Foreign funds to NGOs: Why better scrutiny is needed PDF Print E-mail
Sanjeev Nayyar | Source: http://www.rediff.com

The Foreign Contribution Regulation Act was passed in 1976. It seeks to regulate receipt of funds by non-governmental organisations (NGOs). It is managed by the Union ministry of home affairs.

Any organisation that wants to receive contributions from abroad has to apply and get approval from the home ministry.

All remittances are received into a single bank account of a scheduled bank. The NGO has to annually submit audited receipts and payments account, balance sheet, etc to the home ministry.

The ministry scrutinises the returns to ensure that contributions received for a particular purpose are used for that purpose only. It does a detailed check of randomly picked associations and then collates the data received to present the FCRA Annual Report, i.e. uploaded on the ministry's web site here.

As on March 31, 2009, there were 36,414 registered associations under FCRA. These organisations could be religious, social, educational, cultural and educational organisations.

Why do we need to analyse inflows under FCRA?

  • Because of the sheer magnitude of inflows. Reported inflows into India were $2.4 billion in 2008-09, $2.15 billion in 2007-08 and $2.45 billion in 2006-07.

  • Reported contributions received from 1993-94 to 2008-09 were to the tune of Rs 84,182 crore (Rs 841.82 billion). Actuals are much higher.



Trends in Foreign contributions
Year Registered Associations
(as on 31st March of FY)
Associations who gave
details of remittances received
Amounts received Rs crore
1993-94 15,039 Not Available 1,865
2003-04 28,351 61% 5,105
2004-05 30,321 61% 6,257
2005-06 32,144 58% 7,878
2006-07 33,937 56% 11,336
2007-08 34,803 54% 9,663
2008-09 36,414 55% 10,803
Total 1993-94 to 2008-09 84,182

There has been a steady increase in the number of registered associations. Taking 15,039 associations in 1993-94 as the base year, their number grew by 41 per cent in 2000-01, 101 per cent in 2005-06 and 142 per cent in 2008-09.

In 2008-09, as many as 7,679 of the 20,088 associations that submitted their accounts did not receive any foreign contributions -- meaning that reported contributions include amounts received by 43 per cent of the number of associations.

Reported inflows in 2008-09 were higher by Rs 1,140 crore (Rs 11.40 billion) -- 12 per cent -- as compared to the previous year.

Largest donors country-wise (in Rs crore)

Year USA Germany UK Italy, others
2002-03 1680 715 685 NA
2003-04 1584 757 676 350*
2004-05 1927 931 764 353#
2005-06 2426 1181 1062 500*
2006-07 2949 1033 1428 606&
2007-08 2928 971 1269 515*
2008-09 3433 1103 1131 547*
Total 16,927 6,691 7,015 2,871

Largest donor countries are the United States of America - Rs 3,433 crore (Rs 34.33 billion), the United Kingdom -- Rs 1,131 crore (Rs 11.31 billion), Germany -- Rs 1,103 crore (Rs 11.03 billion), Italy -- Rs 547 crore (Rs 5.47 billion), the Netherlands -- Rs 513 crore (Rs 5.13 billion), and Spain -- Rs 437 crore (Rs 4.37 billion.

The top three donor countries are the USA, Germany, and the UK for many years now. The US is consistently the top donor.

In spite of the economic downturn in the US and the UK, rise continued contributions from these countries might be considered noteworthy. Donors should usually look at the needs of their own countrymen first before worrying about others!

Readers must be aware that most Germans pay some sort of a tax to the Church. Is there a correlation between tax paid and inflows into India? That is an issue worth pondering over.

Key Donors: Country-wise trends (In Rs crore)

Country 2008-9 2007-08
USA 3433 2928
Germany 1103 971
Italy 547 515
Netherlands 513 414
Spain 437 401
Switzerland 370 364
Canada 303 276
France 193 196
Australia 131 138
Belgium 124 100
Austria 106 99
Sweden 103 89
UAE 146 79
Ireland 69 77

Countries where contributions in 2008-09 have increased significantly as compared to the previous year are: The US 17 per cent, Germany 14 per cent, the Netherlands 24 per cent, Belgium 24 per cent and the United Arab Emirates 86 per cent.

Note that, except for the UAE, countries above belong to the West -- read as the Christian world.

Media reports indicate that some countries in the Middle East, notably Saudi Arabia, made large remittances to India (http://www.southasiaanalysis.org:80/papers38/paper3725.html). Barring the UAE, the contributions are not reflected above.

So either contributions are not coming in or are coming in through the hawala route.

