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Foreign funds to NGOs: Why better scrutiny is needed

Last updated on: May 17, 2011 13:44 IST

Foreign funds to NGOs: Why better scrutiny is needed

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Sanjeev Nayyar


The Foreign Contribution Regulation Act was passed in 1976. It seeks to regulate receipt of funds by non-governmental organisations (NGOs). It is managed by the Union ministry of home affairs.

Any organisation that wants to receive contributions from abroad has to apply and get approval from the home ministry.

All remittances are received into a single bank account of a scheduled bank. The NGO has to annually submit audited receipts and payments account, balance sheet, etc to the home ministry.

The ministry scrutinises the returns to ensure that contributions received for a particular purpose are used for that purpose only. It does a detailed check of randomly picked associations and then collates the data received to present the FCRA Annual Report, i.e. uploaded on the ministry's web site here.

As on March 31, 2009, there were 36,414 registered associations under FCRA. These organisations could be religious, social, educational, cultural and educational organisations.

Why do we need to analyse inflows under FCRA?

  • Because of the sheer magnitude of inflows. Reported inflows into India were $2.4 billion in 2008-09, $2.15 billion in 2007-08 and $2.45 billion in 2006-07.
  • Reported contributions received from 1993-94 to 2008-09 were to the tune of Rs 84,182 crore (Rs 841.82 billion). Actuals are much higher.

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Photographs: Reuters
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Foreign funds to NGOs: Why better scrutiny is needed

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Trends in Foreign contributions

Year

Registered Associations (as on 31st March of FY)

Associations who gave details of remittances received

Amounts received Rs crore

1993-94

15,039

Not Available

1,865

2003-04

28,351

61%

5,105

2004-05

30,321

61%

6,257

2005-06

32,144

58%

7,878

2006-07

33,937

56%

11,336

2007-08

34,803

54%

9,663

2008-09

36,414

55%

10,803

Total 1993-94 to 2008-09

84,182

There has been a steady increase in the number of registered associations. Taking 15,039 associations in 1993-94 as the base year, their number grew by 41 per cent in 2000-01, 101 per cent in 2005-06 and 142 per cent in 2008-09.

In 2008-09, as many as 7,679 of the 20,088 associations that submitted their accounts did not receive any foreign contributions -- meaning that reported contributions include amounts received by 43 per cent of the number of associations.

Reported inflows in 2008-09 were higher by Rs 1,140 crore (Rs 11.40 billion) -- 12 per cent -- as compared to the previous year.

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Foreign funds to NGOs: Why better scrutiny is needed

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Largest donors country-wise (in Rs crore)

Year

USA

Germany

UK

Italy, others

2002-03

1680

715

685

NA

2003-04

1584

757

676

350*

2004-05

1927

931

764

353#

2005-06

2426

1181

1062

500*

2006-07

2949

1033

1428

606&

2007-08

2928

971

1269

515*

2008-09

3433

1103

1131

547*

Total

16,927

6,691

7,015

2,871

*Italy, #Netherlands, & Switzerland.

Largest donor countries are the United States of America - Rs 3,433 crore (Rs 34.33 billion), the United Kingdom -- Rs 1,131 crore (Rs 11.31 billion), Germany -- Rs 1,103 crore (Rs 11.03 billion), Italy -- Rs 547 crore (Rs 5.47 billion), the Netherlands -- Rs 513 crore (Rs 5.13 billion), and Spain -- Rs 437 crore (Rs 4.37 billion.

The top three donor countries are the USA, Germany, and the UK for many years now. The US is consistently the top donor.

In spite of the economic downturn in the US and the UK, rise continued contributions from these countries might be considered noteworthy. Donors should usually look at the needs of their own countrymen first before worrying about others!

Readers must be aware that most Germans pay some sort of a tax to the Church. Is there a correlation between tax paid and inflows into India? That is an issue worth pondering over.

