There are certain restrictions for NGOs to receive the donation from outside India. The source of money is the important determination in applying Foreign Contribution Regulation Act (FCRA) of 1976 on the recipient NGO. Any foreigner or organization, which is not controlled by Indians, is a 'foreign source’. Some organizations such as World Bank and UN Agencies are not called 'foreign source'.
In order to receive the contribution in any kind of currency or any things from foreign sources NGO needs the approval from Indian government which is called prior permission or they have to register under FCRA (foreign contribution regulation act). Foreign source includes:
i. The Government of any foreign country or territory and any agency of such Government.
ii. Any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification in the official Gazette, specify in this behalf.
iii. A foreign company within the meaning of section 591 of the Companies Act, 1956 (1 of 1956), and also includes-
a. A company which is a subsidiary of a foreign company.
b. A multinational corporation within the meaning of this Act.
iv. A corporation, not being a foreign company, incorporated in a foreign country or territory.
v. A multi-national corporation within the meaning of this Act.
vi. A company within the meaning of the Companies Act, 1956 (1 of 1956), if more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:
a. Government of a foreign country or territory.
b. Citizens of a foreign country or territory.
c. Corporations incorporated in a foreign country or territory.
d. Trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory.
vii. A trade union in any foreign country or territory, whether or not registered in such foreign country or territory.
viii. A foreign trust by whatever name called, or a foreign foundation which is either in the nature of the trust or is mainly financed by a foreign country or territory.
ix. A society, club or other association of individuals formed or registered outside India.
x. A citizen of a foreign country, but does not include any foreign institution, which has been permitted by the Central Government by notification in the Official Gazette, to carry on its activities in India.
Any organization, which has a 'definite cultural, economic, educational, religious or social program', is covered by FCRA. For practical purposes, this definition covers all NGOs and also the unregistered societies like Mahila Mandals. NGO with FCRA registration or prior permission should not give FCRA funds to NGOs which do not have FCRA registration or prior-permission. NRI donations to an Indian NGO may be Indian funds or FC funds. If the NRI holds an Indian passport, then the donation will be Indian funds. If not, then these will be FC funds. The type of bank account or currency does not matter.
i. If you are holding Indian Passport, you are free to donate to any NGO registered in India. Your donation will not be treated as of foreign source.
ii. If you are a non-resident Indian, not holding Indian Passport, you can donate to NGOs that registered under FCRA. Your donation will be treated as of foreign source.
If you wish to donate an NGO that is not registered under FCRA, you may give a letter of intention to donate a specified amount for a specific purpose/program of the NGO to the Central Government of India and the NGO.
NGO need to apply for prior permission, under FCRA act, by attaching your letter of intention. Once prior permission is received by the NGO, then that NGO is eligible to accept your donation.
iii. If you are a citizen of any country other than India, the norms as stated above in point (ii) will apply.
iv. Please verify the NGO for FCRA certificate before you donate.
Go through the other pages for more information of NGO fundraising.