

  • Whether is it about rehabilitation and compensation in the case of land acquisition or setting up a great accountability framework as was done through the movement led by the Mazdoor Kisan Shakti Sangathan for the Right to Information.

2.  Correcting extractive nature of market: The second vertical is in correcting the extractive nature of markets.

  • The groups asking for environmental accountability are looking at inter-generational justice on a matter that is not very precisely measurable but is palpable.

3.  Picking up niche causes: The third is basically picking up causes that are so niche that it is beyond the capability of the state to come up with such initiatives.

  • For example, a drama school set up in a village called Heggodu, Karnataka, or an idea of distributing clothing for work as done by Goonj.
  • These initiatives cannot be put into specific business plans, spreadsheets or government schemes.
  • They, therefore, need a grant-based, cause-based revenue stream model.

Q Should these organisations accept foreign funding?

  • Causes have no boundaries: “Causes” have no boundaries and funding for such socially desirable belief systems could come from beyond borders.
  • Some causes carried out by organisations such as Doctors Without Borders, or Reporters Without Borders are by definition international in nature.
  • Similar is the case with the Jaipur foot provided by the Bhagwan Mahaveer Viklang Sahayata Samiti.
  • The humanitarian work by the Missionaries of Charity is beyond the capability of a state.
  • Such causes do not have a rational basis to be explained in terms of a financial model; how do you put a price tag to press freedom?
  • The niche funding will happen from agencies that may be beyond the borders.
  • The duality of welcoming foreign investments (which takes away capital gains and dividends) while actively discouraging foreign aid to charities is staring us in the face.

Q What can be Way forward ?

A The government needs to ensure that the regulations do not create hurdles for the civil society organisations in their functioning and receiving fundings