The central government has started cracking down on the misuse of funds by NGOs in India, after an extensive audit. This is a good step towards better accountability, says Manu Shrivastava
Asection of the civil society in India is a cautious lot now. The Indian government has strengthened its noose on the activities, operations and funding, particularly foreign funding, of NGOs to regulate and ensure transparency in the sector that has managed to stay away from government scrutiny and the public eye.
Staggering numbers
In 2015, an affidavit filed by the CBI in the Supreme Court before a bench led by Chief Justice of India H.L. Dattu, revealed the presence of a startling 29 lakh NGOs in India. This data was compiled from 26 Indian states (Karnataka, Telangana and Odisha did not submit the information), and was part of a ‘first’ such exercise following a 2013 Supreme Court order in response to a PIL filed in the Apex Court. An additional 82,000 NGOs were registered in the seven Union Territories (UTs) of India, of which Delhi alone had 76,000 registered NGOs.
This staggering number meant there is one NGO for every 400 people, in a country with one policeman for 709 people. This also meant that the number of NGOs in India is more than double the number of schools, and 250 times the number of government hospitals! The CBI affidavit also stated that this number could go up once information from the remaining three states is received.
More importantly, only about ten percent of the registered NGOs in the states filed their annual income and expenditure statements, i.e., only 2,90,787 of the 29,99,623 registered NGOs file their returns. Of the total number of NGOs in the UTs registered, only 50 file their annual financial statements.
In its efforts to ascertain whether NGOs are complying with the accountability norms by filing their balance sheets, etc., the CBI reported that some states lack the necessary laws to enforce transparency in the financial dealings of the civil society. For example, the 3.7 lakh NGOs in Kerala do not file returns, as it is not mandatory to do so.
Lack of a proper auditing process to track funds dispersed by the government and those received from foreign entities has served as a catalyst in the mushrooming of thousands of NGOs engaged in misuse of funds for personal interests and advantage, money laundering, misappropriation of public money, even anti-national activities.
There is also a growing segment of ‘virtual’ NGOs that exist only in files, with no real grassroots existence. The expertise lies in drafting reports and proposals to show ‘problems’ in the areas where donors are willing to ‘invest’. So basically, ‘real’ issues are created to attract interest of rich foreign donors.
Then there are NGOs that may have a substantial grassroots presence with a strong stakeholder network and working on ‘real’ issues on the ground. Many such NGOs are increasingly diverting their personnel and resources on ‘participating’ in ‘stakeholder’ conferences organised by the United Nations, its subsidiary bodies or other organisations around the world to feed ‘grassroots realities’ into global discussions. Unfortunately, mere participation, with or without a fruitful outcome, is portrayed and perceived as accomplishment by the fraternity. This is preceded and followed by ‘managing’ accounts where expenses are often misrepresented and misappropriated for personal enrichment, improving institutional infrastructure, travel expenditure, etc.
The real purpose?
Across the world, civil society has often been used by foreign entities to destabilise countries and regions. India is no exception. Foreign funds received by NGOs are regulated by the Foreign Contribution Regulation Act (FCRA). In 2015-16, Christian NGOs received the highest amount of foreign contributions, mainly diverted to two organisations in Kerala. The Ayana Charitable Trust in Kerala received the highest foreign funding in India amounting to ₹ 826 crore. With stricter regulations and implementation, foreign funds flowing into the country has declined sharply. By December 2017, following a crackdown on NGOs violating FCRA regulations, foreign funding received by non-profits in India fell from ₹ 17,773 crore in 2015-16 to ₹ 6,499 crore in 2016-17 (a decline of ₹ 11,274 crore).
Originally and ideally, the civil society is an instrument to bridge the gap between development goals and grassroot-level implementation, and a stakeholder-driven critique of government policies. However, a scrutiny of finances and accounting, increasing transparency and stricter regulations are resisted on the pretext of “government interference”, “control” and a way “to suppress dissenting voices”. The Ministry of Home Affairs (MHA) had cancelled the licences of 18,868 NGOs between 2011 and 2017, of which 4,842 NGOs had lost their registrations in 2017.
In the past few years, many governments including those of Israel, India, Russia, Hungary, Ethiopia have been implementing mechanisms to curb foreign contributions to domestic NGOs. Owing to dependence and habit of excessive foreign funds, many NGOs often forego the ‘real’ issues of their stakeholders and align their goals with the interest of the donors. Several NGOs, for example, have caused hindrances to developmental projects in the country marring growth and fuelled protests at the behest of their foreign donors causing instability.
There are approximately 25,000 active organisations registered under the FCRA, 2010. Foreign contributions worth ₹18,065 crores were received by such organisations during financial year 2016-17. The government has aggressively and meticu- lously cracked down on NGOs receiving and misusing foreign funds. The Ministry of Home Affairs issued an order that said “for offence punishable under Section 37 for trans- ferring any foreign contribution to any other person in contravention of Section 7 of the Act, a penalty of ₹ one lakh or 10 per cent of such transferred foreign contribution, whichever is higher.”
Several associations and NGOs of prominence have come under the scanner of the government and have been issued notices. These include Delhi University, IGNOU, JNU, ICAR, IIT Madras and famous international NGOs such as Ford Foundation and Compassion International. In December 2016, the MHA cancelled the renewal of FCRA licenses of Greenpeace India for FCRA violation. Most recently, the MHA filed a complaint against corporate lobbyist Deepak Talwar and his NGO Advantage India for alleged misuse of foreign funds of about ₹ 90 crore, criminal conspiracy and forgery. The government is keeping up with the pace and scale of misuse of foreign funds and public money meant for developmental activities. The launch of ‘Online Analytical Tool’ by the MHA on 1 June 2018 to monitor flow and utilisation of authorised foreign contributions is a step further in the direction.
