Tata Trusts reorganises internal governance structure

Philanthropy & CSR: The Tata Trusts is said to have rewired its governance structure to ensure stricter audits and tighter internal controls.

In the new structure, the delegation of power and allocation of grants will be approved by a professional chief executive officer (CEO) along with the trustees, and will require endorsement from the entire Board. The Trusts have also plugged other gaps in its structure and functioning, in order to ensure good governance.

The CEO and the trustees will ensure there is greater oversight on operations and fund allocation, officials told the Economic Times. In February 2020, the Trusts appointed Tata Group veteran Srinath Narasimhan as its first CEO—signalling the move towards professionalising its leadership team. In addition, development consulting firm, The Bridgespan Group, has been advising the Trusts with regard to professionalisation of its operations.

The Tata Trusts have been under scrutiny for allegedly violating Indian laws by holding about 66 percent of Tata Sons. Indian income tax laws prohibit charitable trusts from claiming tax-exempt status in buying and selling shares, and benefiting from such activity. However, the Income Tax Appellate Tribunal upheld the tax-exempt status of Tata Trusts on December 28, 2020.

Read this article on how funders in India can better manage the risks of big philanthropy.

Fundraising & Communications: The Ministry of Home Affairs (MHA) has issued a circular extending the validity of FCRA registration certificates to September 30th, 2021. This applies to all FCRA licences that have expired or will expire between September 29th, 2020 and May 31st, 2021. The decision to extend the deadline has been driven by the exigencies arising from the COVID-19 situation.

FCRA refers to the Foreign Contribution (Regulation) Act 2010, which permits charitable organisations based in India to raise funds from foreign sources.

The order also clarified that nonprofits that have already opened an account and have the requisite permission to receive foreign aid, can henceforth receive it only in these newly-opened accounts.

The FCRA law was amended in September 2020 to include a clause that mandated that all nonprofits receiving foreign aid must necessarily open an account in State Bank of India’s New Delhi Main Branch. The government had initially set the deadline for this account opening as March 31st, 2021; it later extended it to June 30th, 2021 after several nonprofits argued in court that there had been delays because necessary approvals from MHA had not been received.

Several organisations have not been able to receive foreign funds during the crisis caused by the second wave, and this has impacted their COVID-19 relief efforts. Relaxing the foreign funding rules could significantly help organisations ramp up their operations to help individuals, supply critical healthcare equipment, and respond to communities in rural areas.

Read this article to know how amending the FCRA can have unforeseen implications.

Philanthropy & CSR: The Ministry of Corporate Affairs (MCA) has issued a circular that allows corporate spending on health infrastructure for COVID-19 care to qualify as corporate social responsibility (CSR) expenditure.

This includes setting up medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, ventilators, cylinders, and other medical equipment to counter COVID-19.  

The announcement comes at a time when all efforts are being directed towards expediting efforts to support the country’s healthcare infrastructure.

According to the circular, companies can now undertake projects and activities in collaboration with other companies using CSR funds. Additionally, they can contribute to specified research and development projects, as well as publicly funded universities and certain organisations that conduct research in science, technology, engineering, and medicine.

The government had earlier clarified that setting up makeshift hospitals and temporary COVID-19 care facilities would also be considered a CSR activity. Rajesh Verma, the Corporate Affairs Secretary, has requested businesses to consider converting vacant office buildings into COVID-19 facilities to cater to the rapidly increasing caseload.

Read this article to understand why media attention on COVID-19 deaths due to lack of oxygen in big cities has skewed donor priorities.