{"id":11625,"date":"2022-08-20T07:11:01","date_gmt":"2022-08-20T07:11:01","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=11625"},"modified":"2022-08-20T07:30:22","modified_gmt":"2022-08-20T07:30:22","slug":"limitations-to-ngo-activities-dos-and-donts-of-an-fcra-registered-ngo","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/limitations-to-ngo-activities-dos-and-donts-of-an-fcra-registered-ngo\/","title":{"rendered":"Limitations to NGO Activities: Do&#8217;s and Don&#8217;ts of an FCRA registered NGO"},"content":{"rendered":"\n<p>A non-Governmental Organisation is an\norganisation that is created to conduct charitable and welfare activities. An\nNGO aims to work for welfare of the society. NGO Activities help to tackle a\nwide variety of causes. These causes can be related to the environment, human\nrights, animal welfare, health and education of children etc. Sometimes the\nNGOs are created to facilitate awareness relating to social causes amongst the\nmasses, for example, the welfare of Acid attack victims. Whenever NGOs end up\nmaking a profit, they can&#8217;t disburse it amongst their members. They must ensure\nthese profits are reinfused in the organisation to foster the social cause\nfurther.<\/p>\n\n\n\n<p>The Ministry of Home Affairs recently banned numerous NGOs as it tightened FCRA regulations. An NGO accepting foreign funds must ensure that it complies with the <strong>Foreign Contribution (Regulation) Act<\/strong><sup><a href=\"https:\/\/www.mha.gov.in\/node\/98572\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>. It must not be engaged in any activity detrimental to the national interest. This blog shall enumerate an NGO&#8217;s Do&#8217;s and Don&#8217;ts while accepting foreign funding.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b4bfa00c36\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b4bfa00c36\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/limitations-to-ngo-activities-dos-and-donts-of-an-fcra-registered-ngo\/#DONTs_for_FCRA_Registered_NGOs\" title=\"DON&#8217;Ts for FCRA Registered NGOs:\">DON&#8217;Ts for FCRA Registered NGOs:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/limitations-to-ngo-activities-dos-and-donts-of-an-fcra-registered-ngo\/#Dos_for_FCRA_Registered_NGOs\" title=\"Dos for FCRA Registered NGOs\">Dos for FCRA Registered NGOs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/limitations-to-ngo-activities-dos-and-donts-of-an-fcra-registered-ngo\/#Conclusion\" title=\"Conclusion: \">Conclusion: <\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DONTs_for_FCRA_Registered_NGOs\"><\/span>DON&#8217;Ts for FCRA Registered NGOs:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Intermixing\nof Local and Foreign funds:<\/strong><\/p>\n\n\n\n<p>FCRA regulations state the need to open a\nseparate bank account to accept foreign funds. Local funds cannot be deposited\nin such bank accounts through cash, bank transfer or any other form. The\naccount used to accept foreign funding must be kept separate so that the track\nof money withdrawn from it can also be monitored separately. Intermixing\ndomestic and foreign funds for NGO activities should not be done.<\/p>\n\n\n\n<p><strong>Must\nuse the grant for the purpose it was sent for:<\/strong><\/p>\n\n\n\n<p>Foreign contributions are sent in for a\nspecific project\/purpose the NGO is carrying out. So, the organisation must\nensure that the grant is not utilised for any other NGO activities apart from\nthe purpose for which the donor has agreed to donate as per the project\ncontract letter. The Surplus of one project should not be diverted to be\nutilised for other projects if there is a shortfall.<\/p>\n\n\n\n<p><strong>Don&#8217;t\nmake Transfers to an unregistered organisation:<\/strong><\/p>\n\n\n\n<p>The Funds received under FCRA must not be transferred to an organisation that is a non-FCRA. In case such transfers are being made, prior approval from the Central Government is required. However, the payment of such funds to direct beneficiaries or to the person against rendering service can be made.<\/p>\n\n\n\n<p><strong>Withdrawals\n&amp; payments:<\/strong><\/p>\n\n\n\n<p>The government has stated that if the\nentities indulging in the FCRA make payments for expenditure more than that of\n\u20b9 20,000 in cash, they are bound to face scrutiny by the government. Therefore\nthe organisations must refrain from making cash payments and instead opt for\ndigital payments, payee cheques or bank transfers. <\/p>\n\n\n\n<p><strong>Inter-Transfer\nof Funds:<\/strong><\/p>\n\n\n\n<p>FCRA norms allow the opening of one or more accounts called utilisation accounts for the use of foreign funds once it is received in the authorised FCRA bank account. However, no funds other than the ones received in the main account should be transferred to the utilisation accounts. The law is silent on whether the funds can be transferred between the utilisation account or not. Still, the organisation must avoid it so that it does not draw unnecessary scrutiny from the government and hamper  NGO activities.<\/p>\n\n\n\n<p><strong>Investment\nin Mutual funds and other securities:<\/strong><\/p>\n\n\n\n<p>FCRA registered organisations are\ndisallowed from investing in mutual funds or other securities that are\nuncertain. But the FCA&#8217;s are allowed to utilise the local funds for investment\nsubject to the provisions of the Income Tax Act under Section11 (5). FCRA funds\nshould be invested in the form of FDs in banks to ensure their safety.