Many charitable goals crystalize into organizations as a formal image of those goals. Through the formal appearance, the charitable organizations enjoy the patronage of various classes of people municipally and internationally.

These persons are either seeking help and support from the organization or they are seeking to use the organization as a medium through which they reach out to the less privileged. The objects and activities of these charitable organizations are encouraged through adequate funding which may come from the government, private individuals and corporations.

It is pertinent to ask, what are the measures taken to ensure that these donations and supports are properly used?

The answer to the above pertinent question is the enactment of the Foreign Contribution Regulation Act of 2010.

In this study we shall proceed to examine the above topic as regulated under the Foreign Contribution Regulation Act of 2010 under the following headings:

1. Definition of foreign contribution
2. Scope and objective of the Foreign Contribution Act of 2010
3. Administration of the Foreign Contribution Act of 2010
4. Who is entitled to accept foreign contribution and who are excluded from receiving foreign contribution
5. Registration for Foreign Contribution:
   1. Requirements
   2. Procedure for registration
6. Prior Permission for registration:
   1. Requirement.
7. Procedure for registration for prior permission
8. General requirements for registration and prior permission in India.
9. List of forms for application/registration under the Act

 

Definition Of Foreign Contribution-

Deducible from the provisions of Section 2(1)(h) of the Foreign Contribution Regulations Act of 2010, foreign contribution refers to the donation, gifts, delivery or transfer of funds made by any person or organization beyond the shores of India. An article, by way of the gift of the value below 25,000 Indian Rupees is not contemplated as a foreign contribution under this Act.

The article being any currency, whether Indian Rupees or foreign or any security within the meaning of the Securities Contracts (Regulation) Act, of 1956 and the Foreign Exchange Management Act, 1999 qualifies as a foreign contribution provided it is traceable to a foreign donor.

It is imperative to state that any donation, gift, delivery or transfer or any article, currency or foreign security (and the interest which shall accrue from it) by any person who received the same form a foreigner (including a Corporation), directly or indirectly is a foreign contribution with the meaning of the Foreign Contribution Regulations Act of 2010.

The Foreign Contribution Regulation Act of 2010 went ahead to discountenance funds received from any foreigner within India, by way of fees of any manner whatsoever as foreign contribution.

 

Scope and objective of the Foreign Contribution Act of 2010

With the enactment of the Foreign Contribution Regulation Act of 2010, the following legal and social thirst are intended to be satisfied. They are:

1. The Act is intended to regulate the receipt and utilization of foreign contribution or foreign relief by the recipients of such foreign contribution and
2. The Act is also enacted to restrict the receipt and use of a foreign contribution for any course which does not suit  the national interest.

 

Administration of the Foreign Contribution Act of 2010

It is trite that for law and regulation to be effectively enforced. The said law must go beyond the legislative proweress of the lawmakers, therefore it is imperative for the law itself to invoke a force which shall arise from within by establishing a department of the government which shall be saddled with the task of enforcing every letter of the law.

The Foreign Contribution Act of 2010 against the above background empowered the Home Ministry to fully enforce the wordings of the Act. True to their mandate the Ministry had continued to administer the Act to the extent of withdrawing the licenses of over 8000 agencies for the flagrant breach of the Act.

Who is entitled to accept foreign contribution and who are excluded from receiving foreign contribution? The law i.e the Foreign Contribution Regulations Act of 2010, had also spelled out persons and entities that are permitted or excluded from enjoying the dividends of Foreign Contribution.

