Dear Friends,
If a foreign entity wishes to donate to our Corpus, is that allowed under FCRA? If so, are there any special formalities to be followed?
A quick response will be much appreciated.
Thanks & regards,
Ruby
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It is allowed and there should be two parties (donor and implement agency) agreement or MOU necessary, that the funds for the corpus.
Our Auditor is a stickler and also connected to VANI. He is always encouraging us to try and get corpus. We have 50 La of foreign corpus, neighboring organization has crores. I am sure it is fine,
John
—
John Dalton
Dear Ruby,
It is allowed and there should be written confirmation from the donor that the funds are towards the corpus.
Thanks and regards,
B V Soma Sastry
Hi All,
In my view FCRA receipts can be utilized as Corpus. The inflow should be treated as FC & shown as liability side of the balance sheet as Corpus.
The reporting in FC4 is the tricky part.
Option 1: If creating a corpus is assumed to the ultimate utilization of the FC then this can be reported as utilization in 2 (iii) (a) in FC4. This will need a reconciliation of cash balance for internal records if a query is raised by MHA.
Option 2: Ideally once the corpus is created it will be invested in the allowed investments under FCRA & hence the FC then can be reported as investment under 2 (iii) (c). This will eliminate the requirement of reconciliation but will always show the FC unutilized to this extent.
Option 3: Is to report this both as utilization 2 (iii) a & investment (Upon investment) 2 (iii) (c).
To conclude, utilization of FC as corpus is not a challenge but to report it correctly is. Please ensure that the Donor mandate clearly identifies this grant as a grant for corpus.
Critique welcome.
CA Ritesh Koshik
CFOO Sesame Workshop India
Well stated Ritesh. Thx.
Regarding reporting my preference is for Option 2, since funds once invested, it may be difficult to disclose the same as Utilisation. For example, even when we buy assets, movable or immovable, we have to report the same in FCRA Balance sheet, and on disposal the proceeds need to be reflected in FCRA only.
If corpus once shown as utilisation and if investments are disposed, funds rec’d would no longer be reportable under FCRA and therefore could go out of FCRA monitoring.