Largest Donors: Agency-wise trends (In Rs crore)
Donor Name & Country 2008-9 Percent Increase* Donor Name & Country 2007-08
World Vision International USA 706 22 World Vision International USA
Gospel For Asia Inc USA 596 63 Gospel For Asia Inc USA
Fundacion Vicente Ferrer, Barcelona, Spain 459 85 Fundacion Vicente Ferrer, Barcelona, Spain
Shyam Shyam Dham Samiti India 359 NA Bramhanand Saraswati Trust UK
Action Aid International, UK 228 24 Action Aid International, UK
Fundacion Vicente Ferrer, Spain 241 53 Fundacion Vicente Ferrer, Spain
Plan International, USA 191 26 Plan International, USA
Oxfam India Trust, UK 163 23 Oxfam India Trust, UK
BAPS, Inc USA 199 NA Dr Vikram Pandit USA
Christian Children Fund, USA 197 55 Christian Children Fund, USA
Compassion International, USA 347 187 Compassion International, USA
Om Foundation, USA 188 NA Save the Children, UK
Ahmadiyya Muslim Association, UK 178 NA Christian Aid, UK
Mata Amritanandmai Centre, USA 176 NA EED Evagelishcher Entiwicklungsdienst e.v. Germany
The Global Fund to Fight aids, Tuberculosis, Malaria Switzerland 166 61 The Global Fund to Fight aids, Tuberculosis, Malaria Switzerland
From Top 15 donors 4,394

*% increase between 2007-08 and 2008-09.



Contributions from top 15 donors increased by 55 per cent to Rs 4,394 crore (Rs 43.94 billion).

Largest donors were World Vision USA -- Rs 706 crore (Rs 7.06 billion); Gospel for Asia Inc USA -- 596 crore (Rs 5.96 billion); Fundacion Vicente Ferrer, Barcelona, Spain -- 459 crore (Rs 4.59 billion); Shyam Shyam Dham Samiti India -- Rs 359 crore (Rs 3.59 billion); Action Aid International -- Rs 228 crore (Rs 2.28 billion); and Fundacion Vicente Ferrer, Spain Rs 241 crore (Rs 2.41 billion).

Top 15 recipient associations 2008-09 (In Rs crore)
Association 2008-9 Association 2007-08
World Vision of India, Tamil Nadu 192 World Vision of India, Tamil Nadu 212
Rural Development Trust, A.P. 155 Rural Development Trust, A.P. 125
Believers Church India, Kerala 100 Believers Church India, Kerala 102
Action Aid, Karnataka 77 Action Aid, Karnataka 92
Shyam Shyam Dham Delhi 109 Caritas India, Delhi 90
Gospel for Asia, Kerala - Gospel for Asia, Kerala 86
Women Development Trust, A.P. 82 Women Development Trust, A.P. 80
Plan International Inc, Delhi 66 Plan International Inc, Delhi 74
Church Auxiliary for Social Action, Delhi 61 Shri Gajanam Maharaj Sansthan, Maharashtra 70
Sri Sri Jagadguru Shankaracharya, Karnataka 60 Oxfam India Trust, Delhi 67
Mata Amritanandmayi Math, Kerala 116 Mata Amritanandmayi Math, Kerala 102
Caruna Bal Vikas, Tamil Nadu 74 Caruna Bal Vikas, Tamil Nadu 93
Boachasanwasi Akshar Purushottam Swaminarayan Sanstha, Gujarat 78 Boachasanwasi Akshar Purushottam Swaminarayan Sanstha, Gujarat 93
Christian Children Fund Inc, Karnataka 62 Christian Children Fund Inc, Karnataka 83
Pratham Mumbai Education Initiative Maharashtra 67 Pratham Mumbai Education Initiative Maharashtra 83
SOS Children's Village of India, Delhi 83 - NA
Top 15 recipients received 1,382 - 1452
Total Contributions received 10,803 - 9,663

Largest recipients were World Vision of India Tamil Nadu -- Rs 192 crore (Rs 1.92 billion), Rural Development Trust AP -- Rs 155 crore (Rs 1.55 billion); Mata Amritanandmayi Math -- Rs 116 crore (Rs 1.16 billion); Shyam Shyam Dham -- Rs 109 crore (Rs 1.09 billion); Believers Church India, Kerala -- Rs 100 crore (Rs 1 billion); SOS Children's Village of India, Delhi -- Rs 83 crore (Rs 830 million).

The top fifteen donors constitute 41 per cent of reported contributions while corresponding percentage for top fifteen recipients is 11 per cent.

This means that big donors distributed their contribution across many NGOs. For example, World Vision International USA contributed Rs 706 crore but World Vision of Tamil Nadu received only Rs 192 crore (Rs 1.92 billion).

Trends of state-wise receipt of foreign contributions (In Rs crore)
State 2008-9 % rise* 2005-06 2002-03
1.Tamil Nadu 1650 (1) 1609 775
2. Delhi 2013 17 1556 881
3. Andhra Pradesh 1244 7 1012 630
4. Maharashtra 953 8 664 505
5. Karnataka 1009 13 621 489
6. Kerala 991 24 656 409
7. Jharkhand 154 20 97 58
8. West Bengal 598 11 355 272
9. Gujarat 464 23 301 272
10. UP 225 11 103 NA
11. Orissa 228 29 129 NA
12. MP 160 16 77 NA
13. Bihar 161 20 101 NA
14. Rajasthan 138 13 - NA
15. Himachal Pradesh 129 8 83 NA
16. Assam - - - NA
17. Punjab - - 82 NA
18. Others 686 16 432 756
Total 10,803 12 7,878 5,047

*% increase between 2007-08 and 2008-09.


