NGOs have no fundamental right to receive ‘unbridled foreign contributions’: Government

Recently, to a petitions challenging amendments made in the Foreign Contributions Regulations law in 2020 centre told the Supreme Court that NGOs have no fundamental right to receive “unbridled foreign contributions” without regulations.

• NGOs play an important role in uplifting vulnerable sections of society and their overall development.
• This is especially true in the case of India, where the majority of the population continues to live below the poverty line and may not be able to access even the basic facilities provided by the government.
• Every NGO registered or previously authorized under the Act must submit an annual report to the Authority in the prescribed form.
• This report must be accompanied by a statement of income and expenditure, a receipt and payment account, and a balance sheet for the relevant financial year.
• In financial years where no external contribution is received, the ‘NIL’ report must be submitted to the Authority.
• In the event of non-compliance with the provisions of the FCRA, the government may penalize the NGO. For example, if these non-governmental organizations do not file an annual return, the government may issue a notice of cause for the exhibition and thereafter suspend or cancel their foreign funding licenses.
• Over the past two years, about 20000 private sector licenses have been revoked by central government after they were found violating various provisions of the FCRA Act. Those private organizations were therefore barred from receiving any foreign currency.

• The petitions had argued that the amendments severely restricted the use of foreign funds by the NGOs for their activities and their transfer.
• The petitioners had also found it cumbersome that the new law expected 23,000 NGOs to open accounts in the main branch of the SBI in the Capital to receive their foreign funds.

• Denial of acceptance of foreign donations: The Bill prohibits public servants from receiving foreign donations.
• A public servant includes any person who works for or is paid by the government, or who is paid by the government for any public service.
• FCRA 2010 also prohibits individuals from accepting any foreign donation. These include: candidates, editor or newspaper editor, judges, civil servants, members of any legislature, and political parties, among others.
• External donation: The Bill prohibits the transfer of an external donation to any other person.
• The term ‘person’ under the Bill includes one person, organization, or company registered.
• FCRA 2010 allows for the transfer of foreign donations to individuals who have registered to receive foreign donations.
• Registration Aadhaar: The bill makes the Aadhaar number mandatory for all office bearers, directors or key officials of the recipient of an external donation, such as an identity document.
• In the case of a foreigner, a copy of the passport or card of an Indian overseas citizen for identification.
• FCRA Account: The bill states that foreign donations should only be accepted into a bank-designated account as an FCRA account at those branches of the State Bank of India, New Delhi. No funds other than an external donation should be received or credited to this account.
• A person may open another FCRA account at any organized bank of his choice to save or use the donation received.
• Restrictions on the Use of Foreign Donations: The bill allows the government to restrict the use of unused foreign donations. This can be done if, based on the investigation the government believes that the person has violated the provisions of FCRA.
• Reduction of the use of external donations for administrative purposes: The Bill proposes that no more than 20% of the total foreign exchange earnings be administered for administrative expenses. At FCRA 2010 the limit was 50%.
• Issuance of a certificate: The Bill allows the federal government to allow a person to issue his or her registration certificate.
• The government may do so if, after an investigation, it is satisfied that the person has not violated any of the provisions of FCRA 2010, and the administration of his or her external contribution is vested in the government.

• The Foreign Contribution Regulation (Amendment) Act (FCRA), 2020 aimed to check fraudulent transfer of funds and misuse of foreign money to influence democratic polity and public institutions.
• The objective of the act is to regulate the acceptance and utilization of the foreign funds by certain individuals and association and also to prohibit acceptance of such contribution for any activities which are detrimental to national interest.
• In the absence of any violation to fundamental right receiving of unbridled foreign contributions' are not maintainable under article 32 and these amendments are within the legislative domain of the centre.
• The provision of transfer under erstwhile section 7 allowed the endless chain of transfers and create a layered trail of money thus making it difficult to trace the flow and utilization of foreign contributions which can create serious vulnerability for misuse and diversion of foreign contribution.

The Act cannot be equated with any other general legislation and it was enacted with a clear objective to insulate the democratic polity and public institutions and individuals working in national democratic space from the undue influence of foreign contribution or foreign hospitality received from any foreign source.