A regulator for NGOs that get foreign funds? Government vets plan

NEW DELHI: After tightening the rules related to Foreign Contribution Regulation Act (FCRA) for non-governmental organisations (NGOs), the government is examining a proposal to set up a regulator for charities receiving overseas donations.

The approach has been recommended by a study conducted by the Central Economic Intelligence Bureau (CEIB), an arm of the finance ministry, to set standards for NGOs receiving funds from abroad. The CEIB examined "various typologies of misuse of NGOs" and suggested an independent ‘National Commission for Charities’ that can take actions and even de-register those found misusing rules.

The 53-page report has been shared with the home ministry and enforcement agencies for their comments. Recently, the Enforcement Directorate had seized the bank accounts of Amnesty International after it was found violating FCRA rules which led the international NGO to later claim that it had to shut down its India operations because of the ED action.

The paper suggests building a unified database of NGOs, contributions received and their total expenditure. It recommended making this database available to all enforcement agencies for better and effective coordination on a ‘whole-of-government’ approach.

An independent regulator for charities and the NGO sector could create an "arm's length" from the government, reducing allegations of biased and unreasonable actions. On the other hand, some sections of the voluntary sector could see a new level of regulation and restrictive rules in the proposal.

The exhaustive study has suggested institutional level changes and those pertaining to the income tax department. The I-T department deals with tax exemptions granted to charities and trusts based on their eligibility. Modifications in tax provisions have also been suggested.

The changes recommended by the CEIB study included “creation of a centralised regulatory organisation/independent national commission for charities, setting up of separate bodies/commission at the national and state level for awarding grants to NGOs besides a rationalised, comprehensive and unified legal framework”.

Last week, the government had notified some changes to FCRA rules where it made it mandatory for voluntary organisations to be operational and doing charity for at least three years before being eligible to receive foreign funds. It also stipulated that NGOs must have done charity work of at least Rs 15 lakh in voluntary activity during this period to be eligible for foreign contributions.