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

Hridaya Seva Trust, Pune, holds an FCRA registration certificate and has received a foreign contribution of Rs 40 lakh for a rural health project. Its trustees propose to pass Rs 10 lakh of that foreign contribution to Jan Arogya Samiti, an unregistered local society, so that it can run a camp. Under the Act as it now stands, what is the position?

The transfer is prohibited. Section 7 bars any registered or permitted person who receives foreign contribution from transferring it to any other person. There is no exception for a similar charitable purpose, intimation to the bank, or a percentage limit, so the Trust cannot pass on the Rs 10 lakh.

  1. APermitted, because the recipient is a charitable body working on the same purpose
  2. BPermitted if the Trust informs the bank within thirty days
  3. CPermitted only if the amount is less than 25% of the contribution received
  4. DProhibited, because a registered person who receives foreign contribution cannot transfer it to any other personCorrect

Explanation

Section 7, as substituted in 2020, says no person who is registered or has prior permission and who receives foreign contribution shall transfer it to any other person. The provision has no exception for similar purposes, intimation or a percentage cap. The options allowing transfer on those grounds therefore misstate the law.

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