So the non-profit you support is raising funds and you are busy reaching out to all your friends. The ones who are settled abroad are particularly targeted. A $100 donation (or its equivalent in INR), while giving huge satisfaction in doing a bit of charity would hardly pinch their pockets there, and make a huge difference here.

It probably would not cross your mind that receiving money from “foreigners” without having FCRA Prior Permission/ FCRA Registration is violating the law and your non-profit can land up in serious trouble. Here is what you need to know when you collect donations from abroad.

Pic courtesy: The Telegraph

What is FCRA?

Foreign Contribution Regulation Act (FCRA) is an act, passed by the Indian Parliament, “to consolidate the law to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”
The FCRA of 2010 is the one currently in force. With effect from May 2011, it replaced the earlier Act of 1976. It is regulated by the Ministry of Home Affairs (MHA), New Delhi.

What is the key meaning of the FCRA Act?

Unless one has FCRA Prior Permission or FCRA Registration, one cannot accept donation (in any currency including INR, even from NRO or NRE acct)/ contribution in kind exceeding Rs 25,000 (excluding personal gifts)/ hospitality/ CSR support—from a foreign source. Salaries, scholarships, payments for services, and the like are excluded.  
“Foreign source” includes:   
– a citizen of a foreign country (includes holder of a non-Indian passport, even if he/she is a PIO/OCI card holder)
– a society, club or other association of individuals formed or registered outside India
– a foreign trust, foundation, trade union
– the Government of any foreign country or territory and any agency of such Government
– any international agency (excluding United Nations or any of its specialised agencies and other agencies specified by the Central Government)
– a foreign company, corporation registered in a foreign country, MNC
– an Indian company with more than 50% foreign ownership.

The detailed act can be seen in the file FCRA2010.pdf.

What is the difference between Prior Permission and Registration?

An organisation can apply for Prior Permission if it does not have registration and if it already has a commitment from a foreign source. The permission, when given, will be for acceptance of foreign contribution, limited to the commitment.
An organisation can apply for Registration without having any commitment from a foreign source. The registration, when given, will be for acceptance of foreign contribution for five years. 

Who can apply for FCRA Registration?

Any “person” having definite cultural, economic, educational, religious or social programme can apply for FCRA Prior Permission or FCRA Registration.
“Person” means Individual, Hindu Undivided Family (HUF), Association and Section 25 Company. For convenience, we shall use the word “organisation”.
The rules talk about submission of three years annual reports and audited accounts, but this is not specified as a condition for eligibility. So an organisation can apply even if it is less than three years old. The organisation should have spent over Rs 6 lakhs towards its objectives, with not exceeding 50% being on administrative expenses. PAN Card is required.  

The following entities cannot apply

– Candidate standing for election
– Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper
– Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government
– Member of any Legislature
– Political party or office-bearer thereof, organisation of a political nature
– Association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form or any other mode of mass communication and individuals associated with it.

How to apply for FCRA Registration?

To ensure that you are successful in your application for FCRA, here are the steps and some useful tips. Before you begin, check that you are eligible to apply “Who can apply for FCRA Registration?”.

Step 1: Check out the FCRA website http://fcraonline.nic.in/ 
Create a login at this link http://fcraonline.nic.in/fc_login.aspx. This would be the one that you will use for eventually submitting your application.
Read the instructions. They can be also seen in the file FCRA_Registration_Instructions.pdf.
You can see a copy of the FCRA Registration application form FC-3 in the file FCRA-rules2011.pdf Pg 23.

Step 2: List the members and office bearers of your association/ trust/ governing body
The format that can be used is below. 

(ON LETTERHEAD)

List of present Members and Office Bearers of (name of organisation)

Though not explicitly stated, FCRA Registration is generally not given if the following are on your list: convicted persons, foreign nationals (passport holders), social activists, journalists and others mentioned under those who cannot apply. 
It is perfectly fine to get such persons to resign before you take the next steps to apply for FCRA Registration. The resignation will need to be backed by the appropriate paper work (such as resolution, filing with the statutory authority, etc.). Copies of these resolutions/forms will need to be submitted along with your registration proof.  
If you wish to include/ exclude members, this is the time to do it because after FCRA Registration is granted, the organisation will need to keep the MHA informed if there are changes by 50% or more.  

Step 3: Pass a resolution of the governing body of the organisation, authorising the registration under FCRA and authorising the Chief Functionary to submit the application on behalf of the organisation 
A sample resolution is below.

(ON LETTERHEAD)

This resolution was passed at the meeting of the Board/ Committee/ Governing Body held on (date) at (time) at (location).

Board/ Committee/ Governing Body unanimously

“RESOLVES THAT necessary action be taken and formalities completed to register the (name of organisation) under FCRA. The Board also authorises (name of chief functionary and designation) to sign and submit all the relevant papers/ documents necessary for effecting the registration, including FC-3.”

Signed by the members and affix seal 

Step 4: Approach your bank to open an FCRA account
The bank will give you a list of documents required to open the account. A zero balance FCRA account will be opened. You will be given an account number but the account will not be activated and no cheque book will be issued. The account number is required to fill in the FCRA Registration application form. Ask the bank to issue a letter stating that an FCRA account has been opened by you, stating the account number and the signatories for operation.

Step 5: Get a recommendation letter from the governmental agency that the organisation works/ interacts with
The format of the letter that can be used is below.

