Amending law regulating foreign–funded agencies could jeopardise charity work, warn Christians

The Indian government's proposal of amending the law on foreign funding of social service and charitable organisations has met with a wave of protest from people who claim that it could seriously hinder the work of an estimated 20,000 development organizations – 50 percent of which are managed by Christians.

The amendment includes some stringent rules and regulations which could cripple the activities of the organizations.

For instance, it gives authorities wide range of powers to revoke registration of the organizations at any time. The new provisions also obligate social service organizations receiving foreign funding to re–register every five years and are subject to review by the authorities.

At present, registration to receive foreign funding is granted indefinitely.

The nightmare Christian charity group Emmanuel Mission International (EMI) went through in 2006 is still fresh in the minds of many.

During the stand–off between EMI and the state government of Rajasthan, the latter attempted to gag the former by arbitrarily revoking registrations granted to five EMI social institutions in February 2006 and freezing EMI's bank accounts for several weeks.

The state revoked the EMI registrations on grounds of two alleged minor infractions of society procedural regulations (such as not holding enough board meetings), an indication of how even the existing law could be abused, as these actions severely disrupted the charity work in EMI's orphanages and hospitals.

Though the government is claiming that the amendment is necessary to keep a check on militant and separatist organizations that raise funds abroad for "anti–national" activities, many feel that the proposed amendment to the Foreign Contributions Regulation Act (FCRA) would discourage non–governmental organizations (NGOs) from establishing long–term projects such as school and hospitals, since approval for foreign funding for these projects could be revoked after, or even before, the five–year period has expired.

In fact, the proposed amendments are so draconian that it has also drawn criticism from former Reserve Bank of India governor Bimal Jalan.

Jalan, who has written to Prime Minister Dr. Manmohan Singh, Finance Minister P. Chidambaram, Home Minister Shivraj Patil and Vice President Bhairon Singh Shekhawat, has expressed concerns about certain "authoritarian" provisions in the Foreign Contribution Regulation (FCR) Bill 2006.

He said the Bill is "authoritarian" in the sense that it gives unbridled powers to the government to inspect, raid or seize any NGO, even the Red Cross.

If that is intended as a step to check activities of terror–linked groups, then the country already has enough anti–terrorism laws and the Foreign Exchange Management Act in place, he said in his letter.

Jalan said the administrative provisions in the Bill must be thoroughly reviewed to reduce the areas of "bureaucratic discretion."

"Provisions for detailed administrative controls, licensing and inspections also run counter to the priority given by the government to reduce such controls on the corporate and other sectors of the economy," Jalan said, suggesting that registration under FCRA should be valid for 10 years as proposed in the Bill.

The Bill has also drawn flak from Christian leaders.

On January 22, the Commission on Polity and National Governance of the National Council of Churches in India (NCCI) – India's largest ecumenical body – convened a meeting of Church leaders, prominent citizens, leading chartered accountants and lawyers on "Foreign Contribution Regulation Bill, 2006," addressing their various concerns, suggestions and proposed formulation of response.

The session was well attended by leaders of various churches and Christian organizations including (Rt.) Rev. Dr. D.K. Sahu, general secretary, NCCI; Rev. Enos Das Pradhan, general secretary, Church of North India (CNI); Rev. Richard Howell, general secretary, Evangelical Fellowship of India (EFI); Mr. Sushant Agarwal, director, Church's Auxiliary for Social Action (CASA) and Mrs. Sharada M. Rao, vice president, NCCI and Rev. Asir Ebenezer, executive secretary, NCCI Commission on Polity and National Governance.

Sanjay Patra, executive director, Financial Management Services Foundation (FMSF) (a development support organization) made a presentation on the provisions of the proposed Bill, comparing it with the Act of 1976, and expressed serious concerns about some of the new provisions included in the Bill tabled in the Rajya–Sabha on December 18, 2006.

Explaining the implications of the proposed amendments particularly for the churches and Christian organizations, Patra initiated a round of open discussion wherein everyone agreed that the Bill had become a bureaucratic trap for NGOs and Christian organizations.

Drawing attention to registration procedure and the penal clauses in the Bill, Patra explained that the Bill, which "suffers from a lack of clarity," could severely affect the functioning of NGOs and curb their activities bringing them under administrative scanner.

"Which is the target – foreign funds or the Indian NGOs?" he wondered, adding, "If it is the former, then why FCR in the first place? And if it is the latter why there is provision for only 50 percent mobility of funds?"

Some of the provisions which drew attention were:
[1] A ceiling of 50 percent on the amount to be spent on administration
[2] The clause "organisation of a political nature" in the chapter on those who cannot receive foreign contribution
[3] Renewal of registration once in 5 years
[4] Income accruing from foreign contribution also treated as such
[5] Absence of provision for deemed registration
[6] Individuals receiving foreign contribution also covered under the Act
[7] Definition of foreign source to include Foreign Companies, MNCs, etc.

The proposed amendments have also miffed the Catholic Church.

Especially the clause that registration to receive foreign contribution should be renewed every five years has made the Catholic Bishops Conference of India (CBCI) upset.

CBCI spokesperson Father Babu Joseph said a Church delegation would take up the matter with the Home Minister before the session.

"The Foreign Contribution Regulation Act 2006 Bill introduced in Parliament during the winter session is set to replace the existing Foreign Contribution Regulation Act of 1976, which governs the receipt of foreign contributions by NGOs including charities, religious organisations etc.," he said, noting that "Existing laws are stringent enough to book defaulters."

