Can Foreign Contribution Regulation Act curb corruption in NGOs ?

Foreign Contribution Regulation Act (FCRA) allows the NGOs to receive donations, grants and assistance from overseas sources. Some of the NGOs have global networks to address global issues and they get funds for a variety of purposes. Total funds flowing in are approximately Rs. 500cr.

FCRA requires several permissions for accepting foreign contributions by the NGOs. They are from :-

  • RBI
  • Ministry Of Home Affairs

NGOs comply with these. So what’s the problem?

The problem is not with compliance of the this regulation but the use and forward channelizing of these resources. Whether these funds are used for their stated purposes- socio economic progress, poverty alleviation or anti national activities.

»»» Another issue us the credential of NGO directors who run a non profit organisation for the benefit of people and not for maintaining a luxurious life. Unfortunately this has been found in some cases.

»»» In recent times, concerns have been raised that NGOs do not spend adequate amount on their core objectives. There is not enough transparency in the administration of these trusts. This results in disproportionate high administrative expenses.

What are these expenses? Buying land , buildings, setting up offices, consultancy fees etc.

This goes against the grain of service motto where the ultimate recipient is supposed to get the maximum.

»»»There is a pressing need to combat corruption in NGOs in two respects :-

  • Whether funds are channelized for the stated objective.
  • Whether the funds are misappropriated and misused for making money, even black money through round tripping , money laundering.

Some features of FCRA

FCRA – prime objective of the Act is to regulate the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life. The focus of the Act is to ensure that the foreign contribution and foreign hospitality is not utilized to affect or influence electoral politics, public servants, judges and other people working the important areas of national life like journalists, printers and publishers of newspapers, etc. The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that individuals and organizations may function in a manner consistent with the values of the sovereign democratic republic.

As per FCRA guidelines, Indian NGOs receiving foreign funds need to be independent from any foreign agency’s control, and should be registered as per the rules of the Indian Societies Act.