Foreign funds to NGOs: Why better scrutiny is needed

Sanjeev Nayyar 

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

*Italy, #Netherlands, & Switzerland.

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	Country	2007-08
USA	3433	USA	2928
UK	1131	UK	1269
Germany	1103	Germany	971
Italy	547	Italy	515
Netherlands	513	Netherlands	414
Spain	437	Spain	401
Switzerland	370	Switzerland	364
Canada	303	Canada	276
France	193	France	196
Australia	131	Australia	138
Belgium	124	Belgium	100
Austria	106	Austria	99
Sweden	103	Sweden	89
UAE	146	UAE	79
Ireland	69	Ireland	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.