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Leading NGOs Believe FCRA Changes Will 'Kill' Voluntary Sector

The amendments will also hinder the sector's ability to collaborate and conduct research, activists tell The Wire.

New Delhi: The Foreign Contribution (Regulation) Amendment Bill, 2020 introduced in Lok Sabha on September 20 will severely impact collaborative research in critical fields in India as organisations receiving foreign funds will no longer be able to transfer them to small NGOs working at the grassroots level. Leading organisations also say the Bill would initially impact the livelihoods of workers associated with these small NGOs and ultimately lead to the “killing” of the entire sector as caps on administrative expenses would make it impossible for even the bigger NGOs to perform.

The Foreign Contribution (Regulation) Act (FCRA), 2010 regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. Under this Act, according to PRS Legislative Research, certain persons are prohibited from accepting any foreign contribution. The Bill adds the category of “public servant” to it. They include any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty.

Also, the Bill seeks to intrdouce an amendment to the clause that says foreign contributions cannot be transferred to any other person unless that person is also registered to accept foreign contributions, by prohibiting the transfer of foreign contribution to any other ‘person’ that may be an individual, an association, or a registered company.

It also seeks to restrict the use of foreign contributions for administrative purposes from the earlier 50% to 20%. Another key aspect is that the Bill seeks to extend the period of suspension of registration of a person by the government from the present limit of 180 days by up to an additional 180 days.

‘Small NGOs destroyed with one stroke’

Reacting to the proposed changes, Poonam Muttreja, executive director of the Population Foundation of India, which works on implementation of gender-sensitive population, health and development strategies and policies, said the Bill will mark the “end of any partnership.”

“If you are getting foreign funding, you cannot work in partnership with anyone, you will now not be able to give the money to an individual or another NGO or collaboration partner. All large NGOs collaborate with smaller NGOs which are there at the grassroots level – they do not have the capability of raising money or writing reports but do the real work. We support them to do the real work and we raise funds and write report and support them as an intermediary organisation. So this would mean the end of the small NGOs,” she said.

Stating that “all the money from the private sector is also going to just one place now – PM-CARES Fund,” Muttreja commented that in any case, for small NGOs to get Indian or international money is “very difficult”. Alliances and collaborations are crucial in the development sector, she said, saying these will now be “destroyed with one stroke”.

The home ministry wants a on-the-fingertip breakdown of how foreign funding shapes the NGO ecosystem in India. Credit: Reuters

The amendments will prevent NGOs receiving foreign funding from collaborating with other organisations. Representative image. Photo: Reuters

Impact on research

With years of experience in working with the sector as also foreign funding agencies, Muttreja said much of the NGO’s budget is for administrative purposes, especially for research. “But with the limit for expenditure under this head being reduced from 50% to 20% of the donations, we will not be able to do any research – be it international or national. We won’t be able to collaborate with universities or research institutes,” she said.

She said since the NGOs have grassroots perspective, the bigger ones collaborate with academic institutions to conduct research. “This is going to get impacted due to the new limit. There must be a logic for having the limit at 50% earlier. But now it has been arbitrarily reduced to 20%.”

Likewise, she said, now the government wants all the FCRA funds to come to just one bank – the State Bank of India in New Delhi. “So will it be reporting to the home ministry? Will everything be decided then? Will the home ministry now look at who is getting what money and decide if it can be released?” she asked, saying it would lead to centralisation.

Also Read: The Proposed FCRA Amendment Will Deal Another Blow to India’s Non-Profit Sector

‘In times of COVID-19, NGOs needed more relaxations’

Muttreja said many NGOs are leading scientific research, especially in health, and so in a time like this – when India is battling the COVID-19 pandemic and so much is at stake, international collaborations should be encouraged. “But this Bill would be an absolute model of control over and above the rules, regulation and certification processes, it would stifle this sector and the spirit of cooperation and collaboration.”

“These amendments also assume that NGOs that are receiving foreign funds are guilty unless proven otherwise. That is the spirit behind the Bill. We are here because of the failure of the executive and government, because they do not do their jobs and we come in to fill the gaps,” she added.