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Foreign funds to NGOs: Why better scrutiny is needed

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Key Donors: Country-wise trends (In Rs crore)

Country

2008-9

Country

2007-08

USA

3433

USA

2928

UK

1131

UK

1269

Germany

1103

Germany

971

Italy

547

Italy

515

Netherlands

513

Netherlands

414

Spain

437

Spain

401

Switzerland

370

Switzerland

364

Canada

303

Canada

276

France

193

France

196

Australia

131

Australia

138

Belgium

124

Belgium

100

Austria

106

Austria

99

Sweden

103

Sweden

89

UAE

146

UAE

79

Ireland

69

Ireland

77

Countries where contributions in 2008-09 have increased significantly as compared to the previous year are: The US 17 per cent, Germany 14 per cent, the Netherlands 24 per cent, Belgium 24 per cent and the United Arab Emirates 86 per cent.

Note that, except for the UAE, countries above belong to the West -- read as the Christian world.

Media reports indicate that some countries in the Middle East, notably Saudi Arabia, made large remittances to India (http://www.southasiaanalysis.org:80/papers38/paper3725.html). Barring the UAE, the contributions are not reflected above.

So either contributions are not coming in or are coming in through the hawala route.

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Foreign funds to NGOs: Why better scrutiny is needed

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Largest Donors: Agency-wise trends  (In Rs crore)

Donor Name & Country

2008-9

Percent Increase*

Donor Name & Country 2007-08

World Vision International USA

706

22

World Vision International USA

Gospel For Asia Inc USA

596

63

Gospel For Asia Inc USA

Fundacion Vicente Ferrer, Barcelona, Spain

459

85

Fundacion Vicente Ferrer, Barcelona, Spain

Shyam Shyam Dham Samiti India

359

NA

Bramhanand Saraswati Trust UK

Action Aid International, UK

228

24

Action Aid International, UK

Fundacion Vicente Ferrer, Spain

241

53

Fundacion Vicente Ferrer, Spain

Plan International, USA

191

26

Plan International, USA

Oxfam India Trust, UK

163

23

Oxfam India Trust, UK

BAPS, Inc USA

199

NA

Dr Vikram Pandit USA

Christian Children Fund, USA

197

55

Christian Children Fund, USA

Compassion International, USA

347

187

Compassion International, USA

Om Foundation, USA

188

NA

Save the Children, UK

Ahmadiyya Muslim Association, UK

178

NA

Christian Aid, UK

Mata Amritanandmai Centre, USA

176

NA

EED Evagelishcher Entiwicklungsdienst e.v. Germany

The Global Fund to Fight aids, Tuberculosis, Malaria Switzerland

166

61

The Global Fund to Fight aids, Tuberculosis, Malaria Switzerland

 From Top 15 donors

4,394

 

*% increase between 2007-08 and 2008-09.

Contributions from top 15 donors increased by 55 per cent to Rs 4,394 crore (Rs 43.94 billion).

Largest donors were World Vision USA -- Rs 706 crore  (Rs 7.06 billion); Gospel for Asia Inc USA -- 596 crore (Rs 5.96 billion); Fundacion Vicente Ferrer, Barcelona, Spain -- 459 crore (Rs 4.59 billion); Shyam Shyam Dham Samiti India -- Rs 359 crore (Rs 3.59 billion); Action Aid International -- Rs 228 crore  (Rs 2.28 billion); and Fundacion Vicente Ferrer, Spain Rs 241 crore (Rs 2.41 billion).

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Foreign funds to NGOs: Why better scrutiny is needed

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Top 15 recipient associations 2008-09 (In Rs crore)

Association

2008-9

Association

2007-08

World Vision of India, Tamil Nadu

192

World Vision of India, Tamil Nadu

212

Rural Development Trust, A.P.

155

Rural Development Trust, A.P.

125

Believers Church India, Kerala

100

Believers Church India, Kerala

102

Action Aid, Karnataka

77

Action Aid, Karnataka

92

Shyam Shyam Dham Delhi

109

Caritas India, Delhi

90

Gospel for Asia, Kerala

-

Gospel for Asia, Kerala

86

Women Development Trust, A.P.

82

Women Development Trust, A.P.

