FCRA Registration: Definition, Benefits & Criteria

FCRA registration is a permit which the Ministry of Home Affairs issues. It helps to monitor the donations which the Non Profit Organizations (NPOs) receive in India. Those who run a registered Non Governmental Organization (NGO), Charitable Trust or a Section 8 Company and want to receive foreign donations have to get registered under the Foreign Contribution Act (FCRA). In other words, FCRA registration is mandatory for them. 

When the Charitable Trusts, NGOs and Section 8 Companies get registered under FCRA, they are eligible to receive funds in their FCRA accounts, from foreign sources. NPOs that provide the specific groups of people with the necessary support are permitted to get funds from foreign funding agencies. FCRA is a law which helps in regulating the foreign funds to the NPOs. This law necessitates NPOs in India to get registered with the state department before they receive any funds from sources which are from another country. FCRA law’s establishment dates back to 1976 when it was felt that there needs to be a regulating law in India for the flow of foreign donations when it comes to NGOs and other charitable organizations. 

Origin of FCRA

1976 was a year filled with lots of fears and uncertainties. It was the year when the Emergency was declared. Many anticipated that other countries would try to interfere in India’s matters by sending funds in different organizations across the country. With the enactment of FCRA, the government gained more control over the transactions of NGOs from individuals and entities abroad.

Benefits of FCRA Registration

The following are some of the benefits of FCRA registration for the organizations and the government:

• FCRA Registration enables an organization to receive funds or donations from sources abroad for definite cultural, social, economic, educational or religious programmes with the restrictions of the government.
• It promotes transparency in the manner in which the foreign funds are raised and spent by such an organization. 
• Organizations registered under FCRA are given significant support by the government by providing tax exemption on income, donations and capital gains.
• Organizations registered under FCRA help the social workers to check the source of funds and analyze it properly. 
• FCRA registration allows the government to prevent the foreign donations from getting misused. The government can check the true nature of the donation the organization received and whether it is utilized for the intended purpose.
• Non Profit Organizations having FCRA registration come across as more trustworthy and reliable due to which they are more likely to attract donors.

Criteria for grant of FCRA Registration

Before granting the approval for FCRA registration to a non profit organization, the government checks that the following criteria is met:

The ‘person’ or ‘entity’ that is making an application for FCRA registration:

• Is not Fictitious or Benami
• Has never been prosecuted or convicted for being a part of any activities which were aimed at conversion through inducement or force, whether it was directly or indirectly, from one religious faith to another one.
• Should not have been prosecuted or convicted for stirring communal tension or conflict in any district or any other part of India
• Should not be guilty of diversion or misutilization of the funds it has received
• Should not be engaged or likely to be engaged in spreading and promoting agitation or advocate violence to achieve its ends
• Should not use the foreign contribution for personal gains or divert it for purposes which are not a part of the aims and objectives of the person or entity
• Should not have contravened any provisions of FCRA 
• Has not been forbidden from receiving foreign funds
• Must not have been convicted under any law which is in force for the time being nor any prosecution for any offense must be pending against him.
• A person that is a director or office bearer in the organization should’ve neither been convicted under any law which is in force for the time being nor any prosecution for any offense must be pending against him.
• Their acceptance of foreign contribution is not likely to affect prejudicially:
  • The sovereignty and integrity of India;
  • The security, strategic, economic or scientific interest of the State;
  • The public interest;
  • Freedom or fairness of election to any legislature;
  • Friendly relation with any foreign state;
  • Harmony between racial, linguistic, social, religious, regional groups, castes or communities.
  • Their acceptance of foreign contribution shall not lead to incitement of an offense or threaten the life or physical safety of any individual.

Eligibility for obtaining FCRA Registration

A “prior permission” route is necessary for organizations that are seeking foreign funds for definite cultural, social, economic, educational or religious programmes or they may obtain FCRA registration which is valid till 5 years and will save up a lot of time and strength. 

• For FCRA registration, the basic necessity is that the FCRA applicant is a NGO, Charitable Trust/Society or a Section 8 Company.
• At the time of application, the non profit organization must be at least 3 years old and should not have any history of having received any foreign funds in the past without taking the approval of the Government of India.
• The organization that is looking forward to obtaining the FCRA registration should have spent at least the amount of at least Rs.10,00,000/- over the last three years for fulfilling its aims and objectives. This excludes administrative expenditure.
• The applicant must possess Statements of Income & Expenditure of the organization which is duly audited by Chartered Accountant for last three years as they are required to be submitted to substantiate that the financial parameter is met.
• In case of a newly registered organization (registered less than 3 years ago), for receiving foreign funds for a specific activity, specific purpose and from a specific source, an approval can be requested from the Ministry of Home Affairs as part of the Prior Permission method. 

