New Delhi: The not-for-profit sector has been hitting the headlines—whether for the offloading of an Indian Greenpeace activist from an international flight or the cancellation of 1,100-plus funding licences in Andhra Pradesh last month.

That the ministry of home affairs (MHA) has developed a great interest in voluntary organizations registered under The Foreign Contributions Regulation Act, 2010 (FCRA) is evident from the steady stream of circulars and orders issued by it and others in the last six months.

In October, the home ministry announced that the non-governmental organizations can’t do transactions of over ₹ 20,000 in cash—a clause which is applicable to only business enterprises under the Income Tax Act.

In December, a Reserve Bank of India (RBI) circular was released, listing NGOs whose funds it said should be monitored by banks. In January, a new circular was released with a list of 10 donor organizations, including Danish International Development Agency (Danida), Mercy Corps, US; Hivos International of the Netherlands; Climate Work Foundation, US; and Greenpeace International.

Any NGO receiving funds from them will now need prior permission of the MHA before they bring in the funds.

In fact, starting 1 April, all organizations registered under the FCRA have to reapply for licence within a year. While licences issued by the MHA in the ongoing year will be applicable for five, those issued before 1 April 2015 will be deemed cancelled from April 2016.

“This is spurred by the need to ensure national security," said Joseph Lui Kham, deputy secretary, foreigners division, MHA. Kham is in-charge of registration of not-for-profits under FCRA.

Lately, this small and obscure division has been throbbing with life.

Most not-for-profit organizations raise funds from third parties, which can be divided into government sources, corporate social responsibility (CSR) initiatives, foreign funding or aid, said Harsh Jaitli, chief executive of Voluntary Action Network India (Vani), which works to promote volunteering. According to Jaitli, since June, when the Intelligence Bureau submitted a classified document to the prime minister’s office (PMO) with a list of NGOs including the Greenpeace International, Amnesty International and CORDAID, accusing them of “stalling" India’s growth and development, the alleged threat perception from the NGOs has become part of the mainstream discourse. Following this, “a fear psychosis was perceptible among organizations across the board (donors and civil society organisations)", says Jaitli.

But Kham, citing the example of Greenpeace India, said, “Such organizations don’t act in favour of national interest. Many not-for-profits are known for money laundering, misusing funds, funding anti-national activities and even stopping development with the help of foreign organizations."

He added that the MHA has people who can corroborate these claims but refused to name them or those of all the organizations in its list, citing security reasons.

“We are reviewing all licences issued till date and are investigating organizations that we have cause to believe are acting against public interest," he said.

“The relationship between civil society and bureaucracy in India is a complex one, characterised by mutual suspicion and hostility. Perhaps this explains the antagonist stance," said N.C. Saxena, a former bureaucrat, who served as member of the erstwhile Planning Commission.

Jaitli believes both Indian and foreign donors will shy away from engaging with organizations which work in governance, environment and human rights in the coming year because “there is an undertone visible within the echelons of the government that questioning the efficacy of policies is not permissible."

But not all believe that predictions of reduction in funding to Indian NGOs are necessarily linked to the regulatory changes taking place domestically.

As Subrat Das, the executive director of the Centre for Budget and Governance Accountability (CBGA), a policy research and advocacy organization based in Delhi, said that funding for non-profit organizations has witnessed a decline over the last decade, mainly from foreign governments (i.e. bilateral aid) and private foreign foundations.

“The fall in funding to India is mostly because of the projection of India as an ‘emerging economic power’ and the deterioration in mobilizing funds for charity and development aid because of the global economic recession. But yes, the situation may worsen because of the deterioration of the regulatory system for non-profit entities in India," Das added.

The regulatory ecosystem for NGOs in India had started deteriorating with the UPA-II government amending the FCRA in 2011 and the Income-Tax Act, making the provisions restrictive and amending the definition of the activities, according to Das.

“The list of ‘blacklisted’ foreign donors makes it quite clear that those working on environment issues and climate change figure prominently in the government’s hit list. Especially organizations which have an alternative vision and definition of growth," said Samit Aich, executive director with Greenpeace India.

Unwilling to share the exact amount of money received by Greenpeace India, Aich said they are able to generate over 70% of their funds domestically, at present.

“But even if the restriction is set on the 30%, which we receive from foreign aid organizations, it will have some impact on the scale of our activities in the coming year," said Aich.

Jaitli said the monitoring and attempt to restrict funding is nuanced: for instance, the government is completely comfortable with service delivery organizations as those NGOs that accept foreign funding to do things like distribute blankets, food and sewing machines. It is less comfortable with those that are using funds to mobilise opinion, or to fund people’s movements.

Vishy Teki, the director of the Hyderabad-based NGO Communication Resource Centre (CRC) which creates content on social issues and believes in mobilising people using new media platforms, said: “Donor organizations are on a defensive mode owing to the threat from the MHA. They will pass through a ‘pause’ mode for some time till the political opposition to the new policies become more visible and vocal on many of the issues raised in public domain. They may not be able to fund any public mobilization efforts on various development issues unless the governance in the country come to terms with positive public dissent."

CRS is funded by the American government agency USAID and the Bill and Melinda Gates Foundation, a charitable organization.

According to Aich, “The government is using the current draconian FCRA laws to cull down on legitimate democratic dissent voices. This intent was proven malafide after Greenpeace India challenged the blockage of its funds by the government earlier this year in the Delhi High Court, which termed the government action “illegal", “arbitrary" and “unconstitutional".

Another such case is over the Indian Social Action Forum (INSAF), an umbrella organization for people’s movements supporting communal harmony and tribal rights across the country. In 2010, the FCRA wing of the MHA froze INSAF’s bank account for 180 days, stating that the forum’s activities are “prejudicial and against public interest". In 2014, the Delhi high court overturned the suspension.

Anil Choudhary, senior member with INSAF, said, “If you are independent and critical of the market and the government, you face the music in the form of regulatory restrictions."

Choudhary added that the real impact of dwindling funds for the not-for-profit sector will only be known at the end of fiscal year 2015-16. “INSAF receives close to ₹ 1-1.5 crore as foreign aid. We use this money to organize meetings, prepare reading material, conduct surveys and advocacy among the 700 member organizations. Each meeting costs us close to ₹ 3-4 lakh, even with people travelling in second-class train compartments. Now, if the government decides not to give us the FCRA licence, our scale of activities will be impacted."

But Saxena believes there are some drawbacks within the not-for-profit sector too.

“While FCRA needs to be liberalized, advocacy groups also need to improve their credibility." He adds whether the level of overall foreign funding comes down with the exit of development aid organisations such as the Swedish International Development Corp. Agency (Sida) will be known in later in the year.

Those working in the sector are hopeful of alternative funding models emerging, though not necessarily through CSR.

Jaitli said firms tend to avoid organizations working in the area of advocacy, governance, environment and human rights.

Aich of the Greenpeace India believes that “funding must be decentralized. Reliance on a few big funders is not sustainable, especially for organizations working on more controversial issues". Teki said this is the most opportune time for Indian civil society to act. “Take the case of the Aam Aadmi Party—its funding is an example where participation of the people moved from issuing cheques to influencing local politics," he added.

Once community-centred funding comes into the picture, the voices of dissent and people’s movements will be harder to stamp out, Teki said.

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