80

Plan International Inc, Delhi

66

Plan International Inc, Delhi

74

Church Auxiliary for Social Action, Delhi

61

Shri Gajanam Maharaj Sansthan, Maharashtra

70

Sri Sri Jagadguru Shankaracharya, Karnataka

60

Oxfam India Trust, Delhi

67

Mata Amritanandmayi Math, Kerala

116

Mata Amritanandmayi Math, Kerala

102

Caruna Bal Vikas, Tamil Nadu

74

Caruna Bal Vikas, Tamil Nadu

93

Boachasanwasi Akshar Purushottam Swaminarayan Sanstha, Gujarat

78

Boachasanwasi Akshar Purushottam Swaminarayan Sanstha, Gujarat

93

Christian Children Fund Inc, Karnataka

62

Christian Children Fund Inc, Karnataka

83

Pratham Mumbai Education Initiative Maharashtra

67

Pratham Mumbai Education Initiative Maharashtra

83

SOS Children's Village of India, Delhi

83

NA

Top 15 recipients received

1,382

1452

Total Contributions received

10,803

9,663

Largest recipients were World Vision of India Tamil Nadu -- Rs 192 crore (Rs 1.92 billion), Rural Development Trust AP -- Rs 155 crore (Rs 1.55 billion); Mata Amritanandmayi Math -- Rs 116 crore (Rs 1.16 billion); Shyam Shyam Dham -- Rs 109 crore (Rs 1.09 billion); Believers Church India, Kerala -- Rs 100 crore (Rs 1 billion); SOS Children's Village of India, Delhi -- Rs 83 crore (Rs 830 million).

The top fifteen donors constitute 41 per cent of reported contributions while corresponding percentage for top fifteen recipients is 11 per cent.

This means that big donors distributed their contribution across many NGOs. For example, World Vision International USA contributed Rs 706 crore but World Vision of Tamil Nadu received only Rs 192 crore (Rs 1.92 billion).

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Foreign funds to NGOs: Why better scrutiny is needed

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Trends of state-wise receipt of foreign contributions (In Rs crore)

State

2008-9

% rise*

2005-06

2002-03

1.Tamil Nadu

1650

(1)

1609

775

2. Delhi

2013

17

1556

881

3. Andhra Pradesh

1244

7

1012

630

4. Maharashtra

953

8

664

505

5. Karnataka

1009

13

621

489

6. Kerala

991

24

656

409

7. Jharkhand

154

20

97

58

8. West Bengal

598

11

355

272

9. Gujarat

464

23

301

272

10. UP

225

11

103

NA

11. Orissa

228

29

129

NA

12. MP

160

16

77

NA

13. Bihar

161

20

101

NA

14. Rajasthan

138

13

-

NA

15. Himachal Pradesh

129

8

83

NA

16. Assam

-

-

NA

17. Punjab

-

82

NA

18. Others

686

16

432

756

 Total

10,803

12

7,878

5,047

*% increase between 2007-08 and 2008-09.

In absolute terms the contributions received by individual states are huge.

Most of the reported inflows are concentrated in the four southern states, and Delhi and Maharashtra. Wonder why?

The '% rise' (in the table) compares contributions received in 2007-08 against those received in 2008-09. As compared to 2007-08, the percentage increases are significant in Delhi, Karnataka, Kerala, Gujarat, Orissa, Bihar, Madhya Pradesh and Jharkhand.

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Foreign funds to NGOs: Why better scrutiny is needed

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Top recipient districts of foreign contributions (In Rs crore)

District

2008-09

2007-08

2002-03

Chennai

756

731

363

Mumbai

575

470

284

Ranchi

-

NA

Bengaluru

702

670

358

Kolkata

371

352

NA

Uttara Kanada

-

NA

Hyderabad/Sec

301

291

181

Ananthpur

309

278

169

Pathanmthitta

250

-

Ahmedabad

237

207

NA

Tirunelveli

-

NA

Madurai

181

187

NA

Quilon (Kollam)

377

-

NA

Ernakulam

209

207

NA

Pune

178

173

NA

Krishna

138

134

NA

Tiruchirapalli

96

NA

Kancheepuram

101

122

NA

Trivandrum

-

NA

KangraDharamsala

116

104

NA

Kottayam

98

NA

NA

NA stands for not available.

