Skip to content

CS Professional · CSR and Social Governance

Foreign Funding to Non-Corporate Entities under the FCRA, 2010

Foreign funding to non-corporate entities is governed by the Foreign Contribution (Regulation) Act, 2010. It controls who may accept foreign contribution, how it is received and used, and when it cannot be passed on. To solve questions, identify the person, test it against the prohibitions, then state the section and conclusion.

What this chapter covers

This chapter is about the Foreign Contribution (Regulation) Act, 2010 (FCRA). It applies to the whole of India. It also applies to citizens of India outside India, and to associate branches or subsidiaries outside India of companies or bodies corporate registered or incorporated in India. The Act came into force on 1 May 2011.

The chapter has four parts. First, scope and key definitions. Second, the persons who cannot accept foreign contribution at all. Third, the ban on transferring foreign contribution to another person. Fourth, the practical side: how an NGO receives, holds and uses foreign money and what compliance it must show.

It connects to the rest of the CSR and Social Governance paper because NGOs, trusts and societies are the main implementing partners for CSR and social programmes. Whenever a question involves a non-corporate entity taking money from abroad, this chapter supplies the rules. Expect case-based questions where you apply a provision to facts.

The paper is written and case-based, and FCRA questions suit that format: a short fact pattern, a provision, and a clear conclusion. The rules are specific, with named categories and clear conditions, so a well-prepared student can score reliably. The chapter is also practical for a company secretary, who may advise NGOs, trusts and CSR partners on foreign funding compliance. Weak answers usually come from vague wording, not from difficulty. Learn the exact provisions and you gain an edge.

Foreign Funding to Non-Corporate Entities: topics in the order to study them

  1. 1FCRA 2010: Scope, Applicability and Key DefinitionsStart here. Every later rule depends on who and where the Act covers and on what terms such as foreign contribution mean.
  2. 2Persons Prohibited from Accepting Foreign ContributionNext, learn the categories in section 3 and the Central Government's power under section 9, since these decide whether a person can receive foreign money at all.
  3. 3Prohibition on Transfer of Foreign ContributionOnce you know who can receive, learn the section 7 ban on passing it on, and the related delivery rules in section 3.
  4. 4Foreign Funding to NGOs: Compliance and Practical IssuesFinish with the applied part: the FCRA account under section 17, reporting and case-style issues, which pulls all earlier rules together.

How to prepare Foreign Funding to Non-Corporate Entities

Treat this chapter as a rulebook with lists. Learn the lists exactly, then practise applying them to facts.

  1. Read the Act's scope in section 1 and write down who it applies to: the whole of India, citizens outside India, and overseas branches or subsidiaries of Indian companies and bodies corporate.
  2. Memorise the categories in section 3(1), clauses (a) to (h), such as candidates for election, public servants, judges, members of a legislature, political parties and certain media persons. Use a short mnemonic of your own.
  3. Learn section 3(2) and 3(3) separately. They stop a person from accepting or delivering money on behalf of prohibited persons.
  4. Write the section 9 conditions in your own words. The Central Government can act only if it is satisfied of likely prejudice to sovereignty and integrity, public interest, fairness of elections, friendly relations with a foreign State, or communal harmony.
  5. Learn section 7 and section 17 together: no transfer by a registered person, and receipt only in the FCRA Account, with no other funds deposited in it.
  6. Practise three or four case questions. Use this format: provision, facts, analysis, conclusion. Keep each answer short and exact.
  7. Revise the list of prohibited persons and section numbers a day before the exam, and test yourself from memory.

Common mistakes in Foreign Funding to Non-Corporate Entities

  • Writing that every NGO can freely accept foreign contribution once it has a bank account.

    Fix: State that a person must hold a certificate or prior permission, and must receive money only in the designated FCRA Account.

  • Mixing up the prohibited persons list with the section 9 powers.

    Fix: Remember that section 3 is a direct statutory bar, while section 9 is a power of the Central Government exercised only on the listed grounds.

  • Saying a registered person may pass foreign contribution to another NGO as a sub-grant.

    Fix: Quote section 7: no person registered or with prior permission may transfer foreign contribution to any other person.

  • Putting domestic donations into the FCRA Account.

    Fix: Note the proviso to section 17: no funds other than foreign contribution may be received or deposited in such an account.

  • Quoting section numbers from memory without certainty, or listing the section 3 categories incompletely.

    Fix: Use only section numbers you are sure of. Drill the list of clauses (a) to (h) until you can write it without prompts.

  • Writing general essays instead of the provision, facts, analysis and conclusion structure.

    Fix: Open with the rule, apply it to the named person in the facts, and end with a one-line conclusion.

Last-day revision: Foreign Funding to Non-Corporate Entities

  • FCRA 2010 extends to the whole of India. It also applies to citizens of India outside India and to overseas branches or subsidiaries of Indian companies and bodies corporate.
  • The Act came into force on 1 May 2011 by notification.
  • Section 3(1) bars foreign contribution to candidates for election, public servants, judges, government and government-body employees, legislators and political parties.
  • Section 3(1) also bars certain newspaper persons and persons in audio or audio-visual news and current affairs media.
  • Section 3(2) bars accepting foreign contribution on behalf of a political party or a section 3(1) person.
  • Section 9 lets the Central Government prohibit or regulate only if it is satisfied of likely prejudice to the listed interests.
  • Section 7: a registered or permitted person who receives foreign contribution cannot transfer it to any other person.
  • Section 17: receive foreign contribution only in the FCRA Account at the specified State Bank of India branch in New Delhi.
  • Section 17: other FCRA accounts or utilisation accounts in scheduled banks are allowed. No funds other than foreign contribution may go into them.
  • Banks must report prescribed foreign remittance details, source and manner to the specified authority.
  • Section 38: a repeat convict under section 35 or 37 for acceptance or utilisation cannot accept foreign contribution for five years from the later conviction.
  • The 1976 Act was repealed by section 54, with savings for actions done under it.

Foreign Funding to Non-Corporate Entities practice questions

Foreign Funding to Non-Corporate Entities in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Foreign Funding to Non-Corporate Entities: frequently asked questions

What is FCRA 2010 and who does it apply to?

It is the Act that regulates foreign contribution received in India. It extends to the whole of India. It also applies to citizens of India outside India and to overseas branches or subsidiaries of Indian companies and bodies corporate.

Who is prohibited from accepting foreign contribution?

Section 3(1) lists them, including candidates for election, public servants, judges, members of a legislature, political parties and their office-bearers, and certain newspaper and news media persons. Section 3(2) also bars accepting it on their behalf.

Can an NGO transfer foreign contribution to another organisation?

Under section 7, a person who is registered or has prior permission and receives foreign contribution cannot transfer it to any other person. Write this rule exactly and avoid adding exceptions that you cannot support from the text.

Which account must an NGO use for foreign contribution?

Under section 17, it must receive foreign contribution only in an FCRA Account at the specified State Bank of India branch in New Delhi. It may open other accounts in scheduled banks for keeping or using the money, but no other funds can be deposited in them.

How should I answer a case question on FCRA?

State the relevant provision first. Apply it to the facts and name the person involved. Finish with a clear conclusion on whether the receipt or transfer is allowed.