What is FCRA? Understanding Its Impact on NGOs and Organizations

What is FCRA?

The Foreign Contribution Regulation Act (FCRA) is a law enacted by the Government of India in 1976, later amended in 2010, to regulate the acceptance and utilization of foreign contributions or donations by individuals, associations, and NGOs. The primary aim of FCRA is to ensure that foreign funding does not affect national security, political interests, or public policy.

Under this law, non-profit organizations, societies, and charitable institutions must obtain FCRA registration or prior permission from the Ministry of Home Affairs (MHA) before receiving foreign contributions. The act also imposes strict compliance and reporting requirements to ensure transparency and accountability in the utilization of foreign funds.

FCRA is particularly significant for NGOs, educational institutions, and research organizations, as it governs their ability to receive international financial support. Failure to comply with FCRA regulations can lead to penalties, cancellation of registration, and legal action against the concerned organization.

FCRA plays a crucial role in maintaining national integrity and financial transparency. Its importance lies in –

1. Preventing foreign entities from influencing political and social structures in India.
2. Ensuring that NGOs operate ethically and utilize foreign funds for legitimate purposes.
3. Encouraging proper financial management and compliance among organizations receiving international donations
4. Regulating fund inflows to avoid illegal or unethical financial activities.

1. FCRA applies to individuals, associations, NGOs, and companies that receive foreign contributions.
2. Organizations must obtain FCRA registration or prior permission from the Ministry of Home Affairs (MHA) before accepting foreign contributions.
3. Registration is valid for five years and must be renewed before expiration.
4. Regular Registration - For organizations that have been in existence for at least three years and have undertaken significant activities.
5. Prior Permission (PP) Route - For newly established organizations seeking one-time foreign funding for a specific purpose.
6. Foreign contributions must be received in a designated FCRA bank account at State Bank of India (SBI), New Delhi Main Branch.
7. Funds can only be used for approved charitable, educational, religious, or social purposes.
8. Administrative expenses cannot exceed 20% of the total foreign funds received.
9. Foreign contributions cannot be used for political activities, influencing elections, or supporting media and journalists.
10. NGOs receiving foreign funds must not endanger national security or public interest.
11. Organizations must file an annual return (FC-4 Form) with the MHA detailing the receipt and utilization of foreign funds.
12. Strict bookkeeping and audit requirements ensure transparency in fund utilization.
13. Violations of FCRA rules can lead to cancellation or suspension of registration.
14. Unauthorized receipt or misuse of foreign funds can result in financial penalties, confiscation of funds, or legal action.

For a grant of registration under FCRA, 2010, the association should:

1. be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 (Now Section 8 of Companies Act, 2013) etc;
2. Normally be in existence for at least three years and have undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised.

FCRA registration process

1. Go to Ministry of home affairs website by typing in address of the web browser, http://fcraonline.nic.in.
2. Click on “Where do I need to file” to apply for any FCRA services.
3. Click on “application for FCRA registration.”
4. Click on “click to apply online.”
5. Click on “Sign Up.”
6. Fill all the correct details for signup.
7. Once the form is filled out & submitted, a user ID is created.
8. Applicants will have to log in with their user ID and password generated.
9. After login, a screen will appear; select FCRA Registration.
10. Click on “Click here to proceed with new registration.”
11. Click on the menu for proceedings step by step. Fill in association details, executive committee, EC detail and others, bank details, and other details.
12. If an executive committee member is a foreigner, then they need to separately add details.
13. Upload the necessary documents.
14. Click on final submit.
15. Pay the registration fee.
16. The applicants should take the printed-out filled form for future reference.

FCRA renewal process

1. Go to Ministry of home affairs website by typing in address of the web browser, http://fcraonline.nic.in.
2. Click on “Where do I need to file” to apply for any FCRA services.
3. Click on “application for renewal of FCRA registration.”
4. Click on the "Click to apply online" button.
5. Login with your user ID and password.
6. Select FCRA Renewal.
7. Click on "Apply Online."
8. Click on “instructions” and read all instructions before proceeding.
9. Click on “Click here to complete the partially filled FCRA renewal application.”
10. Click on “Association Details,” “Executive Committee,” “EC Detail and Other,” “Bank Details,” andUtilisation Accounts” and fill in the details needed.
11. If an executive committee member is a foreigner, then they need to separately add details.
12. Upload necessary documents.
13. Click on “Final Submit.”
14. Click on “Make Online Payment” and pay the fee.
15. The applicants must print the renewal form for future reference.

Compliance Requirements for NGOs and Organizations

1. All foreign contributions must be received in a designated FCRA bank account at State Bank of India (SBI), New Delhi Main Branch.
2. The organization may transfer funds to other utilization accounts, but transactions should be properly documented.
3. Funds must be used only for the specific purpose mentioned during registration.
4. NGOs must file Form FC-4 annually on the FCRA portal.
5. NGOs must upload details of foreign contributions received every quarter on the FCRA website. The report must include donor details, the amount received, and the purpose of the contribution.
6. Maintain proper financial and activity records for at least six years.
7. NGOs must conduct an annual audit by a Chartered Accountant (CA). The auditor must certify that funds were utilized as per FCRA norms.
8. Certain activities like change of office address or governing body members, transfer of foreign funds to other FCRA-registered NGOs, and any modification in the objectives of the organization require prior approval from the Ministry of Home Affairs (MHA).
9. FCRA registration is valid for five years and must be renewed six months before expiry via Form FC-3C.
10. NGOs must notify MHA about any changes in name, address, or key personnel within 15 days.
11. Failure to comply with FCRA regulations may lead to suspension or cancellation of FCRA registration, freezing of bank accounts, fines, or legal prosecution under FCRA and related laws

1. Enhances financial transparency and accountability.
2. Encourages legitimate and ethical use of funds.
3. Strengthens government oversight.

1. Stringent registration and renewal process.
2. Burdensome compliance requirements.
3. Mandatory FCRA bank account requirement.
4. Restrictions on fund utilization.
5. Ban on sub-granting funds to other NGOs.
6. Risk of license cancellation and fund freezing.
7. Legal and operational uncertainty.

1. Obtain and maintain FCRA registration.
2. Operate through a designated FCRA bank account.
3. Maintain accurate financial records.
4. Adhere to reporting and filing requirements.
5. Follow the 20% cap on administrative expenses.
6. Avoid prohibited activities and restrictions.
7. Conduct regular internal and external audits.
8. Keep organisational details updated.
9. Stay updated with FCRA regulations.

The Foreign Contribution Regulation Act (FCRA) plays a crucial role in regulating foreign funding for NGOs in India. While its primary aim is to ensure transparency and national security, the stringent compliance requirements and frequent amendments have created operational challenges for many organizations. The future of FCRA and NGOs in India will depend on striking a balance between regulatory oversight and enabling social development. We help you register your OPC quickly and easily, giving you the legal structure you need to grow your business. Connect with us for hassle free registration process across India. Our experienced lawyer will help you in every process of registration.

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