Can Canadian Organizations Continue to Support Indian NGOs?

Can Canadian Organizations Continue to Support Indian NGOs?

Navigating Canadian Charitable Funding for NGOs in India: Understanding FCRA Compliance

There have been numerous inquiries regarding the feasibility of Canadian charities and non-profits continuing their collaborations with non-governmental organizations (NGOs) in India, given the heightened enforcement of Indian laws governing foreign charitable contributions. This post aims to shed light on the Indian regulations surrounding foreign donations and their implications for Canadian organizations without delving into the obligations of Canadian registered charities engaged in foreign activities under the Income Tax Act.

Understanding the FCRA and Its Implications:

The Foreign Contribution Regulation Act (FCRA) is a pivotal Indian legislation overseeing foreign contributions to the country. Initially enacted in 1976, the FCRA mandates NGOs to possess FCRA registration in order to accept foreign funding. In 2020, the administration led by Prime Minister Modi introduced amendments to the FCRA, imposing more stringent compliance requirements and making it more challenging for Indian NGOs to obtain and maintain FCRA registrations.

Moreover, these changes prohibited registered groups from sub-granting funds to other entities, effectively discontinuing a crucial avenue through which smaller groups accessed foreign charitable support.

While the Modi administration argued that these amendments were essential for ensuring accountability within the sector, critics contend that they have been wielded as a political tool to suppress or penalize organizations that challenge the government's stance. Some have also suggested that financial considerations may have played a role, as NGOs are now mandated to open bank accounts with the government-owned State Bank of India. Consequently, there has been a noticeable surge in the cancellation of FCRA registrations, with the total number decreasing from approximately 22,700 to 16,800.

Given that India is home to an estimated 3 million registered NGOs, it is evident that a substantial portion of these organizations may no longer be eligible to receive funding from Canadian or other foreign charities.

Can Canadian Organizations Continue to Support Indian NGOs?

Many Canadian charities and non-profits have established partnerships with groups in India, and they are eager to sustain their financial support. However, the recent crackdown has significantly reduced the number of eligible organizations in India that can lawfully accept foreign charitable contributions. From an FCRA compliance standpoint, Canadian organizations can continue their collaborations with Indian NGOs if the latter possess active FCRA registrations.

India's Ministry of Home Affairs maintains a database that enables interested parties to verify an organization's FCRA registration status. This database can be accessed here.

It is worth noting that Canadian registered charities must still adhere to the provisions outlined in the Income Tax Act. This entails either maintaining oversight over the funds or adhering to the qualifying disbursement rules when dealing with non-qualified donees.