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CS Professional · CSR and Social Governance · Foreign Funding to Non-Corporate Entities

Asha Seva Trust, Pune, holds an FCRA registration certificate and receives a foreign donation of ₹40 lakh. Its trustees propose to pass ₹10 lakh of this amount to Gramin Vikas Samiti, another local society that has no FCRA registration, to run a village project. Under the Foreign Contribution (Regulation) Act, 2010, what is the position?

The transfer is not permitted. Under the FCRA, a registered person or one holding prior permission that receives foreign contribution cannot transfer it to any other person. The recipient's charitable purpose, small instalments or intimation to the bank do not change this prohibition.

  1. APermitted, because the recipient is a charitable society working in the same field
  2. BPermitted, if the Trust passes the money in instalments below ₹5 lakh each
  3. CNot permitted, because a registered person who receives foreign contribution cannot transfer it to any other personCorrect
  4. DPermitted, provided the Trust informs its bankers about the transfer

Explanation

Section 7 (as substituted in 2020) says a person who is registered or has prior permission and who receives foreign contribution shall not transfer it to any other person. The recipient's charitable nature, the instalment size or informing the bank does not create an exception. So the transfer to Gramin Vikas Samiti is barred.

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