FCRA Compliance: How to Register and Maintain Your NGO’s Eligibility
Foreign funding plays a crucial role in the functioning of Non-Governmental Organizations (NGOs) in India. Whether it’s supporting social welfare initiatives or funding community development projects, foreign contributions can significantly boost an NGO’s impact. However, to legally receive and utilize foreign funds, an NGO must comply with the Foreign Contribution (Regulation) Act, 2010 (FCRA). This article will guide you through the process of registering for FCRA and maintaining your NGO’s eligibility, ensuring that your organization remains compliant with Indian regulations.
What is FCRA?
The Foreign Contribution (Regulation) Act, 2010 (FCRA) is a regulatory framework designed to govern the receipt and utilization of foreign contributions by individuals, associations, and NGOs in India. The primary aim of FCRA is to ensure that foreign funds do not compromise national security or the political and social fabric of the country. Therefore, any NGO wishing to accept foreign donations must first register under FCRA.
Steps to Register for FCRA
1. Eligibility Criteria
Before applying for FCRA registration, it’s essential to ensure that your NGO meets the eligibility criteria set by the Ministry of Home Affairs (MHA):
- Existence Period: The NGO must be in existence for at least three years at the time of applying for registration.
- Charitable Activities: The NGO should have spent a minimum of Rs. 10 lakh in the last three years towards its core charitable activities, excluding administrative expenses.
- Financial Records: Maintain audited financial statements for the last three years, reflecting the utilization of funds for charitable purposes.
2. Preparing the Application
To apply for FCRA registration, the NGO must prepare the following documents:
- Form FC-3: The application form for FCRA registration, available on the FCRA website.
- Memorandum of Association (MoA) and Articles of Association (AoA): The founding documents of the NGO, outlining its objectives and governance structure.
- Audited Financial Statements: Financial records for the last three years, including income-expenditure statements and balance sheets.
- Activity Report: A detailed report of the NGO’s activities over the last three years.
- Bank Account Details: Open a bank account exclusively for receiving foreign contributions. This account should be in a nationalized or scheduled bank, and the details must be provided in the application.
3. Filing the Application
Once the necessary documents are ready, the NGO can file the FCRA registration application online through the FCRA portal:
- Create an Account: Register on the FCRA website (https://fcraonline.nic.in) and create an account.
- Fill Out the Form: Complete Form FC-3 with accurate details and upload the required documents.
- Pay the Fee: A registration fee of Rs. 10,000 must be paid online during the application submission.
- Submit the Application: After filling out the form and uploading the documents, submit the application online.
Maintaining FCRA Compliance
Once your NGO has successfully registered under FCRA, it’s crucial to maintain compliance to avoid penalties or cancellation of the registration. Here are key compliance requirements:
1. Annual Returns
- Form FC-4: NGOs must file an annual return using Form FC-4, detailing all foreign contributions received and how they were utilized. The return must be filed within nine months of the end of the financial year, i.e., by December 31st.
- Financial Statements: Include a balance sheet, income-expenditure statement, and a statement of receipts and payments, certified by a Chartered Accountant.
2. Record Keeping
- Separate Accounts: Maintain separate accounts and records exclusively for foreign contributions received under FCRA.
- Bank Account: Ensure that all foreign contributions are received in the designated FCRA bank account and are used only for the purposes mentioned in the registration.
3. Renewing FCRA Registration
- Validity: FCRA registration is valid for five years, after which it must be renewed.
- Renewal Application: File the renewal application six months before the expiry of the registration, using Form FC-3. The renewal fee is Rs. 5,000.
4. Amendments and Reporting Changes
- Notify Changes: Any changes in the NGO’s name, address, objectives, or bank account details must be reported to the MHA within 15 days of such change.
- Prior Permission: If the NGO wishes to receive funds for a specific project before its FCRA registration, it must seek prior permission from the MHA by filing Form FC-1A.
Common Pitfalls to Avoid
- Non-Compliance: Failing to file annual returns or maintain proper records can lead to penalties, including suspension or cancellation of the FCRA registration.
- Diversion of Funds: Foreign contributions must be used strictly for the purposes specified in the registration. Any diversion of funds for other purposes is a violation of FCRA rules.
- Unreported Changes: Not reporting changes in the NGO’s structure or activities can result in non-compliance, jeopardizing the FCRA registration.
Conclusion
FCRA compliance is a vital aspect of managing an NGO that receives foreign contributions. By following the steps outlined in this article for registering and maintaining FCRA eligibility, your NGO can operate smoothly and focus on achieving its social and charitable objectives. Staying compliant with FCRA not only protects your NGO from legal issues but also enhances its credibility, making it more attractive to foreign donors and partners.