NGOs

Introduction

• What are NGOs?
  The World Bank defines NGOs as private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development
  NGOs are legally constituted organizations which operate independently from the Government and are generally considered to be non-state, nonprofit oriented groups who pursue purposes of public interest

• Data set: India vs Rest of world
  According to the reports of the Central Bureau of Investigation, India has one NGO for every 600 people. Whereas, countries like the US and Italy have three as many non-profits per person, and France has ten times as many

• News:
  1. Home Ministry tightens eligibility criteria for non-governmental organisations applying for foreign donation.
  2. New rules to define limit of administrative expenses for NGOs.
  3. NGOs could lose license to receive foreign funds under the new set of rules.
  4. As of November 2019, MHA has cancelled FCRA licenses of 1300 NGOs.
  5. SC judgement- NGOs substantially financed by govt come under RTI Act.

History of NGOs in India

1. The first half of 19thcentury in Indian history was marked by initiation of social reform movements. Social aspects of the community got recognition, which in turn, gave birth to the idea of voluntary organizations for the first time in Indian history.

2. Second half of the 19th century witnessed an unprecedented socio-political awakening resulting in the constitution of institutionalized reform movements such as Brahmo Samaj, Arya samaj, Ramakrishna Mission etc. And this prompted the Government to enact Societies registration act 1860.

3. 1900-1947: Voluntary spirit for political action and mass mobilization for the struggle for independence.

4. Post-independence: The shift to a neoliberal economic and political agenda facilitated the growth of voluntary organizations, to act as mediators and managers of the development processes.

Constitutional Provisions for NGOs in India

• Article 19(1)(c) on the right to form associations

• Article 43 which highlights the State’s having an endeavor to promote cooperatives in rural areas

• Concurrent List, Item 28– Charities and charitable institutions, charitable and religious endowments and religious institutions”

Registration of NGOs: In India, it mainly come under 3 segments

• Societies- under the central act of Societies Registration Act,1860.

• Trusts- Private trusts are registered under the central government’s Indian Trusts Act, 1882, and public ones are registered under the state legislation concerned.

• Charitable institutions- set up according to section 8 of the Companies Act, 2013. These have high compliance requirements, and also have to pay income tax under the IT Act of 1961.

Need of NGOs

• Issues of exclusion of women, children and marginalized communities in the development process persist even today.

• India ranks 130th in the 2018 Human Development Index rankings. The Global Hunger Index for 2018 indicates that 38.4% of children under five in India are stunted.

• In such an environment, civil society plays a key role in raising the concerns of people and ensuring that minorities are not neglected.

• NGOs can broaden government’s accountability by ensuring government is responsive to citizens at large rather than to narrow sectarian interests.

• Overall, NGOs play the role of a catalyst in the whole development process.

Role of NGOs

“The 21st Century will be an era of NGOs.” — Kofi Annan, Former UN Secretary General

• Policy formulation: There exist political NGOs (eg. ABVP) that act as pressure groups to the extent that they are able to educate the public and put pressure on public policy. NGOs play an important role in protecting Human Right through Judiciary and NHRC- They have filed cases, writ petitions and public interest litigation on behalf of victims and public at large, and it has produced results.
  Vishaka & Ors vs State of Rajasthan & Ors- resulted in the formulation of the Vishaka guidelines, dealing with issues of sexual harassment at workplace.

• Policy implementation: The civil society initiatives have contributed to some of the path-breaking laws in the country, including the Environmental Protection Act-1986, Right to Education Act-2009, Forests Rights Act-2006 and Right to Information Act-2005
  Ramakrishna Mission Home of Service: It is an Indian non-governmental organization established in Varanasi , established in 1900 and became a branch of Ramakrishna Mission in 1902. It manages an education program on essential health problems in schools, slums and villages of Uttar Pradesh (India) thanks to auto produced multimedia educational films.
  CRY aims to restore children’s rights in India

• Policy evaluation: systematic collection and analysis of information to make judgments about contexts, activities, characteristics, or outcomes of one or more domain(s) of the policy process
  Bandhua Mukti Morcha (BMM) or Bonded Labour Liberation Front (BLLF) is a non-governmental organisation in India working to end bonded labour. It has legally been banned in the country.
  People’s Union for Democratic Rights (PUDR) has taken up hundreds of instances of violations of democratic rights, including issues of general importance- gender equality; rights of forest-dwellers and forest policy; working class rights; agrarian conflict; caste oppression; deaths, rapes and torture in police custody; and undemocratic legislation, in particular the various incarnations of the ‘terrorist act’ (TADA and POTA) etc.

