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FOREIGN CONTRIBUTION (MANAGEMENT & CONTROL) BILL,2005 Implications on NGO’s SUDHIR VARMA PowerPoint Presentation
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FOREIGN CONTRIBUTION (MANAGEMENT & CONTROL) BILL,2005 Implications on NGO’s SUDHIR VARMA FCA; CIA(USA) For Forum for Ethics, Accountability and Transparency 20 th to 23 rd February 2006, Jaipur. FOREIGN FUNDS IN INDIA - To the Government - In Business / Trade

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slide1

FOREIGN CONTRIBUTION (MANAGEMENT & CONTROL) BILL,2005

Implications on NGO’s

SUDHIR VARMA

FCA; CIA(USA)

For

Forum for Ethics, Accountability and Transparency

20th to 23rd February 2006,

Jaipur

slide2

FOREIGN FUNDS IN INDIA

- To the Government

- In Business / Trade

- In the Development Sector

slide3

FOREIGN FUNDS IN INDIA

- With the Government No Controls

- In Business / Trade FERA

- In the Development Sector FCRA

slide4

FOREIGN FUNDS IN THE DEVELOPMENT SECTOR

  • For Charitable Activities
  • For Research
  • For Development
  • For Capacity Building
slide5

FOREIGN FUNDS – WHY CONTROLS

  • For Anti-Government Activities
  • For Anti-National Activities
slide6

FOREIGN CONTRIBUTION REGULATION ACT

  • Introduced in 1997
  • For Anti-Government activities
  • Little thought was given to the development sector

- On their working

- Their issues

- Their concerns

slide7

DEMAND FOR CHANGE IN FCRA

  • Pressure from the Development Sector.
  • Changes asked for were not specific
slide8

IN 1999 FERA WAS CHANGED TO FEMA

  • Diluting controls
  • Reducing paperwork
  • Diluting penalties
  • Government to be a watch dog.
slide9

CHANGE IN FERA – CIRCUMSTANCES

  • Growth in International Business / Trade
  • Increase in consumerism
  • Rise in standard of living
  • Industry happy
  • People happy
  • Government happy
slide10

COROLLARY TO CHANGE IN FERA

  • Change FCRA
  • Bring similar changes
slide11

DEVELOPMENT SECTOR – CIRCUMSTANCES

  • NGO’s work better than Government Agencies
  • NGO’s give better end results
  • NGO’s set bad precedents for comparisons with

Government data.

  • NGO’s have started questioning Government policies
  • NGO’s have started embarrassing the Government

CAN NGO’S EXPECT

GOVERNMENT SUPPORT AND UNDERSTANDING.

slide12

FCRA TO BE REPLACED THROUGH

  • FOREIGN CONTRIBUTION (MANAGEMENT AND CONTROL)
  • FC(MC) BILL, 2005
  • FC(MC) is a change from FCRA, not necessarily for the

better.

  • The intent of the Government - is not clear

- is not transparent.

slide13

WITH THE NEW ACT, THE GOVERNMENT HAS ENSURED THAT THEY HAVE

  • More interaction with NGO’s
  • More control over - the working of NGO’s

- the funds of NGO’s.

  • More intervention in the working of NGO’s.
slide14

APPREHENSIONS OF NGO’S

  • Some are well-founded
  • Some are exaggerated.
slide15

IMPLICATIONS OF FC(MC)

  • REGISTRATION
  • RENEWALS
  • UTILISATIONS OF FUNDS
  • SUSPENSION / CANCELLATION
slide17

RE-REGISTRATION

  • Old registration not valid for more than 2 years.
  • New registration not automatic
  • Registrations shall be done afresh.
  • Norms and rules for new registration have not yet been

defined.

  • Registration from date of application or for financial

years.

slide18

NEW REGISTRATIONS

  • Valid for 5 years at a time.
  • Perpetual existence under threat.
  • Continuity of projects not assured.

- Hospitals

- Educational Institutions

- Vocational Training Centers

  • Scope of activity gets restricted
slide19

NEW REGISTRATIONS

  • New entrants not allowed.

“Has done meaningful activity in the field”

  • Provisions for enquiry defined

Wide and open to interpretation

  • Officer can call for information
  • Officer can examine any person.
slide20

NEW REGISTRATION

  • A fee has been prescribed
  • Reasons for refusal have to be communicated.
  • NGO’s can appeal against refusal.
  • Time limit for disposal of appeal not define.

Justice delayed is justice denied.

slide22

RENEWALS

  • Required every 5 years
  • Applications can be made after 3 years

i.e. 2 years in advance.

  • Gaps between expiry and renewal of registration.
  • Renewals from date of application or for financial

years.

  • More than 30,000 registrants at present
  • Can they be renewed IN TIME.
slide23

IMPLICATIONS OF FC(MC)

UTILISATIONS OF FUNDS

slide24

UTILIZATIONS OF FUNDS

  • MULTIPLE BANK ACCOUNTS
  • FC Funds continue to be received in one designated

bank account.

  • Subsequently funds can be transferred to other bank

accounts

  • - For different locations
  • - For different projects
  • But subsequent bank accounts
  • - will be used exclusively for Foreign Funds
  • - Foreign Funds shall not be directly received in these
  • bank accounts
slide25

UTILIZATIONS OF FUNDS

  • MULTIPLE BANK ACCOUNTS
  • Long outstanding demand of donors to keep their funds in

a separate bank account can now be met. A separate bank

account can be assigned to each donor, if desired.

slide26

FC FUNDS

  • Definition of Foreign contribution enlarged.
  • Interest earned on FC Funds shall be deemed to be FC

Funds

  • Income earned from FC Funds shall be deemed to be

FC Funds.

  • Distinction required between

- Income earned from FC Funds

- Income earned from Assets / Facilities acquired from

FC Funds.

slide27

UTILISATIONS OF FUNDS

  • FC Funds can be used only for the purpose for which

they have been received.

  • Only 30% of FC Funds can be used for Administrative

Expenses.

slide28

ISSUES

  • FC Funds received for Administrative Expenses.
  • Definition of Administrative Expenses.

- Administration Expenses of a program

- Administration Expenses of the Institution.

slide29

FIXED ASSETS ACQUIRED FROM FC FUNDS

  • Governments intervention to decide

- Which assets can be disposed off.

- Manner of disposal.

- Procedure of disposal.

  • These decisions are not left with the donor.
  • On suspension / cancellation of registration these assets can

be seized by a Local Magistrate / Police Station.

slide30

IMPLICATIONS OF FC(MC)

  • SUSPENSION / CANCELLATION OF REGISTRATION
  • Registrations can be suspended or cancelled.
  • An opportunity will be given before passing such an order.
  • Suspension can be for 90 days.
  • Cancellation shall be effective for atleast 3 years before an

application for re-registration can be made.

slide31

IMPLICATIONS OF FC(MC)

  • ON SUSPENSION / CANCELLATION OF REGISTRATION
  • The Government can take charge of all un-utilized FC

Funds.

  • The Government can also seize assets acquired by FC

Funds.

  • On going activities / projects can be stalled.
slide32

OFFICE BEARERS

  • No person who has been prosecuted can be on the board

of Registered Institutions.

  • These persons cannot be on the board of registered

institutions even if any proceedings are pending in a court

of law.

slide33

TIME LIMIT

No time limit has been prescribed for accepting or rejecting an application for

- Prior permission

- Registration

- Renewal

slide34

FOREIGN CONTRIBUTION (MANGEMENT AND CONTROL) ACT

Should be released alongwith the

FOREIGN CONTRIBUTION (MANAGEMENT AND CONTROL) RULES