Representatives of NGOs have also expressed their displeasure, saying that the amendment was an insult to their work.

"The government is criminalizing the social sector," John Dayal, secretary general of the All India Christian Council, told Compass. "Groups like the Rashtriya Swayamsevak Sangh [RSS, a Hindu nationalist organization] get their funds through undeclared channels. The amendment won't affect them."

If the amendment becomes law, "thousands of organizations working among the needy, especially in rural areas, will shut down, because this law will prevent them from planning any long–term activity," Dayal added.

Dayal and other pressure groups will take up the issue with a Parliamentary Committee before the Bill is introduced to Parliament at the end of February.

Professor Babu Mathew, director of ActionAid – which has worked among some of India's poorest communities since 1972 – said the amendment was a move to replace healthy regulation with unhealthy control.

"It's still not clear why the government thinks the changes are necessary," Mathew said. "India already has a framework that is more than adequate, under which NGOs have been doing very constructive work. This new Bill doesn't show its teeth until carefully examined. When you look closely, it's about reducing democratic space and dampening the voice of civil society."

Under the new terms, civil servants would decide what type of social service was unacceptable and "political" in nature, he noted.

"The guidelines are far from clear, dramatically increasing the risk of that power being misused," Mathew said. He also pointed out that government organizations would be exempt from the new regulations.

The Voluntary Action Network of India (VANI), a network of more than 2,000 Indian NGOs, has described the government's proposed move as a strategy for social control.

"Ironically, the FCR Bill also appears to run counter to the government's own 2006 Draft National Policy on the voluntary sector, which supports the creation of an 'enabling environment for Voluntary Organizations,'" VANI said in a statement.

VANI also said a clause in the Bill prohibiting the acceptance and use of foreign funding for "any activities detrimental to the national interest" was too vague and could be abused.

The Bill extends the categories of persons and organizations that are prohibited from receiving foreign contributions, it noted. It also imposes more stringent penalties for violations, while failing to provide a clear mechanism for appealing government decisions, it said.

"Under the guise of protecting India's national interest, the Bill's only accomplishment will be to empower the government to interfere in the inner workings of NGOs," VANI said.

Many social service organizations are now hoping to put pressure on the Indian Parliament to drop the Bill in its upcoming Budget Session in late February.

About the Foreign Contribution Regulation Act 2006 Bill

Indian non–governmental organizations (NGO), religious bodies and individuals receive an astonishing US$ 1.56 billion in grants from several charities every year.

The money will be funneled through the banks officially once the recipient institution obtains a FCRA certificate from the government.

India's foreign contributions have increased by nearly US$ 222 million annually in the past three years.

Most of the donors are Christian or Islamic missionaries from the United States, France, Saudi Arabia and Germany while major recipients in India are socio–religious missions or associations.

For long there have been apprehensions about where the money has gone while nearly 32,000 NGOs and social organizations in India have received foreign funding.

Would it be used by terror outfits, religious organizations for conversions or misused by individuals to live a life of luxury?

A recent case has warned the Indian government about the possible risk in this field.

In mid January, India's Central Bureau of Investigation (CBI) had accused Abdul Hamid Rahmani and his organization Abdul Kalam Azad Islamic Awakening Centre of illegally receiving foreign donations.

The organization, founded in Delhi in 1985, had operated several bank accounts in Saudi Arabia and Delhi receiving millions of donations in the past two decades but it has never disclosed any information about its bank accounts to Indian government.

In 2002 it had received one single donation of US$ 2 million from New York.

The Indian security agencies did not learn that until a Delhi bank reported the transaction.

The existing law, first enacted in 1976, has several obvious shortcomings, including no restriction on further transfer of funds, no provision for cancellation of registration once granted, no provision for prohibiting foreign contribution to organizations actively engaged in electronic propagation and no restriction on amount that can be utilized for administrative purpose. It also has no express provision for information about a single bank account.

"The FCRA, 1976 was conceived thirty years ago when the demand for foreign exchange was high, amount of foreign contribution was low, number of recipients were small and modes of communication and transmission were not as developed. We have been suggesting a change for quite some time," said Diljeet Titus, the lawyer whose law firm Titus and Associates were consulted by the government about the amendment Bill.

According to the new Bill being reviewed by the Parliament, the organisations will be asked to give details about the receipts and a nation–wide database will be set up for receipts of foreign remittances above a specified amount.

The new law will not only regulate foreign donation but also ban acceptance and utilization of foreign contribution or foreign hospitality for any activities harmful to the national interest.

This might reduce the chances for government officials to travel abroad and accept hospitality as they may be asked to explain.

The new Bill will also affect the NGOs who have got used to spending more in administrative expenses than real relief works.

According to a survey done by the Ministry of Home Affairs, about 15 percent of US$ 1.39 billion received in the fiscal year of 2004–05 went to establishment expenses while 10.48 percent was spent on relief and rehabilitation works.

Under the new Bill, the companies or associations engaged in producing or broadcasting audio–visual news and current affairs, correspondents, columnists, cartoonists and editors will be banned from getting foreign donation. So will be the organizations of political nature.

More than 255 NGOs have teamed up to oppose the new provisions of the Bill especially the one that ask them to re–registration every five years.