Applying for FCRA Registration

For non profit organizations that require FCRA registration, an application has to be made using Form FC-3. The following documents are required to be submitted along with the FCRA application:

• Activity Report which provides all the relevant details of activities during the last three years;
• Copies of past three years’ audited financial statements which clearly mention all the  assets, liabilities, income, expenditure, payment and receipt. The statements should reflect the spendings on aims and objectives and administrative expenditure. 
• Self-certified copy of registration certificate or Trust deed of the non profit organization
• Self-certified copy of relevant pages of Memorandum of Association (MoA)/ Article of Association (AoA) which show the aim and objectives of the non profit organization.

Note: After the FCRA registration is granted to the organization, it is valid up to five years. An renewal application for FCRA registration can be submitted 6 months prior to the date of expiry that the registration maintains its validity. If you need assistance for FCRA renewal, please contact Registrationwala. We would be glad to assist you on your FCRA renewal journey so that you can keep receiving foreign funds without any hassle!

FCRA Validity and Renewal

The validity under the FCRA registration is up to 5 years after which it has to be renewed by the Non Profit Organizations to continue receiving foreign funds legally. FCRA renewal ensures that all NGOs, Charitable Trusts and Section 8 Companies comply with the FCRA law for receiving foreign donations. Renewal of FCRA registration saves Non Profit Organizations from getting fines and penalties. The government, in accordance with the FCRA Amendment 2020, can inquire about the functioning of the charitable organizations to ensure that they are in compliance with the rules and regulations, so it is best to apply for FCRA registration renewal in a timely manner. 

Conclusion

FCRA registration permits organizations to receive foreign contributions legally. At the same time, it allows the Ministry of Home Affairs, Government of India to monitor these funds. If you own NGO, a Charitable Trust or a Section 8 Company and wish to receive foreign donations, you must register under the Foreign Contribution Regulation Act (FCRA). FCRA Registration enables an organization to receive funds or donations from sources abroad for definite cultural, social, economic, educational or religious programmes with the restrictions of the government. It promotes transparency in the manner in which the foreign funds are raised and spent by such an organization. Organizations that are registered under FCRA are given significant support by the government by providing tax exemption on income, donations and capital gains. They help the social workers to check the source of funds and analyze it properly. If you need help and support for FCRA registration, please contact our Registrationwala team. Helping our clients makes us extremely happy!

Frequently Asked Questions

Q1. What is FCRA Registration?

A. The FCRA registration is a permit issued by the Ministry of Home Affairs. It assists the Government of India to keep an eye on the foreign contributions received by Non-Profit Organizations across India. 

Q2. FCRA Registration is applicable to which organizations?

A. The FCRA Registration is applicable to all associations, groups and NGOs which want to legally receive foreign funds for their activities. All such NGOs have to register themselves under the FCRA. The registration stays valid for five years after which the renewal for the registration has to be applied.

Q3. What is Prior Permission under FCRA?

A. A “prior permission” route is necessary for organizations that have not obtained FCRA registration but want to seek foreign funds for definite cultural, social, economic, educational or religious programmes. The permission is granted by the Central Government.

Q4. Can an NGO receive foreign funds without FCRA?

A. To receive foreign funds, NGOs need to have FCRA registration. In case of a newly registered organization (registered less than 3 years ago), for receiving foreign funds for a specific activity, specific purpose and from a specific source, approval can be requested from the Ministry of Home Affairs.

Q5. What are the consequences of not having FCRA registration? 

A. Receiving foreign funds is a punishable offense if the organization is not registered under FCRA. It can lead to fine or imprisonment of up to three years or both.

Q6. Who can open an FCRA account?

A. As per the amended Foreign Contribution (Regulation) Act, 2010, every person or NGO or Association that has been granted FCRA registration or prior permission has to open an FCRA Account at a specified branch of State Bank of India in New Delhi.

Q7. Who is not allowed to receive Foreign Contribution?

A. The following people are not allowed to receive foreign contribution: (i) A candidate contesting an election (ii) Cartoonist, editor, publishers of a registered newspaper (iii) Judge (iv) Government servants or employee of any corporation (v) Member of any legislature or (vi) Political parties.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.