Ever thought of starting your own non-profit organization?
Well, besides the vision, mission & task force, finance would be one of the most important concerns you would have. You would be able to get the initial investments but the main issue is how to maintain a regular inflow of funds to keep your organization running efficiently. You would start looking for the options like domestic & foreign funding. Foreign funding looks to be more attractive since the amount involved is high and could sustain your organization for a longer period. The foreign contributors might also help you with your expansion plans. But before you go ahead and finalize the funding agreements, you should know about an important regulation known as FCRA – Foreign Contribution Regulation Act.
FCRA was introduced in 1973 with primary aim of preventing the use of foreign funds for anti-social and anti-national activities. It was passed by the parliament in 1976. Since then it has gone through significant amendments and modifications (essentially in 1985). This act covers all types of associations – charitable, non-charitable, political, social, educational, etc. Contributions include any kind of article (worth more than Rs 1000), currency and foreign security. Foreign sources include any foreign government, international agency, foreign company, trade union, foreign trust/society, foreign citizen, etc. United Nations and its specialized agencies like World Bank, IMF, etc are excluded from this act.
This basically means that for obtaining foreign contributions, the NGO has to fulfill one of the following requirements:
- It must be registered with Central Government for receiving such funds
- It must obtain prior permission from FCRA department for case to case basis
The process of filing a request for prior permission or registration is quite simple. Details of FCRA and filing process could be obtained from the following links: http://mha.nic.in/fcra.htm & http://www.fcraforngos.org
Mr. Chandra (who handles Jagruti finance) gave an interesting first hand experience of applying for FCRA. He says, “For getting permanently registered with FCRA department, the NGO should have a proven record of social activities beneficial for their area of operation. It is easier for an organization to get the approval if they have been operational for some time (typically 3-4 years). The registration process also involves an inspection from the intelligence bureau. They collect information about the NGO by visiting their area of operation and their office. This inspection process is pretty clean and the officials involved do not expect bribes. One should not try to bribe them lest it might be taken seriously against the NGO. Usually the process takes around 6-7 months to complete. But it may also go beyond 1-2 years depending upon how convincing is the case for registration.”
Chandra further adds, “For new NGOs, it is better to apply for case wise prior permission for the first few times. This way, the NGO would be able to prepare grounds for a permanent registration and get into the good books of the authorities involved. A certificate from the district collector or state government, though not mandatory, would certainly help getting faster results.”