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Under new FCRA rules, grassroot NGOs stare at an uncertain future

NEW DELHI: There is an everyday danger of getting attacked by a tiger or getting washed away, and after they survive all this, they will likely get married off before they are even 15 – that’s how Subhankar Banerjee, founder of SOUL, an NGO in the Sunderbans of West Bengal, describes his struggles working with the children of the community of honey collectors.

It’s taken him five years and several collaborative efforts with other organisations to reach out to the families of the Savar and Santhal tribes in the Sundarbans, and get their children to go to school.

Banerjee runs an ashram that also acts as one of the few schools in this mangrove forest area, promoting the teachings of Swami Vivekananda. His NGO is one of 45 organisations that the Niti Aayog had chosen for Covid-19 outreach in oppressed communities.

However, Banerjee doesn’t know how much longer he can continue his work. The government recently amended the Foreign Contribution (Regulation) Act (FCRA), which, according to him and others, will tighten its grip over NGOs and their funding.

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Vimal Thorat of Dalit Mahila Adhikar Manch says under new rules grass-root organisations will be forced to reduce their staff, bring down the scale of outreach.

The revised FCRA requires NGOs to receive foreign funding only at a designated bank branch in New Delhi, prevents them from transferring foreign grants to other registered NGOs, and applies a mandatory 20% cap on administrative expenses.
“There is a real chance that organisations such as mine can get extinct. Big NGOs such as CRY or SOS might not give us the funds they usually do. NGOs for years have functioned as networks, with smaller ones being supported by the larger, better-funded organisations. Without this networking option, many of the smaller ones will find it difficult to survive,” Banerjee said. “I fail to understand why they would do this when NGOs are really short of funds and donors and CSR (corporate social responsibility) funding too has gone to Covid-19 work.”

Many small NGOs, especially those working with Scheduled Caste and Scheduled Tribe communities, helping couples in inter-caste marriages, implementation of SC/ST (Prevention of Atrocities) Act, reproductive rights and tribal welfare, are of the view that the new FCRA rules will hurt them because they have few donors in India and depend mostly on funds from humans rights organisations abroad.

Experts said that while capping of administrative expenditure is not just legislative overreach, the government has ignored the fact that many NGOs in India are small and don’t have the skill sets to frame proposals to seek their own funding from donors.

Kandasamy Krishnan runs the Foundation for Sustainable Development in Tamil Nadu and Karnataka, employing 37 field workers and 72 volunteers who reach out to tribal communities such as the Irulas, the snake catchers, and ST communities Chenchu, Enadhy and Kadar who live in the hilly areas.

“From training them in basic things like money-counting to facilitating their rehabilitation, as in many cases they are rescued from bonded labour, the kind of work we do requires sustained collaborations with other organisations and the people themselves for years, which will not be possible now under new rules,” he said.

Krishnan, who also works with the National Adivasi Solidarity Council, said the advocacy efforts of NGOs will be the most affected.

“Be it MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) or RTI (Right to Information) or RTE (Right to Education), NGO activists moved the courts and sought these legislations. Now, with the cap, that level of activism will be curtailed,” he said.

The hardest-hitting restriction is one that prevents an NGO from redistributing the funds it receives to other organisations, even if they are FCRA-compliant, said Vimal Thorat, who founded the All India Dalit Mahila Adhikar Manch.

This curb will lead to a reduction in grassroot-level work, she said, noting that in most rape cases, it is pressure from activists that forces the police to take action, register FIRs and gather evidence for convictions.

Grassroot NGOs function in networks to ensure the safety of victims and their families, pay for lawyers and ensure rehabilitation of families for years, all of which won’t be possible with the reduced cap on administrative funds, Thorat said.

“The advancement of the Dalit community cannot be done through welfare activities alone, as ensuring social justice is an important part of the work these organisations did,” she said. “To handle caste crimes, Dalit organisations have activists at the mandal level who work as pressure groups to ensure that cases are registered properly and taken to the court. Under the new rules, we will have to substantially reduce our strength of grassroot workers.”

Government officials told ET the FCRA changes were brought about because several NGOs flouted the rules, with “mother-NGOs” funding smaller entities. They said that even the Companies Act caps permissible administrative expenses under CSR funding at 5%.

Advocate Pavan Narang, who specialises in economic offences, said under Section 17 of the FCRA, an NGO working in a remote area can operate a sub-FCRA account that can receive money from designated FCRA accounts opened at State Bank of India’s Parliament Street branch in New Delhi.

“In any case, with 80% of the funds in hand, more money can be used for social work, which is good ultimately,” he told ET, referring to the cap on administrative expenses.

He added that while the work of some NGOs can be affected, the move will bring transparency.

“The rationale appears to be that the government wants proper monitoring of receipt and final utilisation of foreign funds to stop corruption and bribe issues, as ‘public servant’ has been added to the act to check money-laundering and use of funds for terrorist activities. If earlier, smaller NGOs were getting foreign funds indirectly, now they can be handheld by either bigger NGOs or foreign contributors in setting up the mechanism and they can start receiving funds directly and in a transparent manner,” he said.

The tighter scrutiny of NGOs can be traced back to an old demand of the Sangh Parivar, which has always been uncomfortable with the dominance of foreign-funded NGOs and sees them as an institutionalised medium to destroy Indian values, mainly in the areas of caste, religion and gender. The section that has been fighting against religious conversions is satisfied with the changes as the new rules also seek to place Christian organisations under greater scrutiny.

Advocate Umesh Sharma, who has worked closely with organisations that seek to prevent Christian conversions, told ET that the FCRA amendments are a clean-up that was long due.

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Subhankar Bannerjee who runs SOUL in Sunderbans, an NGO that works with indigenous tribes feels the amendments that amount to more scrutiny could have been brought in later, not at a time when the social sector is already reeling under lack of funds.

“For decades, these NGOs had perfected the art of using a network of smaller organisations, a head office in a city and several collaborations that it was difficult to trace their funding. Some were found to be luring people to convert using money that was sought for educational or other activities. In many cases, they purchased land, which is not allowed,” Sharma said.

However, VA Ramesh Nathan, general secretary of the National Dalit Movement for Justice, disagreed with that view, saying that it is a myth that foreign sources of money are largely church-based and said that an overwhelming majority of donors are philanthropic bodies or governmental agencies not associated with the church.

“When it comes to spreading awareness about the Scheduled Castes and Tribes (Prevention of Atrocities) Act, or advocacy for Dalit or tribal communities, no big donor in India wants to support. In my experience, only foreign agencies help such causes. Donors here and companies through CSR prefer to largely work with NGOs that carry out welfare, relief activities, supply of food, clothes and books,” Nathan said.

He said that over the past several years, the network of Dalit rights organisations that he works with has not received support from many donors.

Questioning the need for the FCRA amendments, he said, “Banks anyway are accountable to disclose details and the act already had measures to monitor the flow of funds. It is ridiculous to ask 20,000 charities to move their FCRA accounts to the State Bank of India in Delhi. It is just an imposition of one nation, one bank. If the FCRA is surrendered, the assets would go too. This clearly targets minority and rights-based organisations and is an attempt to take over schools, shelters or hospitals run by them,” Nathan said.

“Getting funding from European commissions is also not easy as it is limited and comes with checks, but we bid, get funds, identify and collaborate with organisations that can work with and send them resources. The new model will benefit traditional Hindu organisations that receive NRI individual donations that have no limit and no cap like we do,” he added.



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