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

Meera, a Chartered Accountant, advises the trustees of a registered NGO. A trustee suggests that the NGO should regularly pass 30 percent of its foreign contribution to a smaller partner NGO as a sub-grant. Which advice is consistent with Section 7 as substituted in 2020?

The advice should be not to make the sub-grant. Section 7, as substituted in 2020, bars a registered person who receives foreign contribution from transferring it to any other person. It sets no percentage ceiling and no exception for a partner NGO's status or accounts.

  1. AAdvise that sub-granting is allowed if the partner NGO is not registered
  2. BAdvise that sub-granting is allowed with a 30 percent ceiling
  3. CAdvise that a registered person receiving foreign contribution cannot transfer it to any other person, so the sub-grant should not be madeCorrect
  4. DAdvise that sub-granting is allowed if the partner NGO opens an FCRA Account

Explanation

Section 7 now contains a flat bar on transferring received foreign contribution to any other person. It states no percentage ceiling and no exception based on the recipient's status or account. The suggested sub-grant is therefore inconsistent with the Act.

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