Ease of doing business with FCRA-funds narrows

The current uproar over the Amendment Bill 2026 to make India’s Foreign Contributions Regulation Act (FCRA) more stringent is gaining traction because it seeks to further narrow the ease of both receiving and doing business with FCRA funds.The newly notified FCRA Rules 2026 under the Amendment Bill 2026 tie FCRA spending to exact purposes; seek complete disclosure of operational geographical areas, activities and social media handles; set a threshold of spending for FCRA renewal; forbid sub-grants to other non-profits; tighten administrative expenses and appointment of foreigners in management; and ban activities towards religious conversions.Every successive amendment has made the provisions more restrictive. From a one-time registration under FCRA, the 2010 Amendment introduced the 5-year renewal clause leading to a lot of angst among non-profits regarding the ‘arbitrary’ grant/renewal mechanisms of FCRA registration. The highly debated provision of government takeover of unspent FCRA funds and assets created by FCRA funds following FCRA cancellation/surrender is already a part of the 2010 Amendment. Thousands of crores of these funds are lying in limbo as State governments have been unable to take possession of these.For a funding source that has hovered around a mere 0.05 to 0.07 percent of India’s GDP, the FCRAhas always been a contentious issue. Although the core purpose of the FCRA is to regulate foreign donations to safeguard internal security, it is often labelled as a ‘weapon’ to ‘police’ civil society. The unhappiness with FCRA has only grown over time as the FCRA provisions have become tighter.FCRA was hurriedly enacted in 1976 during Emergency when civil liberties were suspended, to ensure that foreign donations would not be used to destabilise the then government. Till the early 2000s, FCRA funds were relatively easy to get, were generous, long-term and flexible. FCRA funds given for over a decade to an NGO were common. Monitoring by donors was non-punitive and ‘participative’ where non-compliance with programme outcomes or objectives were termed as a ‘learning’ and attributed to challenging socio-cultural contexts. The FCRA recipients were required to submit only audited accounts to the government. No narrative reports about the nature of the work, the geographical area or programme results were required by the government.This ‘freedom’ also allowed the funds to be productively used for innovative interventions and field-based research, catalyse positive developmental changes and the space to step back to get a bird’s eye view for understanding different dimensions of a ground-level problem. Much of the work done by these NGOs was in tribal areas, with Scheduled Castes and with marginalized women. At that time, the thought was that the SCs and STs did constitute the poorest among the poor and required humanitarian and development support.In the 2000s, many NGOs began to take up campaigns as a tool to advocate for better policies for ‘their’ constituencies. In 2007, for instance, about 25,000 tribal and Dalit people from 18 States undertook a ‘janadesh (people’s mandate) satyagraha’ march from Gwalior to New Delhi to demand land rights. Media reports describe how the marchers were mobilized by NGOs for four years for this action; that the marchers were prevented from reaching Parliament which they wanted to gherao; that a delegation of NGO leaders first met UPA Chairperson Sonia Gandhi to give her a draft paper on forming a commission to draw up a national land reform policy; and then achieved an agreement with the government to establish a National Land Reform Council under the Prime Minister’s chairmanship. Insiders know that there was nothing ‘organic’ about this uprising. All the funds for mobilization and the Janadesh came mostly from United Kingdom-based international NGOs.Then, in 2012, the then Prime Minister Manmohan Singh openly pointed to foreign funders delaying the commissioning of the Russian-assisted Kudukulam nuclear project by supporting people’s agitation against it. The subsequent 2020 Amendment of FCRA tightened the controls by designating one government bank for all foreign donations for all FRCA recipients; lowering administrative overhead spending; enforcing Aadhaar or passport ID submission for all non-profit office-bearers and trustees; and banning sub-granting to local partner organisations.The 2026 FCRA Amendment Bill takes forward many of the existing provisions. Given that this will further narrow the ease of receiving and doing business with FCRA funds, the current uproar within India and abroad is understandable.