Learn more about India’s Foreign Contribution Regulation Act, and how it could affect your nonprofit’s international fundraising strategy.
If you are from the nonprofit sector in India, you probably know this acronym by heart.
FCRA stands for the Foreign Contributions Regulation Act of 2010. Receiving an FCRA registration or prior permission is a prerequisite for a nonprofit whether registered or unregistered in India to accept foreign contributions or grants—whether in the form of sums of money or goods, articles, shares, or stock from any “foreign source.” It is also necessary to become a GlobalGiving partner. However, many people don’t understand it completely and often miss out on receiving their registration or maintaining it successfully because of easily avoidable errors.
I interviewed a few of GlobalGiving’s Indian nonprofit partner leaders to demystify this regulation for you and share top tips on how to maintain a happy, healthy FCRA registration.
The Parliament of India enacted the Foreign Contributions Regulation Act in 1976 which was repealed and replaced by a stricter FCRA 2010 to regulate the acceptance and utilization of foreign contributions or foreign hospitality by certain individuals or associations especially, non-governmental organizations or nonprofits. The Act regulates the flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to national interest and to ensure that individuals and organizations function in a manner consistent with the values of the Indian government. A nonprofit in India cannot receive funding from any foreign national or institution, including GlobalGiving, unless they receive this permission from the Home Ministry of India.
Some of the important documents you’ll need to comply with FCRA include: a certified copy of the registration certificate of your organization or a trust deed, details of activities run by your organization, as well as copies of audited statements of accounts for the past three years. Over these past three financial years your organization should have spent in aggregate at least one million Indian rupees on programs and activities.
Once you have completed the online application you will be assigned a file number and you can track the status of your application online. All FCRA processes, from registration to filing annual returns, are online only and no hard copies need to be sent to the regulator (Ministry of Home Affairs). The most current information on all the documentation required can be viewed on the official FCRA website.
Not submitting all the required documents during the application process is a frequently missed step. “Check the FCRA website thoroughly before starting the application,” advises Vasumathi Sriganesh from QMed Knowledge Foundation. Jothiramalingam from Centre for Rural Systems and Development says that sometimes organizations submit financial statements that are not audited. A small error like this could either get their application rejected or delay the process.
The top reason why nonprofits lose their registration is not filing their annual FCRA returns on time. Vasumathi says that sometimes organizations forget that they need to renew their registration at least six months prior to its expiration date and then have to go through the unnecessary hassle of applying again. She further stresses that FCRA registration is required not just to receive donations from outside India but also from foreign passport holders or foreign entities even if they are donating in Indian rupees. Anupam Sarkar from Mission Smile noted that receiving funds into a bank not designated for the purpose of receiving foreign funds is another issue that can be detrimental to the FCRA registration of an organization. Sometimes, organizations may, with all the right intentions, donate money received into their FCRA bank account to another Indian nonprofit that does not have a registration yet. This is not permitted under the FCRA Act and can have dire consequences. Also remember to study the ‘Utilisation of FCRA funds’ section of the FCRA website to understand all the activities prohibited under this regulation.
GlobalGiving’s payment systems and donor management tools take care of most of the administrative and operational work required to receive foreign contributions for an Indian organization. Vasumathi saved many hours of work in managing the 200+ foreign donors to her nonprofit, thanks to GlobalGiving’s systems and processes. Prior to joining GlobalGiving she had to spend hours collecting personal information for each donor and reporting back separately. She recalls, “US and UK based donors to my organisation did not get tax benefits then but now they do thanks to our partnership with GlobalGiving.”
Following all the compliances and requirements under the Foreign Contributions Regulation Act of 2010 is the key to keeping a happy and healthy FCRA registration. The nonprofit leaders I interviewed stressed the importance of completing small tasks that can sometimes be taken for granted or ignored.
(We accept INR in partnership with Impact Guru! Learn more.)
Featured Photo: Enable Care to End AIDS in India by HIV/Aids Alliance
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