Foreign Contribution Act now has new provisions for punishment of NGOs violating rules

New provisions introduced in FCRA, 2010 to prevent wrongful use of foreign contributions received by organisations

New Delhi: The government has introduced several new provisions in the Foreign Contribution (Regulation) Act, 2010, (FCRA) that will now also provide for suspension and cancellation of registration of non-governmental organisations (NGOs) that violate the rules.

Under the new provisions, no person who receives foreign contributions under the provisions of the FCRA shall transfer the same to another person, unless that person is also authorised to receive foreign contributions as per the rules made by the central government.

The foreign contribution shall be utilised for the purpose for which it has been received and up to 50% of such contribution received during a particular financial year can be used for administrative expenses.
In the case of more than half the contribution to be used to defray administrative expenses, prior approval of the central government will be required, PTI reports.

The new provisions came into effect from 1 May 2011 and a notification was issued by the government on 29 April 2011.

The new guidelines also include provisions for suspension or cancellation of registration of NGOs for violation of the provisions of the Act.

Another provision relates to the management of foreign contributions and assets created out of such contribution of persons whose certificates have been cancelled.

While the provisions of the repealed FCRA, 1976 have generally been retained, FCRA, 2010 is an improvement over the repealed Act, as more stringent provisions have been made in order to prevent the wrongful utilisation of foreign contribution received by associations.

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