New FCRA Rules for Foreign-Funded NGOs

New Delhi, May 27 (PTI) — The Centre has announced that NGOs involved in publication-related tasks and receiving foreign contributions will face restrictions. Such NGOs will not be allowed to publish any newsletters and must procure a certificate from the Registrar of Newspapers for India, confirming that they do not circulate news content.

The new regulations are mandatory for NGOs seeking registration under the Foreign Contribution (Regulation) Act (FCRA).

According to a notification from the Ministry of Home Affairs (MHA), amendments have been made to the FCRA rules. From now on, NGOs seeking foreign funding must commit to adhering to the Good Practice Guidelines of the Financial Action Task Force (FATF), which is the global body overseeing the prevention of terror financing and money laundering.

NGOs applying for registration are required to submit financial statements and audit reports for the past three financial years. These documents should include statements of assets and liabilities, receipts and payments accounts, and income and expenditure accounts.

In cases where these audit reports and financial statements lack activity-wise expenditure details for the last three financial years, a certificate from a chartered accountant is necessary. This certificate must specify the activity-wise amount spent, duly reconciled with the income and expenditure account and the receipt and payment account.

If the NGO is engaged in publication-related activities, or if such activities are listed as part of its aims and objectives in its Memorandum of Association or trust deed, the chief functionary must provide an undertaking stating compliance with the FCRA, 2010.

The MHA further stated that if the NGO's publication is registered with the Registrar of Newspapers for India, a "Not a Newspaper" certificate must be obtained from the Registrar.

For NGOs previously registered under the FCRA, they must submit an affidavit regarding the receipt and utilisation of foreign contributions upon the expiry or cancellation of their registration certificate.

Moreover, if expenditure on aims and objects is below Rs 15 lakh over the past three years, an affidavit regarding the inclusion of capital investments must be provided.

The government has specified that NGOs seeking permission to receive foreign contributions must also include a commitment letter from the donor. This letter should clearly state the amount committed and it must match the donation amount. NGOs must also provide a project report with a detailed breakdown of proposed expenses funded by the foreign contribution, along with a declaration that administrative expenses will not exceed 20% of the foreign contribution.

Registration under the FCRA is compulsory for all NGOs intending to receive foreign funds. Such funds must be used strictly for their designated purposes.

The Centre clarified that any association wishing to receive foreign contributions must have specific cultural, economic, educational, religious, or social programmes.

The organisation is prohibited from receiving or utilising any foreign contribution without obtaining the necessary permission or registration from the Centre.