Classification of NGOs:

• Action groups for depressed classes, victims, cause-related
  Women: SEWA, Jaagori, Nanhi Kali
  Children: Smile foundation, Pratham, CRY (Child Rights & You)
  Specially-abled: UDAAN
  Elderly: Helpage India
  Juvenile, prostitutes, orphans, minorities, Dalits: Dalit foundation, Prajwala, AAWC
  Cause-related: dams, nuke plants, police brutality, LGBTQ+ (Nazaria, Bi-collective), stigma around HIV/AIDS (Naz foundation)

• Support groups
  Journal, documentation, research, awareness
  PRS legislative research: PRSindia.org

• Development and charity groups
  Goonj: recycling waste
  Honey bee: grassroot innovators

• Organizations with political goals
  RSS (world's largest NGO, according to DNA)

Regulation of NGOs

There are laws for the regulation of the functioning of NGOs in India. The most important laws in this regard are:

• Foreign Contribution Regulation Act (FCRA)

• Foreign Exchange Management Act (FEMA)

Foreign Contribution Regulation Act (FCRA), 2010

• Purpose-
  Regulates the foreign funding of voluntary organizations in India
  Ensures that the recipients of foreign contributions adhere to the stated purpose for which such contribution has been obtained
  Under the Act, organisations are required to register themselves every five years

• Implemented by- Ministry of Home Affairs

• Who can accept foreign contributions?
  Organizations working for definite cultural, social, economic, educational or religious programs, if and only if they are
  Registered with the Home Ministry
  Maintaining a separate account listing the donations received from foreigners, getting it audited by a Chartered Accountant and submitting it to the Home Ministry, every year

• Who is debarred from accepting foreign contributions?
  A candidate contesting an election
  Cartoonist, editor, publishers of a registered newspaper
  Judge
  Government servants or employee of any corporation
  Member of any legislature
  Political parties

Proposed Amendments to FCRA

• Aim: to enhance the transparency and accountability in the matter of foreign funds inflow and utilisation.

• There is now a capping of the administrative expenses of NGOs at 20% of their foreign donations- only 20% of the foreign funds can be used for administrative purposes while the limit was 50% in FCRA 2010.

• The new amendment requires them to have a State Bank of India account at a Delhi Branch.

• It also prohibits the transfer of grants received under FCRA to any other outfit.

• It also gives sweeping powers to the Ministry of Home Affairs to cancel the FCRA certificate of an NGO.

• Makes Aadhaar mandatory for persons who control recipient organizations.

• Prohibits "public servant" from receiving foreign contributions.

Impacts of these changes

• Positive:
  With increased accountability, NGOs indulging in dubious activities will be controlled better
  This amendment appears to be preventive in nature and seems to enable the Government to prevent illegal receipt and utilisation of foreign contributions
  It provides flexibility to the recipient to also open another FCRA Account in any of the scheduled banks in India for the purpose of keeping or utilising the foreign contribution which has been received from its "FCRA Account" in the branch of State Bank of India at New Delhi
  The misuse of funds could be checked

• Negative:
  1. The clause on prohibition on transfer of funds would mark the end of partnership and NGO collaboration- as it is, the smaller organizations at the grassroot levels do not have the capability of raising money, but they collaborate with the bigger ones and do the real work.
  Since the larger NGOs, along with academic institutions promote research work, the reduction in the limit of expenditures, would invariably affect the research work associated- national and international.
  2. All FCRA funds coming to one place would lead to centralisation, and increase in the transaction costs for organizations that receive such funds
  3. Redundancy will be reduced

Foreign Exchange Management Act (FEMA)

• This Act of 1999, aims to consolidate and amend the law relating to foreign exchange.

• Objective: facilitate external trade and payments, for promoting the orderly development and maintenance of foreign exchange market in India.

• There are certain NGOs which are registered under FEMA and they disburse foreign funds to various associations within the country.

• In 2016, the powers of the Ministry of Finance to monitor NGOs were placed under the FEMA.

• The idea was to bring all NGOs, which receive foreign contributions, under one umbrella for better monitoring and regulations. The step was taken to ensure only one custodian monitors flow of foreign funds to these organisations.

• For example, International donors such as the Ford Foundation, the U.K.’s Department for International Development etc are registered under FEMA but not the Foreign Contribution Regulation Act (FCRA) 2010. This makes it difficult to monitor the flow of funds effectively.

• A transaction under FEMA is called a fee or a salary while the same under FCRA is called a grant or a contribution.

Sector review

Problems

Accountability

• Accreditation remains a big challenge as it is very difficult to distinguish whether an organization wants to work for the cause or has been set up only for the purpose of receiving government grants.

Efficiency

• Logistical difficulties and hurdles could create confusion as there are two separate Ministries overlooking the functioning of NGOs.

Transparency

• Misappropriation of funds.

• CBI records filed in the Supreme Court show that only 10% of the total registered NGOs under the Societies Registration Act file annual financial statements.

• FCRA mentions restrictions can be imposed if it  "public.

Solutions

Accountability

• A National Accreditation Council consisting of academicians, activists, retired bureaucrats should be made to ensure compliance by NGOs

Efficiency

• Avoid tussle between Home Ministry and Finance Ministry by bringing the regulation of NGOs under one head.

Transparency

• Annual audits by a third independent party to keep a check on financial activities

• FCRA mentions "public interest"

Conclusion

A democratic state needs a democratic civil society and a democratic civil society also needs a democratic state. They must mutually reinforce each other.