<\/p>\n\n\n\n<p><strong>Limitation\nof Admin. Expenses:<\/strong><\/p>\n\n\n\n<p>As per rules, FCRA organisation must\nrestrict their administrative expenses to a maximum of 50% of the total\ncontributions received. However, this can be changed after receiving prior\napproval from the central government.<\/p>\n\n\n\n<p><strong>Contribution\nreceived after suspension:<\/strong><\/p>\n\n\n\n<p>In case an NGO&#8217;s FCRA registration is suspended or temporarily cancelled by the government for violating the FCRA regulations, then it should stop accepting foreign contributions to carry out NGO activities.<\/p>\n\n\n\n<p><strong>Receiving\nfunds in Utilisation accounts:<\/strong><\/p>\n\n\n\n<p>FCRA organisations should refrain from\naccepting funds in the utilisation accounts directly or any account for which\nForm FC-6C the organisation has failed to file. All the foreign funds must be\nreceived in the main Designated bank account of the organisation and not at any\nother account.<\/p>\n\n\n\n<p><strong>False\nStatements:<\/strong><\/p>\n\n\n\n<p>NGOs must not give out any false\ninformation or try to take any permission from the government based on\nmisrepresentation or concealment of facts or information.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dos_for_FCRA_Registered_NGOs\"><\/span>Dos for FCRA Registered NGOs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Maintaining\nseparate books:<\/strong><\/p>\n\n\n\n<p>It is recommended that NGOs maintain\nseparate books of accounts for the FCRA and local funds. Books for FCRA\ndealings should be kept separate, and only entries regarding FCRA activities\nshould be made in them. This practice helps with enhancing transparency and\nefficient monitoring and helps the organisation produce the records to the\nministry of home affairs as and when required.<\/p>\n\n\n\n<p><strong>Single\nDedicated Bank account for funds:<\/strong><\/p>\n\n\n\n<p>The <strong><a href=\"https:\/\/swaritadvisors.com\/ngo-registration\" class=\"text-primary\">NGOs<\/a><\/strong> should maintain only one &#8220;dedicated account&#8221; for receiving foreign funds. An organisation should disperse the amount to utilisation accounts through this main account only. They should not receive any funding directly in any utilisation accounts. If the organisation plans to change the account, it should inform the government through Form FC-6C within 15 days of doing so.<\/p>\n\n\n\n<p><strong>Filing\nof Returns:<\/strong><\/p>\n\n\n\n<p>The FCRA NGOs, irrespective of the fact\nwhether they are granted permanent registration\/ permission, must file Annual\nreturns for FCRA every year. As per the norms, if there are no funds received\nduring a year, the organisation must file the returns as NIL mandatorily.<\/p>\n\n\n\n<p><strong>Renewal\nof Registration:<\/strong><\/p>\n\n\n\n<p>The FCRA certificate given to NGOs is valid\nfor a period of 5 years. After which it needs to be renewed. All the\norganisations who need to file an application through form FC-3C for the\nrenewal of the certificate. This application must be filed at least six months\nbefore the expiration of the license. If an organisation fails to do their\nlicense shall be ceased or cancelled.<\/p>\n\n\n\n<p><strong>Intimation\nof Changes:<\/strong><\/p>\n\n\n\n<p>The<a href=\"https:\/\/swaritadvisors.com\/fcra-registration\"> <\/a><strong><a href=\"https:\/\/swaritadvisors.com\/fcra-registration\" class=\"text-primary\">FCRA organisation<\/a> <\/strong>must intimate the central government in case any changes are made in <\/p>\n\n\n\n<ul><li>Name of the organisation<\/li><li>Banks accounts<\/li><li>Aims or objectives of the organisation<\/li><li>More than 50% change in key members<\/li><li>These changes can be made by filing FC-6.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> NGOs are created for the welfare of the people. To carry out the NGO&#8217;s activities effectively, funds are required. If an NGO wants to invite funds from foreign sources, they need to be registered under the FCRA. An NGO must fully comply with norms set by FCRA in order to function in India. If an NGO fails to do so, then it shall be subjected to heavy scrutiny by the government, which can even lead to suspension of the NGO. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/overview-of-difference-between-ngo-and-trust\/\">An Overview of Difference between NGOs and Trust\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A non-Governmental Organisation is an organisation that is created to conduct charitable and welfare activities. An NGO aims to work for welfare of the society. NGO Activities help to tackle a wide variety of causes. These causes can be related to the environment, human rights, animal welfare, health and education of children etc. Sometimes the [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":11626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11625"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=11625"}],"version-history":[{"count":9,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11625\/revisions"}],"predecessor-version":[{"id":11636,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11625\/revisions\/11636"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/11626"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=11625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=11625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=11625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}