Mega Ltd. has identified Helping Hands, a reputed NGO for executing its CSR activities as an implementation agency. However, one of the directors suggested it would be better if the company considers to go for a FCRA due

The Foreign Currency (Regulations) Act, 2010 (FCRA 2010), read with the Foreign Contribution (Regulation) Rules 2011(FCRR, 2011), as amended from time to time were enacted to regulate the inflow of foreign funds received by NGOs. The FCRA, 2010 replaces the erstwhile Foreign Contribution (Regulation) Act of 1976. The FCRA legislation state that an organization cannot receive funding from a foreign source, unless it is registered under the Foreign Currency (Regulations) Act, 2010 or has obtained specific permission for receiving such foreign contribution for a specific project. Also, the registered NGOs need to comply with various post-registration/ permission requirements, as detailed in the provisions of the FCRA 2010 and FCRR 2011. It is necessary of the entities who receive foreign funding should review the updated FCRA norms and meet their compliance obligations meticulously to avoid any regulatory actions. The FCRA Due Diligence through a proper verification of the compliance status of the NGO gives a comfort to the company that if the NGO is chosen as the implementing agency for the CSR Activities of the Company, the activities done by the MGO for the company shall be within full compliance of FCRA legislations. The key aspects of the FCRA Due Diligence could be summarised as follows: Scope of the Act on NGO's Activities: FCRA Legislation is applicable only if the NGO received foreign contributions. Registration & Prior Approval: If the NGO has received foreign contributions, then it needs to be verified if the NGO has obtained Registration or has it obtained specific prior permission for the foreign contributions received by it and whether the underlying conditions, prescribed for such registration/prior permission are being complied with or not. Reporting Requirements: All NGOs receiving foreign contributions are required to file periodical returns with the FCRA Division of the Ministry of Home Affairs. All NGOs are required to submit their annual return. This return has to include all the details of the contributions received, namely: Source and manner in which it is received; Purpose for which it was received; and, Manner of usage of the contributions. It is necessary for the entities who receive foreign funding should review the updated FCRA norms and meet their compliance obligations meticulously to avoid any regulatory actions. As once an entity appears under the government scanner for non-compliance, such organizations may face all manner of restrictions and regulatory obstacles. Due diligence of the NGO can be done by reviewing these annual returns and other compliances under the FCRA.