The under listed are entitled to receive foreign contribution as provided by the Act:

1. A private person or Individual,
2. Hindu Undivided Family,
3. Trust,
4. Society, and
5. Company

While the following are not allowed from receiving a foreign contribution under this Act:

1. A person contesting any election or political sit in India.
2. A political party or a political office holder in India.
3. Any organization with a political undertone or any form of political consciousness in the organization.
4. Any person who is directly involved in the running or making publications in a registered newspaper.
5. Any or corporation in the business of producing, and broadcasting of  news (audio or video) through any electronic mode, or any other electronic form as recognized under the Information Technology Act, 2000.
6. Judicial officers.
7. Civil Servants in the employment of an arm of the government of India.
8. An employee of any Government-owned Corporation Member of any legislature.
9. Organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government Act.
10. Correspondent or columnist, cartoonist, editor, owner of the association or company referred to the above point.
11. Persons, associations or companies that in the exercise of the mandate vested in the Home Ministry they have prohibited such persons, associations or companies from receiving foreign contribution.

 

Registration for Foreign Contribution-

Requirements-

For an organization, person or individual to register and benefit under the Foreign Contribution Regulation Act of 2010, they must fulfill the underlisted criteria with:

In the case of an association it must be registered under India’s Societies Registration Act of 1860 or in the alternative, the Indian Trusts Act, 1882 or Pursuant to Section 8 of the Companies Act of 2013, the said association must be in existence for a minimum of 3 years and has engaged in substantial activity in its field the overriding use and benefit of the society for which the foreign contribution is intended to further benefit.

The said association ought to have expended about 1000,000 Indian Rupees in the space of three (3) years on its aims and objects of the establishment, to the exclusion of administrative expenditure. The statement of account (income and expenditure) as audited which must be within 3 years must be submitted.

 

Prior Permission for Registration-

Requirement-

An organization which has not been in existence for at least three (3) years not eligible for registration and benefits under the FCRA, 2010. However, such an organization may apply for a grant of prior permission under as provided under the Foreign Contribution Regulations Act, 2010.

The grant of this permission is limited to the receipt of a given amount from a specific donor for the execution of a named project. Notwithstanding the avenue created by this Act, the said organization must meet the following criteria:

1. It should be registered either under any of the following laws:
   1. The Societies Registration Act, 1860
   2. The Indian Trusts Act, 1882
   3. Companies Act, 2013

Provided a commitment letter from the foreign contributor or donor stating the amount of foreign contribution and the purpose for which it is proposed is to be applied.

In the case of Indian recipient-organizations and foreign donor with the same members, Foreign Contribution Regulation Act of 2010, prior permission will be granted to the Indian recipient organizations if the following conditions are met:

1. The Principal officer of the recipient Indian organization should not be a part of the donor organization.
2. A minimum of 51% of the officers (members or principal officer of the Indian recipient organization) should not be members/shareholders of the foreign donor organization.
3. Where the foreign donor organization is a single person, he must not be the Principal Officer of the recipient Indian organization.
4. Where it is a single foreign donor, a minimum of 51% officers (members or principal officer of the Indian recipient organization) should not be members/shareholders of the foreign donor organization.

 

Procedure For Registration and Grant of Prior Permission-

Application for registration or grant of prior permission is to be made and submitted online in form FC-3 at the website of the Foreign Contribution Regulation Act manned by the Home Ministry, see www.fcraonline.nic.in.

 

Documents Required For Registration-

1. A signature in the standard of Joint Photographic group (jpg) of the Principal officer.
2. A certified copy of the Certificate of Incorporation/Trust Deed etc. of the Association.
3. A certified copy of the pages of Memorandum of Association/ Article of Association evidencing the aims and objects of the association.
4. Activity Report stating in detail the activities of the association in the past three years.
5. Copies of the audited financial statement of accounts for the past three years  showing the expenditure made on aims and objects of the association and on administrative expenditure.

 

For Prior Permission

1. A signature in the standard of Joint Photographic group (jpg) of the Principal officer.
2. A certified copy of the certificate of incorporation/Trust deed etc. of the association.
3. Duly signed a Commitment Letter from Donor organization.

Where the organization seeking prior permission is a proprietor of any business registered under the Press and Registration of Books Act, 1867, a certificate from the Registrar of Newspapers for India that the publication is not a newspaper in terms of section 1(1) of the said Act.

