Lack of FCRA licence impacts flow of relief materials into India

Advocacy & Government: The lack of an FCRA licence is impacting whether charitable organisations (including hospitals) can receive COVID-19 related relief material from overseas.

In addition to aid from various governments across the world, support has been pouring in from individual donors and global foundations as well. However, these donations—whether in-kind or cash—can only be received by those organisations that are registered with the Ministry of Home Affairs under the Foreign Contribution Regulation Act (FCRA). 

On May 3rd 2021, the central government allowed the import of relief material from overseas to be exempt from GST. However, no such exemption has been granted from the FCRA law. 

The law has some of the most stringent clauses, and the fear of violating it is impacting the plans of large donors to buy equipment like oxygen plants and concentrators for Indian hospitals, smaller charities, and organisations working in rural areas.

According to a report in The Hindu, foreign donors are keen to donate an oxygen production plant to a large hospital, where nearly two dozen patients had died after oxygen supplies were not replenished in a timely manner. However, the lack of an FCRA licence by the hospital is proving to be an obstacle.

Given that FCRA approvals take time, experts have said the government needs to urgently grant an exemption for all such donations.  

“The FCRA law does not provide any blanket exemption for imports exempted by the central government, so no such exemption is available for importers of such COVID aid. It is advisable that the Centre issues a clarification exempting the receiver/importer from complying with the FCRA provisions for approval and other compliances,” said Suresh Surana, founder of tax consulting firm RSM India. 

As per the FCRA law, a donation, delivery or transfer of any article, currency or foreign security, by any person who has received it from any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution, Mr Surana pointed out.

Read this explainer on the amendments made to Foreign Contribution Regulation Act (FCRA), 2010 and their implications.

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.