Muttreja said it is very difficult for NGOs to get any government funds, and now “they are also starving us of private sector money”. She added, “NGOs also have a lot of restrictions on using grant money for sub-contracting work to any foreign institution. So no Indian organisation can be a leading institution in an international consortium. But I am proud that our institutions do critical research, especially in the health sector. Yet, additional restrictions are being imposed.”

“These rules, they say, are meant to control the NGOs which engage in dubious activities. There we stand with the Government of India in its efforts to put down such activities. But by failing to recognise the diversity of NGOs, which include world-class organisations that are recognised globally, they will crush their competitiveness and creativity. They want to bring us down to our knees.”

A volunteer distributes food to migrant workers travelling home at a Kanyakumari railway station. Photo: PTI

‘Grassroots activists stand to lose their livelihood’

Muttreja said there is limited domestic philanthropy and much of it is now going to PM-CARES. Her big concern was that the Centre is now trying to criminalise the activities of even those certified as FCRA compliant. “They are endangering the livelihoods of so many grassroots activists who did not become teachers, or enter the health sector or join government jobs or private sector. They stayed with the NGO sector despite the small salaries and yet now they will not have jobs and will be unable to serve the community.”

“Are we a country that wants to make sure that in every sector, we make the jobs disappear,” she quipped, adding that “this is nefarious”.

On the FCRA exemption for the PM-CARES fund, she said it was “ridiculous” as “there are no rules” for it.

“Every rule and regulation is for us and to stop us from getting funds. This, despite even the PM acknowledging the role played by NGOs during the COVID-19 pandemic and lockdown. But after saying we did good work, we get hit. It (this Bill) is a ticking time bomb, you will see NGOs disappearing in India,” Muttreja said.

Also Read: The Modi Government is Cornering Public Funds via PM CARES While Robbing States of GST Share

Is ‘public servant’ clause linked to the Indira Jaising controversy?

Under the FCRA Act, certain persons are prohibited from receiving foreign contribution. The Bill now adds public servants (as defined under the Indian Penal Code) to this list.

In 2016, the Ministry of Home Affairs (MHA) clamped down on Lawyers Collective, an organisation run by senior advocates Indira Jaising and Anand Grover on the ground that Jaising was a holding a government post of additional solicitor general and so her organisation could not have received foreign donations. Jaising later countered this in the Supreme Court, saying she was not a “government servant” but a “public servant”.

Anand Grover and Indira Jaising. Photo: PTI Illustration: The Wire

Now the Bill debars a “public servant” from receiving foreign funds. To this, Mutreja said: “It is like, ‘You challenge us, we will fix you, the very next day’.” Also, she said, in the Jan Lokpal Bill brought during the UPA regime, even NGOs were identified as public servants.

She said while NGOs were stifled earlier too, “the only difference is that this Bill legitimises that”.

Why can’t MHA identify NGOs misusing funds?

Mutreja asked why can’t the MHA identify those NGOs which “cause mischief” in the country and misuse foreign funding. “Why target all of us? Is this government so incompetent that it cannot distinguish those which are anti-social from the rest? We would like to help the government in this identification. We do not want to be identified with organisations engaged in conversion or other such activities,” she said.

She insisted that there are many existing laws like the Income Tax Act, FCRA regulations which can be used to detect NGOs which are ‘misuinsg’ funds. “Why are these instruments not being used?” she asked.

On major international donors, she said, they will be left with just two choices – either to stop grant-making in India or to redesign their strategies. “But they also have to comply with rules of their countries and that would now be with their hands tied behind their backs. Also, they have strategies and policies which are very well thought out. They spend so much time doing their international strategy. They won’t be doing a special strategy for India,” she said, adding that this would impact critical edge research in India.

This FCRA problem, Muttreja said, did not start with this government, it started with the UPA government and its home minister P. Chidambaram. “It was the fear of a foreign hand behind the anti-nuclear power plant protests at Kudankulum in Tamil Nadu that amendments were brought in to cancel the FCRA certifications of several NGOs who were involved with the protests,” she said.