 

Fees

1. A registration or prior permission fee of 2000 and 1000 Indian Rupees respectively are to be paid online.

 

Validity & Renewal

Registration made under this Act shall be for a period of 5 years and an application for renewal of registration may be made before 6 months from the expiry of their existing registration.

 

Exemption from Registration/Prior Permission-

Donation made by NRI

Contributions from Indian citizen living in another country (Non-Resident Indian), from his personal savings, through the normal banking channels are discountenanced as foreign contribution.

Foreign Transfers from Relative

Funds remitted from relatives in another country is deemed as a foreign contribution. However, a recipient of the sum in excess of Rs. 1 lakh or equivalent thereto in a financial year from any of his relatives shall make a disclosure to that effect to the Central Government in Form FC-1 within 30 days from the date of receiving the said sum.

Government Department

Any organization constituted by a fiat of the central or state government whose accounts are compulsorily audited by Comptroller & Auditor General of India are exempted from the operations and enforceability of the entire provisions of the Foreign Contribution Regulation Act, of 2010.

Annual Filing

The filing of an annual return is imperative on any organization operating under the provisions of the Foreign Contribution Regulation Act of 2010. The organizations are mandated to mandate a separate record for the purpose of the FCRA.

Annual returns of organizations are to be filed in compliance with form FC-4 with scanned copies of income and expenditure (financial) statement, electronically at www.fcraonlineservice.nic.in within a period of 9 months from the closure of the year which shall be on or before the 31st day of December each year.

In the absence of any receipt and utilization by an organization the Act further mandates them to periodically file a ‘NIL’ return but a certificate from Chartered Accountant, audited statement of accounts is not required to be uploaded along with the NIL return.

Where an organization operating under the Act fails to file annual returns they shall face such penalty as imposed on them by the Home Ministry which may include cancellation or deregistration.

General Requirements For Registration And Prior Permission In India-

Any person or organization seeking the registration or grant of prior permission under the FCRA, 2010 must ensure:

1. That it is not a fictitious or nonexistent entity.
2. That they have not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or undue influence, either directly or indirectly, from one religious faith to another.
3. That they have not been prosecuted or convicted for promoting any communal war, tension or disharmony in any district or any other part of the country.
4. That they have not been found guilty of diversion or misappropriation of its funds.
5. That they have not intended to use the foreign contribution for personal gains or gratification contrary to the objects stated.
6. That they are not existing in contravention any of the provisions of this Act.
7. That they are not under any encumbrance by law which prohibits them from accepting foreign contribution;

 

List Of Forms For Application/Registration Under The Act-

The forms and their uses as mandated by this Act are as hereunder stated:

Form

Purpose

FC-1

1. Notification of receipt of a foreign contribution by way of gift from a relative by an individual.
2. Notification of receipt of Foreign Contribution by way of articles from a relative by an individual.
3. Notification of receipt of Foreign Contribution by way of Securities.
4. Notification of receipt of Foreign Contribution by a person contesting a political office.

FC-2

1. Application for seeking prior permission to accept foreign Hospitality.

FC-3

1. Application for FCRA registration.
2. Application for prior permission.
3. Application for renewal of FCRA registration.

FC-4

1. Filing of Annual Return

FC-5

1. Application for permission for transfer of foreign contribution to other unregistered people.

FC-6

1. Notice of change of Name, Address, Bank details, Key members.
2. Notice of quarterly receipt of foreign contribution.
3. Filing of annual returns on assets and liabilities by association.

 

Conclusion

The position of Charity and charitable organizations cannot be undermined while looking at the factors accountable for the continued development of countries.

The quest and receipt of foreign contribution within the purview of the law are very important for the continuous development of countries.  Where the receipt and utilization of these funds are not regulated by the government through her designated department, surely foreign contribution will be reduced to another means of a quick and illegitimate fund as the funds received will not be applied to the object to which it was received.

It is commendable that an Act of this nature is in operation in India, as not only does it operate to encourage charity but by its restrictive nature compel the citizenry to live up to the minimum standard of honesty.