Foreign Grant For NGO/Society/Trust/Institution

Non-governmental organizations (NGOs) play a crucial role in influencing change in the society and also in upliftment of the weaker sections. Thousands of NGOs in India operate in almost all major sectors of the country, such as, health, education, rural development, food security,  etc. There is a long list of potential sectors with varied scope of work right from the grassroots.

However, NGOs often function around a blurry line when it comes to acquiring capital, and usually rely on donations, charity, government-funded campaigns, Corporate Social Responsibility (CSR), and foreign funding. Foreign funding for NGOs is regulated by the Foreign Contribution (Regulation) Act (FCRA) of 2010 and about 30,000 NGOs in India are registered with FCRA as eligible to obtain foreign money.

Is your NGO eligible?

Under the FCRA, 2010, all companies, associations, societies as well as NGOs need to fulfill certain criteria to be eligible to receive foreign funds. Registration with the Central Government is usually important, but there is also a separate provision of prior permission for case to case basis.

As FCRA is a broad legislation that regulates foreign contribution in all organizations, an organization must have a defined cultural, economic, educational, religious, or social programme to be first eligible to accept foreign contribution. For registration under FCRA, the organization must have been in operation for at least 3 years, whereas for prior permission no such minimum years of operations are required.

Eligibility for grant of registration

Should be registered under an existing statute like the Societies Registration Act, 1860,  the Indian Trusts Act, 1882, or the Companies Act (1956 or 2013), etc.

1.       Having been in operation for 3 years
2.       Should not have a parent society already registered under FCRA
3.       No foreigner should be on the board of this aforementioned society

Apart from just being in operation for 3 or more years, the organization must also submit proof of activities undertaken in its chosen field of operation. The organization must have also spent at least Rs. 10,00,000 over the last three years on its aims and objectives, excluding administrative expenditure. Statements of Income & Expenditure which are duly audited by a Chartered Accountant are also to be furnished for the same.

A separate bank account must also be maintained by the organization which is solely for the purpose of foreign transactions, and no other funds must be kept in this account. This is applicable for registration and prior permission both.

Eligibility for grant of prior permission

An organization in its early stage may not be eligible for registration. Such organization may apply for grant of prior permission under FCRA, 2010. Prior permission is granted for receipt of a specific amount, from a specific donor, and for carrying out specific activities/projects.

An association or an organization can receive foreign contribution without registration only with prior permission from the FCRA department. Such prior permission for foreign contributions can only be received under these circumstances-

1.  Should be registered under an existing statute like the Societies Registration Act, 1860,  the Indian Trusts Act, 1882, or the Companies Act (1956 or 2013), etc.
2. Should submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given;
3.  For Indian recipient organizations and foreign donor organizations having common members, FCRA Prior Permission shall be granted to the Indian recipient organizations subject to some conditions.