Non-governmental organizations (NGOs) are non-profit entities working independent of government. UN Department of Global Communications defines an…

Non-governmental organizations (NGOs) are non-profit entities working independent of government. UN Department of Global Communications defines an NGO as “a not-for profit voluntary citizen's group that is organized on a local, national or international level to address issues in support of the public good. Task-oriented and made up of people with a common interest, NGOs perform a variety of services and humanitarian functions, bring citizen's concerns to governments, monitor policy and program implementation, and encourage participation of civil society stakeholders at the community level.” A paper released by World Bank states that NGOs are typically value-based organizations which depend, in whole or in part, on charitable donations and voluntary service. NGOs have become very influential and prominent in world affairs and a substantial chunk of overseas development aid is routed through NGOs. Our country also has a long history of civil society movements with organizations working in diverse fields such as health, education, community services, environment protection, sanitation, drinking water and poverty eradication. With passage of time, foreign funds began flowing to domestic NGOs in India. Although work being done by NGOs has been commendable in diverse areas, it is not without criticism. One of such criticisms relates to issue of foreign donations. It has been argued that foreign funding makes NGOs accountable to fund-providing donors and can pose risk to sovereignty of a country. Foreign contributions in India are regulated under the Foreign Contribution (Regulation) Act, 2010 (FCRA). The objective of such a law is to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest and for matters connected therewith or incidental thereto. DSB Trust is one such organization working in field of preserving ecology and environment. It has been working on environmental issues since last few years and is very vocal and prominent in raising issues. However, the trust is over-zealous in its approach and has sometimes been accused of stalling crucial development projects in guise of protecting environment. It also receives substantial foreign donations from overseas agencies, trusts and its well-wishers and such donations are main source of funding for carrying out activities of trust. The office-bearers of trust met on 25 th March, 2023 to take stock of situation arising from amendments to FCRA law and rules in recent past. One of the office bearers Mr. X lamented about increased compliance burden and changes in manner about receiving foreign contributions. He was also worried that FCRA registration of their trust is going to expire in this year and modalities for renewing FCRA registration may have undergone change due to change in laws and rules. On closer perusal, he finds that FCRA registration of trust is going to expire on 31 st December, 2023. Another office bearer, Mrs. C who is herself an activist, pointed out that legislation has tightened noose around NGOs receiving foreign contributions making it difficult for them to undertake certain types of works and incur certain expenses due to restrictions being made more stringent in respect of utilization of foreign contributions. She is of the view that expenditure relating to writing and filing reports is directly related to trust's activity of preserving ecology and environment and may be out of purview of regulatory restrictions. However, she is unsure about her stand and its legal implications. Mr. Y also agreed with both of them and opined that field programmes cannot be run without systems and procedures in place for supervision, management, policy design and strategy. He had heard about changes in rules relating to transfer of foreign contributions to other NGOs. About 5 years ago, the trust had transferred foreign contributions to smaller NGOs having better reach to the intended beneficiaries of program run by the trust. The office-bearers were in a fix whether foreign contributions received can be transferred to another NGO for running programmes of trust now. During meeting, Mr. Z also chipped in. He also reminisces that there had been changes in rules pertaining to registration of charitable trusts under income tax law in recent past and new procedure of registration was complied with by trust in 2021 by filing application in Form 10A. However, he wants to be clear about modalities of renewal of registration under income tax law whenever it falls due for renewal next time. Besides, the trust is planning to sell during financial year 2023-24 an immovable property held under trust wholly for charitable purposes since last 5 years and whole of proposed net consideration is to be invested in acquiring another capital asset to be held wholly for charitable purposes. The trust has recently appointed their new auditor and tax consultant CA Madhusudan. Mr. Z is of the view that they should consult their tax consultant in respect of these matters for necessary guidance. CA Madhusudan has also to audit account of foreign contribution for year 2023-24 and has to certify various figures pertaining to brought forward contribution at beginning of financial year, foreign contribution received during the year, interest accrued on foreign contribution, balance of unutilized foreign contribution at end of financial year. Further, utilisation of foreign contribution received for the purpose for which trust was registered is also required to be certified. Besides, he is also required to express an opinion on the financial statements of trust for financial year 2023-24.