New Regulations for NGOs Receiving Foreign Funding
The Ministry of Home Affairs (MHA) in India implemented stricter regulations for non-governmental organisations (NGOs) seeking foreign funding. These changes particularly affect NGOs involved in publication activities. The new guidelines aim to enhance accountability and transparency in the utilisation of foreign contributions, ensuring compliance with national and international financial regulations.
Key Changes in Regulations
The MHA’s recent notification outlines several key changes. NGOs must now provide detailed documentation when applying for registration under the Foreign Contribution (Regulation) Act (FCRA). This includes financial statements and audit reports for the past three years. The reports must detail assets, liabilities, receipts, payments, income, and expenditures.
Documentation Requirements
NGOs must submit a chartered accountant’s certificate if their financial statements do not specify activity-wise expenditures. This ensures clarity in how funds are allocated. If an NGO is involved in publication activities, it must provide an undertaking affirming compliance with the FCRA. A “Not a Newspaper” certificate is also required if the publication is registered with the Registrar of Newspapers for India.
Adherence to FATF Guidelines
Organisations must adhere to the Good Practice Guidelines of the Financial Action Task Force (FATF). This global body monitors terror financing and money laundering. NGOs must include a commitment letter from foreign donors, ensuring that the donation amount matches what is pledged.
Limitations on Administrative Costs
The new rules stipulate that administrative costs for projects funded by foreign contributions cannot exceed 20 per cent of the total received funds. This aims to ensure that the majority of funds are directed towards the intended social, educational, or cultural programmes.
Compliance and Penalties
NGOs must obtain permission or registration from the MHA before receiving foreign contributions. Any association wishing to receive such funds must have a clear cultural, economic, educational, religious, or social programme. Non-compliance may lead to penalties, including the cancellation of registration.
Impact on Publication Activities
The regulations specifically target NGOs involved in publication activities. These organisations are now restricted from publishing newsletters unless they comply with the new guidelines. This measure is intended to prevent the misuse of foreign funds for disseminating news content.
Future Implications
These regulations reflect the government’s commitment to maintaining transparency and accountability in the NGO sector. They are part of a broader effort to ensure that foreign contributions are used effectively and for their intended purposes.
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