(ON LETTERHEAD OF AUTHORITY)

To whomsoever it may concern

This is to certify that (organisation name), having its registered office at (organisation address), has been engaged in (specify nature of activities eg social/cultural) activities in (name of district) District of (name of state) State for the last (no. of years) years.  

The antecedents of the organisation have been verified and there is nothing adverse against them.

The grant of registration to the aforesaid to accept foreign contribution under the Foreign Contribution Regulation Act 1976/2010 is recommended.

Signed by Recommending Authority with designation and rubber stamp

Step 6: If you are a trust or association/society/company, apply for a certified copy of your trust deed/ registration certificate
This can be obtained from the sub-registrar office/ Registrar of Societies/Companies.

Step 7: If you are an association/society or company – make a copy of the Bye-laws/ Memorandum of Association and/or the Articles of Association as applicable.

Step 8: Get copies of your audited accounts
You will need the audited accounts for the last three years (lower if you have been in existence for less than three years).
Make a list of year-wise total expenses (and also welfare expenses and administrative expenses), and year-wise major activities undertaken by the organisation pursuant to its aims and objectives (within 1000 characters). You will need this for the FC-3 form. For a list of administrative expenses, check the file FCRA-rules2011.pdf Pg 5. 

Step 9: Make a list of the main objects and definite programmes for which the FCRA contribution is to be accepted/ utilised
This needs to be in line with your organisation’s objectives.
You will also need an abridged version (within 200 characters) for the FC-3 form.

Step 10: Compile a report of activities of your organisation
Many organisations prepare an annual report, in which case this will be ready. If you do not have ready reports, you will need to prepare this for the last three years (lower if you have been in existence for less than three years). You need to submit a separate report for each year.
You will need an abridged version of activities (within 200 characters) and areas of operation (within 200 characters) for the FC-3 form. (It is the ultimate test in precis writing! The FCRA website does mention that if the space provided is inadequate, you can include separate sheets along with your application.)

Step 11: Put together other information that you will need to fill in the FC-3 form 
Some may not be applicable to you. Here is the list.
– If the organisation has a parent or sister or subsidiary organisation which is registered under the FCRA then the registration number along with Ministry of Home Affairs file number
– If the organisation has submitted any application earlier then its reference number
– If the organisation has received any foreign contribution with or without the prior approval of the Central Government, then the details

Step 12: Put together the other documents that you need for submission
Some may not be applicable to you. Here is the list.
– Copy of any Journal or other publication of the organization
– Copy of PAN Card
– Copy of Certificate of registration u/s 12AA of the I.T. Act / I.T. exemption (for donors) u/s 80G
– Copy of FCRA Registration of parent or sister or subsidiary organisation
– Copy of Prior Permission/ earlier FCRA Registration.

Step 13: Fill up the FC-3 form online
You will be able to fill all the required information, except the Demand Draft details. Fill in dummy data here so that you can proceed to the next pages.
One point to note – when typing in the open-ended answers online, you may get error messages. You may have to exclude characters (like commas, full-stops, hyphens, etc.) and/or save and get back. (The online form is a bit temperamental!)  
Save as draft. Do not submit. Take a print out to proof read. Make changes as required. Once you are satisfied, you are ready to take the last few steps.

Step 14: Make the demand draft
Rs 2,000/- in favour of “Pay and Accounts Officer, Ministry of Home Affairs”, payable at Delhi.

Step 15: Submit the FC-3 form online and print hard copy
Update the Demand Draft details, make any other changes you want, and then submit the form online. After this, download the submitted form and print. You will need 3 originals and one copy for your records. Note the file number.

Step 16: Make a covering letter
Now that your application has been submitted and you have all the necessary documents, make a covering letter addressed to MHA (as per the address on the FC-3 form). Write the file number in your letter. Also, in the letter, list the documents that you are enclosing, and give each a serial number. A format of the list that can be used in the covering letter is as below.  

Please find herewith the following documents required for FCRA Registration, including this covering letter:

Step 17: Bind and post
Arrange all the documents in serial number order. The Chief Functionary should self attest the copies with rubber stamp. Make sure you have a full set for your records. Bind using an appropriate method (grip binder is convenient). Send by Registered Post/ Speed Post with acknowledgement due, to reach within 30 days of online submission. Track on Indiapost.

Step 18: Due diligence
Be ready for a spot inspection as soon as your application is received. If all is fine, your organisation should get the FCRA Registration in about 60 days after the inspection.

Tracking your application
This can be done online using the same username and password mentioned at Step 1. 

Update, June 2015
FCRA Department has fixed 5th of each month (or the next working day) for solving problems related to registration or prior-permission. The meeting will take place in room no. A-104/1 1st floor, NDCC-II Building, MHA, Jai Singh Road, from 10 a.m. to 1 p.m.
Only genuine representatives of the concerned NGO are allowed to meet the Director. You should make an appointment in advance. For this, send an email to ravinder.prasad56@nic.in. Remember to mention the following in the email:
1. Name and address of association
2. Name of the visitor
3. Application number (for registration / prior-permission)
4. Issues for discussion
Such meetings are often helpful in clarifying doubts, or getting your application moving forward, if it is stuck for any reason. Please make the best use of this opportunity.
Ref: F.No. 21022/23/(41)/2015-FC-III, dated 18-Jun-15, available at www.AccountAid.net (20-Jun-15)

References
FCRA website