Can excess FCRA fund be returned back to the donor?

Posted on May 14, 2022 by SRRF

Dear SRRF Team,

I am writing to inquire if any excess funds donated to an FCRA account can be transferred back to the donor?

I am a foreign citizen who had partnered with an FCRA approved Indian non-profit to implement a project in India. I am just an individual not associated with any organization and had donated money from my personal bank account to fund this project. With the project now close to finishing, the organization has unspent funds in their FCRA account that I would like to request back. Can the remaining money be simply transferred back into my personal bank account? I was going through your forum and found conflicting information. Any guidance would be appreciated. 

Thank you. 

Regards,
Anuja Jani 

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4 Responses to Can excess FCRA fund be returned back to the donor?

  1. Dharmesh Patel says:
    May 19, 2022 at 5:05 pm

    Hello
    As Subhash Mittal Ji mention it’s all depend on contract/MOU between donor and FCRA NGO (contractor).
    MOU has written all detail how to use money and what in case of excess or short. If nothing there, then it very difficult for FCRA NGO to return.
    Even for donor it’s very difficult to ask for return with out any written proof. If any foreigner are giving money to FCRA NGO then it’s not Donation but it’s money for particular project and FCRA NGO is just doing work for foreigner.
    We are Canadian Charity and also doing project in India. Mostly we work with vendor and service provider directly instead of FCRA NGO. That way we comply with CRA requirement.
    In past we also did 5 year MOU with FCRA NGO but it’s very difficult to execute project with them while fulfilling CRA & Indian Govt requirement.
    In your case if they are not able to return the money then you can direct them to use it in other project and you do MOU for that next project with them and utilize your money.

    • Subhash Mittal says:
      May 21, 2022 at 7:39 am

      Please note, foreign NGOs are not allowed to directly work in India. RBI has clearly issued instructions that any foreign body corporate (which covers foreign NGOs) whose work falls within the scope of FCRA, must take permission of FCRA to work in India. Any work done through a service contract may violate this law and may put your organisation and the local vendors under the lens of local regulatory authorities.

  2. Subhash Mittal says:
    May 18, 2022 at 10:19 am

    This is one problem which has been created by the FCRA Dept itself. Till a few years back funds could be easily refunded, without referring to the FCRA Dept. Then some NGO, decided that they would take FCRA permission and applied to FCRA Dept. for permission to refund the funds to donor. FCRA Dept took the stand that since there is no provision for refund of funds to donor in the Act, it cannot allow such a refund.

    If one examines the Facts, the FCRA Act is silent on this issue, it does not prohibit refund of funds. How FCRA Dept can prohibit a refund clause between donor and grantee is truly beyond me. If the donor and donee decide that they do not wish to continue the contract that they have entered, as long as there is a clause for refund, FCRA Dept legally is on a very weak ground to refuse permission to refund the funds. This is the basic law of Contract, which FCRA Dept cannot overrule, however practical reality is that since no one has dared to take the Dept to court on this issue, it has been merrily refusing the permission.

  3. Shrirang Bijur says:
    May 14, 2022 at 9:09 am

    There is no provision to return donation in FCRA regulations.

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