The FCRA Bill and its impact on fundraising

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The Foreign Contribution (Regulation) Amendment Bill, 2020 has been passed in both houses of the parliament amidst mixed reactions from the development sector, politicians and administrative authorities. Being a fundraiser, I have had the opportunity to hear as well as understand this issue from several sides courtesy friends who work in various NGOs. For the benefit of people who are in the development sector, here is a breakdown of what is in store for your foreign fundraising efforts.

Argument against the bill
(Specifically made by Civil Society particularly empowerment and accountability NGOs)

  1. Reduction of admin expenses from 50% to 20% is not justified fully and seems like micro-management by Govt. Given the reduction of this amount, scale of impact may go down.
  2. Stopping of FC fund transfers among NGOs will hamper implementation outsourcing.
  3. Renewal audit/inquiry can lead to prejudice by authorities.
  4. SBI Delhi account is not practical for everyone. 94% of NGOs are based outside of Delhi.
  5. There is a lack of domestic funding for RBOs and empowerment work. FC is needed.

Argument For the bill

  1. NGO transfers of FC have been historically unregulated and also untraceable.
  2. Govt says reduction of admin cost from 50% to 20% is to reduce unnecessary expenditure on the part of the NGOs.
  3. Renewal audit should not threaten NGOs who are doing good work and not indulging in any wrongdoings.
  4. SBI account can be opened from any local SBI branch. It will be opened in Delhi without the need of the account holder coming to Delhi. Funds can then be sent to any Indian account.

Neutral Observations

  1. The idea of FCRA renewal only after scrutiny seems well intentioned, but has the potential to lead to administrative and bureaucratic challenges.
  2. Most of the argument from the Govt’s side (by politicians) has been w.r.t religious conversions and insurgency.
  3. The Aadhar debate seemed aimless from both sides.
  4. Fund Transfer (FC) ban may hurt implementing agencies and grassroots organisations who are the last mile connectivity for service delivery in many cases.
  5. Most NGOs have already been working with 10% admin expenses. 20% does not seem unreasonable at the first glance. We may need more info to establish a concrete opinion.
  6. NGOs may need to become more efficient in program delivery as less manpower (skilled) will be available for more impact.
  7. Domestic funding will come into focus for many agencies. This may probably lead to more competition while also bringing in innovation.
  8. FCRA account has been separate for all NGOs in any case. The change that it will now be with SBI Delhi does not look too difficult to follow and may lead to ease of tracking by the agencies when needed.
  9. Welfare and service delivery NGOs may be impacted less by this law. RBOs (Rights Based Organisations) and Govt accountability and Citizen empowerment NGOs will be affected more.

Dhimant Chovatia

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