Asection of the civil society in India is a cautious lot now. The Indian government has strengthened its noose on the activities, operations and funding, particularly foreign funding, of NGOs to regulate and ensure transparency in the sector that has managed to stay away from government scrutiny and the public eye.
Staggering numbers
In 2015, an affidavit filed by the CBI in the Supreme Court before a bench led by Chief Justice of India H.L. Dattu, revealed the presence of a startling 29 lakh NGOs in India. This data was compiled from 26 Indian states (Karnataka, Telangana and Odisha did not submit the information), and was part of a ‘first’ such exercise following a 2013 Supreme Court order in response to a PIL filed in the Apex Court. An additional 82,000 NGOs were registered in the seven Union Territories (UTs) of India, of which Delhi alone had 76,000 registered NGOs.
This staggering number meant there is one NGO for every 400 people, in a country with one policeman for 709 people. This also meant that the number of NGOs in India is more than double the number of schools, and 250 times the number of government hospitals! The CBI affidavit also stated that this number could go up once information from the remaining three states is received.
More importantly, only about ten percent of the registered NGOs in the states filed their annual income and expenditure statements, i.e., only 2,90,787 of the 29,99,623 registered NGOs file their returns. Of the total number of NGOs in the UTs registered, only 50 file their annual financial statements.
In its efforts to ascertain whether NGOs are complying with the accountability norms by filing their balance sheets, etc., the CBI reported that some states lack the necessary laws to enforce transparency in the financial dealings of the civil society. For example, the 3.7 lakh NGOs in Kerala do not file returns, as it is not mandatory to do so.
Lack of a proper auditing process to track funds dispersed by the government and those received from foreign entities has served as a catalyst in the mushrooming of thousands of NGOs engaged in misuse of funds for personal interests and advantage, money laundering, misappropriation of public money, even anti-national activities.
There is also a growing segment of ‘virtual’ NGOs that exist only in files, with no real grassroots existence. The expertise lies in drafting reports and proposals to show ‘problems’ in the areas where donors are willing to ‘invest’. So basically, ‘real’ issues are created to attract interest of rich foreign donors.
Then there are NGOs that may have a substantial grassroots presence with a strong stakeholder network and working on ‘real’ issues on the ground. Many such NGOs are increasingly diverting their personnel and resources on ‘participating’ in ‘stakeholder’ conferences organised by the United Nations, its subsidiary bodies or other organisations around the world to feed ‘grassroots realities’ into global discussions. Unfortunately, mere participation, with or without a fruitful outcome, is portrayed and perceived as accomplishment by the fraternity. This is preceded and followed by ‘managing’ accounts where expenses are often misrepresented and misappropriated for personal enrichment, improving institutional infrastructure, travel expenditure, etc.
The real purpose?
Across the world, civil society has often been used by foreign entities to destabilise countries and regions. India is no exception. Foreign funds received by NGOs are regulated by the Foreign Contribution Regulation Act (FCRA). In 2015-16, Christian NGOs received the highest amount of foreign contributions, mainly diverted to two organisations in Kerala. The Ayana Charitable Trust in Kerala received the highest foreign funding in India amounting to ₹ 826 crore. With stricter regulations and implementation, foreign funds flowing into the country has declined sharply. By December 2017, following a crackdown on NGOs violating FCRA regulations, foreign funding received by non-profits in India fell from ₹ 17,773 crore in 2015-16 to ₹ 6,499 crore in 2016-17 (a decline of ₹ 11,274 crore).
Originally and ideally, the civil society is an instrument to bridge the gap between development goals and grassroot-level implementation, and a stakeholder-driven critique of government policies. However, a scrutiny of finances and accounting, increasing transparency and stricter regulations are resisted on the pretext of “government interference”, “control” and a way “to suppress dissenting voices”. The Ministry of Home Affairs (MHA) had cancelled the licences of 18,868 NGOs between 2011 and 2017, of which 4,842 NGOs had lost their registrations in 2017.
In the past few years, many governments including those of Israel, India, Russia, Hungary, Ethiopia have been implementing mechanisms to curb foreign contributions to domestic NGOs. Owing to dependence and habit of excessive foreign funds, many NGOs often forego the ‘real’ issues of their stakeholders and align their goals with the interest of the donors. Several NGOs, for example, have caused hindrances to developmental projects in the country marring growth and fuelled protests at the behest of their foreign donors causing instability.
There are approximately 25,000 active organisations registered under the FCRA, 2010. Foreign contributions worth ₹18,065 crores were received by such organisations during financial year 2016-17. The government has aggressively and meticu- lously cracked down on NGOs receiving and misusing foreign funds. The Ministry of Home Affairs issued an order that said “for offence punishable under Section 37 for trans- ferring any foreign contribution to any other person in contravention of Section 7 of the Act, a penalty of ₹ one lakh or 10 per cent of such transferred foreign contribution, whichever is higher.”
Several associations and NGOs of prominence have come under the scanner of the government and have been issued notices. These include Delhi University, IGNOU, JNU, ICAR, IIT Madras and famous international NGOs such as Ford Foundation and Compassion International. In December 2016, the MHA cancelled the renewal of FCRA licenses of Greenpeace India for FCRA violation. Most recently, the MHA filed a complaint against corporate lobbyist Deepak Talwar and his NGO Advantage India for alleged misuse of foreign funds of about ₹ 90 crore, criminal conspiracy and forgery. The government is keeping up with the pace and scale of misuse of foreign funds and public money meant for developmental activities. The launch of ‘Online Analytical Tool’ by the MHA on 1 June 2018 to monitor flow and utilisation of authorised foreign contributions is a step further in the direction.