The history of FCRA and the trends in FCRA registration cancellations
Sai Krishna Muthyanolla
February 22, 2021
With the recent amendments to the FCRA 2010, the government has made it difficult in terms of compliance for non-profit organizations to access foreign funding. In this story, we look at the major amendments to the FCRA since 1976 and also analyse the trend in cancellation of FCRA registrations.
With the recent amendments to the Foreign Contribution (Regulation) Act, 2010, the government has made it difficult in terms of compliance for non-profit organizations to access foreign funding. In this article, we look at the history of the Foreign Contribution (Regulation) Act (FCRA) since its inception in 1976 and through its various amendments. We also analyse the trend in FCRA registration cancellations of non-profit organisations under the purview of the Act for the period 2011 to 2019.
The Foreign Contribution (Regulation) Act (FCRA) enacted in 1976. The FCRA, enforced by the Ministry of Home Affairs (MHA), regulates the inflow of foreign contributions or aid to the country. The intention behind the Act was to prevent foreign organisations from influencing social, political, economic, and/or religious discussions in the country. For that purpose, the Act prohibits certain individuals and organisations from accepting any foreign contribution, which includes political parties, government employees, print or visual media outlets, and so on. The 1976 Act allowed non-profit organisations to receive foreign donations freely, although they were required to annually report the amount received and spent.
In 1984, the law was amended to make it mandatory for non-profit organisations to register before receiving any foreign donations. They could also not transfer that money to other non-profits who were not registered under the Act. After the changes brought about by the 1984 amendments, the FCRA Act came to be perceived as a law focusing on non-profit organisations with foreign contributions.
In 2010, the 1976 Act was repealed and replaced by Foreign Contribution (Regulation) Act, 2010 along with the Foreign Contribution (Regulation) Rules, 2011. The purpose of the 2010 Act, as its preamble specifies, was to:
The parliament approved an amendment in 2018 that modified the definition of the term “foreign source” and made foreign funding to political parties legal retrospectively.
Introduction of the 2010 Act
Broadly, the 2010 Act introduced the following key changes that render the 2010 Act more stringent than the 1976 one:
a) Under the 2010 Act, FCRA registration is valid for five years and must be renewed thereafter, whereas under the 1976 Act it was a permanent registration.
b) Under the 2010 Act, only 50% of the foreign contributions could be utilised for administrative expenses, whereas no such specific restriction existed under the 1976 Act.
Key changes introduced by the recent Amendments under the FCRA Amendment Act, 2020
The Foreign Contribution (Regulation) Amendment Bill, 2020 was introduced in Lok Sabha on 20 September 2020 and after being passed by both houses of the parliament, it came into force on 29 September 2020. The amendment bill broadly redefines terms related to acceptance, transfer, and utilisation of foreign contributions under the Foreign Contribution (Regulation) Act, 2010.
The key changes brought by 2020 Act to the 2010 Act are as follows:
Close to 20,000 FCRA registrations were cancelled in 2012, 2015, 2017 & 2019
As mentioned in the earlier sections, it was with the introduction of the Foreign Contribution (Regulation) Act, 2010 that the registrations came to be valid for a period of 5 years, and must be renewed thereafter, whereas under the 1976 Act it was a permanent registration. Hence, we look at the quantum of FCRA cancellations from 2011 onwards.
With the data available on the FCRA website, we analyse the trend in FCRA certificate cancellations of non-profit organisations under the purview of the Act for the period 2011 to 2019.
The quantum of FCRA cancellations has fluctuated significantly during the period of 2011 to 2019. After the enaction of the 2010 Act, the year 2012 saw the first steep rise in the cancellation of FCRA certifications at 3922 cancellations. For the overall period, the number of FCRA Registered Associations whose registrations were cancelled stands the highest in 2015 as 10,003. In the years 2011, 2013, 2016, and 2018, the number of such cancellations was almost negligible (less than 10 in number). As compared to 2015, the quantum of cancellation has fallen in the subsequent years. More than 99.5% of the cancellations during the 2011-2019 period were in the years 2012, 2015, 2017 & 2019.
Most FCRA registration Cancellations from Tamil Nadu
During 2011 and 2019, the state-wise trends show that the highest number of cancellations were carried out in Tamil Nadu at 2575, closely followed by Andhra Pradesh at 2075, Maharashtra in 2024, Uttar Pradesh at 1848, and Bengal at 1717. The lowest numbers are registered for various UTs, north-eastern states and for states like Jammu & Kashmir at 64, Chhattisgarh at 91, Himachal Pradesh at 97, among others for the period between 2011 and 2019. Consistent with the overall trend, in most states, the cancellations first peaked during 2012 and stand the highest in 2015. However, the trend since 2015 is that of the declining number of cancellations in the subsequent years.
We would look at the quantum of funding for organisations whose registrations were cancelled and other trends in the subsequent story.