NGOs urge government to suspend or relax restrictive FCRA rules to cope with Covid

New FCRA rules notified in September last year which put restrictions on how foreign donations can be used have led to foreign donations drying up, smaller NGOs folding up and relief work stalled

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Sanjukta Basu

The Government wants international donors to donate to official charities like the PM CARES fund. But contrary to the transparency and accountability that it seeks from the NGO sector, it refuses to part with information about how the donations are used.

In September last year the government made sweeping changes in rules governing foreign donations. It stifled the NGOs supplementing the government’s work on the ground. A group of 13 NGOs including the Centre for Advancement of Philanthropy, the National Foundation for India and the Centre for Social Impact and Philanthropy have now sought suspension or relaxation of the restrictions during the Covid crisis.

Dr. Kaustuv K. Bandyopadhyay, Director, PRIA (Society for Participatory Research in Asia), spoke on how the rules have weakened the non-profit sector at a time when both the government and the people need them. The narrative that ‘NGOs are anti-national’ must stop, he feels. This is what he had to say:

“Three changes were made in the rules in the middle of the pandemic. A 20% ceiling was put on administrative expenses, delegating grants and work was disallowed and finally it was made mandatory to open an account in the State Bank of India’s branch in New Delhi. No matter which part of India you are from, you have to open an account in the main SBI branch. It was very difficult for the smaller NGOs. For verification some of them had to come to Delhi.

“The ban on delegation of grants have had far reaching consequences; in order to implement large foreign funded projects, organisations like PRIA would receive the grant and provide a sub-grant to partners at the grassroots. Now the foreign donor would have to directly release grantsto them. But processes of large foreign donors are not designed to deal with small grants; and smaller NGOs do not have the capacity to process foreign funds. Most foreign donors have complicated processes and multiple English language forms. Paper-work has multiplied, and it is a waste of time and resources for all stakeholders. Earlier, smaller NGOs would just focus on implementing the project without administrative hassles.

“For bigger organisations like PRIA too, the 20% cap has had consequences. If you want to run a strong organisation with integrity, credibility and accountability, you need a team of professionals on your payroll. That is an administrative cost. The office building, financial management systems, rents, utilities etc are all administrative costs. Putting a cap on how much you spend on these weakens the organisation. You should be able to keep paying salaries. The organisational head of an NGO is not always working on a programme. But the rule that all salaries have to be booked under a particular programme, does not always make sense. No business organisation does that.

“With the 20 per cent ceiling, we cannot provide capacity building trainings to smaller NGOs which need institutional support and capacity building. They may need systems, human resources. So, we would have a capacity building component within the project grant. Now this is not possible anymore.

“Grants for capacity building have also been coming down over the last 10-15 years because donors do not see any benefit in investing in capacity building since results are visible only in the long run. But CSR initiatives in particular want to show results in six months.

The government is aware of the NGO sector’s contribution. PRIA itself has been working with many state governments, and central government with Ministry of Urban Development and Ministry of Women and Child Development for past many years. Indeed, thousands of organisations have been contributing to India’s development. The civil society groups are the first responders in any crisis. Even the Prime Minister is aware, which is why he is inviting NGOs to respond to the Covid crisis.

“However, some sections in the current government have been short sighted in starting a witch-hunt against NGOs for their alleged ‘anti-national activities’.

“But no data or information are provided in support of such claims. Even in Parliament, there was no debate but only one-sided speeches. It was claimed that foreign money was being used for forced religious conversion but there was no data to support the claim. Neither is there any data available in the public domain. The Bill was introduced and passed in just three days. And in the next few days the rules were also framed.

“Corrupt elements have always been there in every institution and system –in the government, among corporates or among civil society bodies. But in the absence of an objective mechanism to distinguish which activity is desirable and whether an NGO is doing “good” work, it is not fair to design laws targeted at the entire civil society sector.

Moreover, who decides what is “good” work? Distributing food, medicine and other supplies are important but equally important is the work of NGOs mobilising the marginalised to demand and access rights and entitlements. Who decides those are unimportant or bad?

“We all witnessed the massive migrant crisis last year. One of the donor agencies called for a proposal to help migrant workers. We prepared a proposal with six other NGOs. PRIA was to be the implementing organisation but we needed to collaborate with others to implement the programme on a large scale. The programme would have brought together 50-odd NGOs and benefitted one lakh migrant families across India.

“The key objective was to empower the migrants to demand from the state and employers fair wages, housing, health, women’s safety from sexual harassment at workplace and so on. The migrants who returned were skilled or semi-skilled workers. They would not have been interested in NREGA. Our objective was to set up counselling centres to provide them with job opportunities according to their skills, and support them in other ways.

“But the moment the new FCRA legislation was passed the proposal had to be called off.”

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