We have applied for a grant from Australian Government for the building and trial of a new solution in the Healthcare sector.
We have been told that if we do not have FCRA clearance (which we do not have presently), we may need to secure a partner who has the clearance or is exempted from FCRA.
- Is such partnership allowed under the prevalent FCRA rules?
- If yes, under what conditions?
With regards,
Subbu Hegde
Dear Subbu,
An organization cannot receive foreign funds if it does not have a licence under FCRA 2010. With the recent amendments in FCRA, any organization applying for FCRA registration should first open a bank account with the SBI, Main Branch, Sansad Marg, New Delhi. Without the bank account the application will not be considered.
In case you wish to get the money to the account of any other organization which has FCRA registration, then all the documentation will be of that organization and for all practical purposes the said organization will be the legal holder of the project.
Please note that as per the recent amendments to FCRA, inter charity donations have been restricted. Hence the organization who would be receiving the funds will not be able to transfer the funds to your organization. Sub grant agreement is not allowed and the recipient organization will have to directly implement the project.
Secondly, in case your organization enters into a contract with the recipient organization for the implementation of the project, there would be implications with respect to the Income Tax Act. This activity may be construed as business activity and a charitable organization (registered under section 12A of the IT Act) cannot receive commercial income of more than 20% of the total income for the FY. The organization may stand the chance of losing the registration under section 12A.
This is my understanding of the issue with the limited information provided by you.
Thanks and regards,
B V Soma Sastry