Among the districts, the largest recipients of contributions were Chennai -- Rs 756 crore (Rs 7.56 billion); Mumbai -- Rs 575 crore (Rs 5.75 billion); Bengaluru -- Rs 702 crore (Rs 7.02 billion); Kolkata -- Rs 371 crore (Rs 3.71 billion); Hyderabad/Secunderabad -- Rs 301 crore (Rs 3.01 billion); Ananthpur -- Rs 309 crore (Rs 3.09 billion); Ernakulam -- Rs 209 crore  (Rs 2.09 billion);and Ahmedabad -- Rs 237 crore (Rs 2.37 billion).

These are huge sums for individual districts, be it Rs 756 crore for Chennai or Rs 309 crore for Ananthpur in Andhra Pradesh.

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Foreign funds to NGOs: Why better scrutiny is needed

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Utilisation of foreign contributions (In Rs crore)

Expenditure Head

2008-09

% rise*

Establishment expenses

5,022

47

Rural Development

2,835

59

Relief/rehabilitation of natural calamities

1,345

(20)

Welfare activities for children

2,304

74

Construction/maintenance of schools/colleges

2,031

68

Maintenance of Priests/preachers/others

837

105

Religious school/education of priests/preachers

693

62

*% increase between 2007-08 and 2008-09.

Note the percentage increase for expenditure heads 1, 6 and 7 is very high.

Why did Indian NGOs receive Rs 837 crore (Rs 376 crore from the US, Rs 101 crore from Germany, etc) for maintenance of priests is difficult to fathom? Ditto for education of priests/preachers. This might hold good if India were exporting priests to the West.

So also Rs 57 crore (Rs 570 million) was received towards theatre/films. It would be interesting to know the nature of films produced.

Further, the US/the UK/Germany remitted Rs 101 crore (Rs 1.01 billion) towards publication and distribution of religious literature and Rs 186 crore (Rs 1.86 billion) for religious functions. For what type of literature and functions is important to know?

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Food for thought

  • NGOs are required to file their accounts by December 31 of the subsequent year. The FCRA report for year ended March 31, 2009 was signed in December 2010, i.e. nearly 12 months after the due date of receipt. So either NGOs filed reports late or there was a delay at the ministry of home affairs. Either way a delayed report has historical value.
  • NGOs should file their audited accounts within six months of March 31 so that FCRA report is ready by December. The MHA site now allows NGOs to file returns electronically, a welcome move. It should help in speedier consolidation.
  • Since 45 per cent of the NGOs have not filed audited accounts, any NGO which does not file accounts for two years should not be allowed to receive further remittances. The bank branch that is authorized to receive remittances should be empowered to ask the NGO for proof of filing annual return.
  • Is the field inspection of books of accounts of a few NGOs good enough to monitor the activities of over 36,000 NGOs countrywide who receive in excess of $3 billion annually?
  • Since that does not seem to be the case, should the ministry of home affairs involve the home departments of respective states? The ministry of home affairs sources say that states have refused to co-operate. The issue should be resolved through a dialogue between the ruling and the opposition parties.
  • The deeper intent behind the Western world remitting thousands of crores (billions) into India annually needs to be probed and acted upon. After all poor people live in the West, the East and also in the Middle East.
  • More importantly should a country growing at 8 per cent-plus per year allow Western NGOs to have such a toehold in India?
  • Would the United States, Germany, the Netherlands, the UAE, and the UK allow Indian NGOs similar freedom as does the government of India?

Speaking in the Rajya Sabha in 2010, whilst moving certain amendments to the FCRA, Home Minister P Chidambaram said that the government would like to ensure "that the foreign money does not dominate social and political discourse in India. There is enough money within India."

Intent exists! However, India needs to improve the monitoring mechanism for funds received.

The author is a chartered accountant and founder www.esamskriti.com.


Photographs: Reuters
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