My Query is:
If a NGO organize a workshop with the help of foreign organisation and the funds that comes through them in NGO’s bank (which has no FCRA) Will it be considered as a donation?
The foreign organisation has these funds as a grant from their country to conduct programmes in other countries.
Richa Mohan
Dear Richa,
Your query has raised a number of issues. However I think the core issue that you would like clarified is can you utilise foreign funds for organising a workshop, even if you do not have FCRA (I do not wish to go into the issue of donation vis a vis grant since it is a totally different issue).
Since NGOs have definite social, cultural, eduction, etc. agenda, they need to be registered under FCRA for receiving foreign funds. Confusion whether foreign funds can be received for workshops has arisen from the Explanation 3 given under the definition of Foreign Contribution under FCRA 2010. The explanation states that ‘Any amount received, by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) …. in the ordinary course of his business, trade or commerce….’.
Often when first part of this explanation is read, one tends to interpret that all fee charged are exempt from FCRA. However it is important to read the first part alongwith the second part of the explanation, that the activity is in the ordinary course of business, trade or commerce. Thus if an educational institution charges fees, in its ordinary course of business (i.e. providing education), this is exempt from FCRA. However an NGOs ordinary course of business is not organising workshops, that is the business of an event management company.
Hence an NGO cannot undertake FCRA funds for organising workshops without prior permission or registration. It may be added that Dept has been raising objections on certain Liaison Offices, which organise workshops without having FCRA registration.
rgds
subhash mittal
Thank you so much Sir. Your comments clarifies my point.
Thanks to all the respondents of my query.
Dear Subhashji,
Greetings from Hyderabad!
The reply is very comprehensive and has infact cleared several doubts. The concept of “ordinary course of business” has been emphasized in the explanation put forth by you. But coming to the question of Dept raising objections on certain Liaison Offices, which organise workshops without having FCRA registration, it has been noticed that some of the liaison offices have been giving such workshop grants to the partners / sub-grantee so that the workshop can be conducted by partner on behalf of the donor.
Such workshops are part of the process to achieve the overall objectives of the project. The clarity that I am seeking is that will such cases where the donor is giving grants to the existing partner to conduct workshops to enable achievement of the project objectives also fall under the phrase “ordinary course of business”.
Kindly clarify.
Thanks and regards,
_____________________________________
B V Soma Sastry
Director – Finance and Admin
Centre for World Solidarity
12-13-438, Street No. 1, Tarnaka
Secunderabad 500 017
Andhra Pradesh
At working Iam working as Senior Account & Finance Officer at Consumer Unity & Trust Society (CUTS) , Jaipur.
I agree with Mr.B.V. Soma Sastry.
I think it can be considered as a donation
Rtn.Wg.Cdr.(Retd.)SS Roychoudhury,FIE
Chief Executive Officer.
Hemophilia Federation(India)
A-128,Mohammadpur(Behind Bhikaji Cama Place.)
New Delhi-110066
As per my opinion, if grant received from foreign country to organise a workshop in India that fund not considered as donation. However, fund is given by donor for specially mention for uses of ‘donation’ the fund, if not, fund will be considered as grant.
L N Sharma
Dear Richa Mohan,
Greetings from Hyderabad!
1. NGOs can organize workshops with the help of foreign funds and foreign organization.
2. The funds can be routed through the bank, but as per my understanding:
a. If the fund is received as reimbursement wherein the end utilization is proved, the funds can be credited to either NFC or FC account
b. If the fund is received as grant by the NGO for further utilization, the funds cannot go to Non FC account. They have to be credited to the FC account of the NGO
3. This also clarifies the point of treating the funds as donations.
Thanks and regards,
_____________________________________
B V Soma Sastry
Director – Finance and Admin
Centre for World Solidarity
12-13-438, Street No. 1, Tarnaka
Secunderabad 500 017
Andhra Pradesh
Hi
What are the criteria for a trust to apply / get FCRA…please guide us….. ????
Your’s Sincerely
Ravi Bhushan
OMABM Foundation
Dear sirs,
My short answer on this would be: unless this is fee or salary payable by the overseas donor, yes, it is a donation or grant within the ambit of FCRA rules.
Kt
(T.Kaithang)