She noted that bureaucrats are generally wary of NGOs because they raise the “failings and gaps” in programmes and issues. “So whichever government is there, the bureaucracy goes after the sector,” she concluded.

A policeman walks on a beach near Kudankulam nuclear power project in Tamil Nadu, September 13, 2012. Credit: Reuters/Adnan Abidi/File photo

A policeman walks on a beach near Kudankulam nuclear power project in Tamil Nadu, September 13, 2012. Photo: Reuters/Adnan Abidi/File photo

‘Proper consultative process with stakeholders not followed’

President and chief executive of the Centre for Policy Research, Yamini Aiyar, said that due to the lack of consultation in the drafting of these amendments, “We are still making sense of what the fine-print actually means and ultimately the rules will tell us exactly what this is all about.”

“Something as significant as this,” she said, “requires more public debate and consultation, with a range of stakeholders. There is a very wide variety of institutions and organisations that receive foreign funding. So an all-encompassing regulatory structure has to understand that and be responsive to that.”

Aiyar said she accepts the overall principle of greater transparency and improved governance of FCRA recipient institutions, but the concerns are around “some of the issues emerging in the Bill”.

“On the administrative expenditure, it isn’t entirely clear to me what the 20% is going to cover. That would be known when the rules are out. But one general principle of administrative expenditure that needs to be understood is better quality reporting, so that the concern that the money meant for public interest is spent in the public interest, and not in private interest, gets addressed,” she said.

However, Aiyar also cautioned that the new rules may impact the NGOs’ ability to do research. “Any kind of research or policy work involves long-term intensive work and investing in an institution’s ability to function, a lot of which is about administrative expenses. So better reporting requires having a high-quality finance officer, internal operations and HR. All of which cost. This is how strong institutions are built. So the process of monitoring should not be so constraining that it prevents public interest from actually being fulfilled,” she said.

She also said the curbs on re-granting of funds would impact research. “One of the big challenges that Indian research faces is that an Indian institution which wins a foreign grant cannot subcontract foreign institutions. This in effect prevents Indian institutions to play a lead role in global research. India is home to some of the world’s leading academic research institutions and yet we are not able to perform all the roles of ‘leaders’,” she said.

‘Ability to build networks, collaborative research will suffer’

Similarly, she said, “The provision that constrains recipient organisations from sub-granting to other organisations in India will affect the ability to build networks and conduct collaborative research across institutions. If we can’t generate networks of collaborative researchers then our ability to undertake world class research in India is going to suffer quite a lot. Research has to be done in an eco-system – there has to be a combination of universities, policy research, think-tank and grassroots organisations coming together for it.”

When it comes to public policy challenges, like in public health right now, Aiyar pointed out that there is no single institution that can singularly conduct research to find solutions to “such a challenging and wide-ranging issue”. It requires collaboration, including sub-granting, she said.

On the opposition’s accusation that the Centre is using this law to “stifle dissent”, Aiyar said, “There are a variety of organisations of the societies that are eligible for FCRA. We all should welcome the overall goal that the money should not be misspent. The problem arises when this is done in a non-transparent manner without stakeholder consultation and when it is done in a manner which undermines the goal itself.”

“The larger point,” she insisted, “is the need for pre-legislative scrutiny and that applies to everything that is happening in our institutional procedures.”

‘Refer Bill to select or standing committee’

Meanwhile, the Voluntary Action Network India (VANI), an apex body of Indian voluntary development organisations, has urged that the FCRA Amendment Bill should be referred to a select/standing committee in parliament. It has also claimed that the Bill will be a “death blow” to the development relief, scientific research and community support work of the NGO community as it prohibits collaboration.

It said the Bill also “throttles the spirit of cooperation that had been ushered in earlier this year by the positive role played by development organizations in mitigating the lockdown and COVID-19 pandemic by virtually making it impossible for NGOs to function”.