In absolute terms the contributions received by individual states are huge.

Most of the reported inflows are concentrated in the four southern states, and Delhi and Maharashtra. Wonder why?

The '% rise' (in the table) compares contributions received in 2007-08 against those received in 2008-09. As compared to 2007-08, the percentage increases are significant in Delhi, Karnataka, Kerala, Gujarat, Orissa, Bihar, Madhya Pradesh and Jharkhand.

Top recipient districts of foreign contributions (In Rs crore)
District 2008-09 2007-08 2002-03
Chennai 756 731 363
Mumbai 575 470 284
Ranchi - - NA
Bengaluru 702 670 358
Kolkata 371 352 NA
Uttara Kanada - - NA
Hyderabad/Sec 301 291 181
Ananthpur 309 278 169
Pathanmthitta - 250 -
Ahmedabad 237 207 NA
Tirunelveli - - NA
Madurai 181 187 NA
Quilon (Kollam) 377 - NA
Ernakulam 209 207 NA
Pune 178 173 NA
Krishna 138 134 NA
Tiruchirapalli - 96 NA
Kancheepuram 101 122 NA
Trivandrum - - NA
KangraDharamsala 116 104 NA
Kottayam 98 NA NA


NA stands for not available.


Among the districts, the largest recipients of contributions were Chennai -- Rs 756 crore (Rs 7.56 billion); Mumbai -- Rs 575 crore (Rs 5.75 billion); Bengaluru -- Rs 702 crore (Rs 7.02 billion); Kolkata -- Rs 371 crore (Rs 3.71 billion); Hyderabad/Secunderabad -- Rs 301 crore (Rs 3.01 billion); Ananthpur -- Rs 309 crore (Rs 3.09 billion); Ernakulam -- Rs 209 crore (Rs 2.09 billion);and Ahmedabad -- Rs 237 crore (Rs 2.37 billion).

These are huge sums for individual districts, be it Rs 756 crore for Chennai or Rs 309 crore for Ananthpur in Andhra Pradesh.

Utilisation of foreign contributions (In Rs crore)
Expenditure Head 2008-09 % rise*
Establishment expenses 5,022 47
Rural Development 2,835 59
Relief/rehabilitation of natural calamities 1,345 (20)
Welfare activities for children 2,304 74
Construction/maintenance of schools/colleges 2,031 68
Maintenance of Priests/preachers/others 837 105
Religious school/education of priests/preachers 693 62


*% increase between 2007-08 and 2008-09.


Note the percentage increase for expenditure heads 1, 6 and 7 is very high.

Why did Indian NGOs receive Rs 837 crore (Rs 376 crore from the US, Rs 101 crore from Germany, etc) for maintenance of priests is difficult to fathom? Ditto for education of priests/preachers. This might hold good if India were exporting priests to the West.

So also Rs 57 crore (Rs 570 million) was received towards theatre/films. It would be interesting to know the nature of films produced.

Further, the US/the UK/Germany remitted Rs 101 crore (Rs 1.01 billion) towards publication and distribution of religious literature and Rs 186 crore (Rs 1.86 billion) for religious functions. For what type of literature and functions is important to know?

Food for thought

  • NGOs are required to file their accounts by December 31 of the subsequent year. The FCRA report for year ended March 31, 2009 was signed in December 2010, i.e. nearly 12 months after the due date of receipt. So either NGOs filed reports late or there was a delay at the ministry of home affairs. Either way a delayed report has historical value.

  • NGOs should file their audited accounts within six months of March 31 so that FCRA report is ready by December. The MHA site now allows NGOs to file returns electronically, a welcome move. It should help in speedier consolidation.

  • Since 45 per cent of the NGOs have not filed audited accounts, any NGO which does not file accounts for two years should not be allowed to receive further remittances. The bank branch that is authorized to receive remittances should be empowered to ask the NGO for proof of filing annual return.

  • Is the field inspection of books of accounts of a few NGOs good enough to monitor the activities of over 36,000 NGOs countrywide who receive in excess of $3 billion annually?

  • Since that does not seem to be the case, should the ministry of home affairs involve the home departments of respective states? The ministry of home affairs sources say that states have refused to co-operate. The issue should be resolved through a dialogue between the ruling and the opposition parties.

  • The deeper intent behind the Western world remitting thousands of crores (billions) into India annually needs to be probed and acted upon. After all poor people live in the West, the East and also in the Middle East.

  • More importantly should a country growing at 8 per cent-plus per year allow Western NGOs to have such a toehold in India?

  • Would the United States, Germany, the Netherlands, the UAE, and the UK allow Indian NGOs similar freedom as does the government of India?

Speaking in the Rajya Sabha in 2010, whilst moving certain amendments to the FCRA, Home Minister P Chidambaram said that the government would like to ensure "that the foreign money does not dominate social and political discourse in India. There is enough money within India."

Intent exists! However, India needs to improve the monitoring mechanism for funds received.

The author is a chartered accountant and founder www.esamskriti.com.