Video Summary

[RSTV The Big Picture] NGOs Foreign Funding & Risks

The Supreme Court has recently held that the organisations cannot be branded ‘political’ for aiding a public cause if they use legitimate means to register a protest.
By IT's Video Summary Team
March 14, 2020


  • Introduction
  • Foreign Contribution (Regulation) Act, 2010
  • Ruling by SC
  • Political objectives
  • Why political organisations are debarred funding?
  • Risks involved in foreign funding
  • Questions raised
  • Way Forward
  • Conclusion

NGOs Foreign Funding & Risks

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The Supreme Court has recently ruled that the Centre cannot deprive NGOs of their right to receive foreign money by declaring them as political organisations if they use legitimate means of dissent to support public causes.

Foreign Contribution (Regulation) Act, 2010:

  • Section 5 of the Foreign Contribution (Regulation) Act, 2010 gives the Union government “unchecked and unbridled powers” to declare an organisation as being one of political nature and deny it access to funds from sources abroad.
  • Senior advocate Sanjay Parikh, for INSAF, had argued that the FCRA and its rules allowed the government to indulge in its whims and fancies to deprive organisations of their foreign contributions.
  • He said the terms used in the statute like ‘political objectives’, ‘political activities’, ‘political interests’ and ‘political action’ had no clarity.

Ruling by SC:

  • The Supreme Court held that the Central government cannot brand an organisation ‘political’ and deprive it of its right to receive foreign funds for using “legitimate forms of dissent” like bandh, hartal, road roko or jail bharo to aid a public cause.
  • The Supreme Court observed – “It is clear from the provision itself that bandhs, hartals, rasta rokos, etc. are treated as common methods of political action.”
  • Any organisation that supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared an organisation of political nature.
  • But the foreign funding pipeline could be cut if an organisation took recourse to these forms of protest to score a political goal.
  • It struck a similar balance in the cases of organisations of farmers, workers, students, youth based on caste, community, religion, language, etc.
  • It said their foreign funding could continue as long as these organisations worked for the “social and political welfare of society” and not to further “political interests”.
  • The court also made it clear that organisations used for channeling foreign funds by political parties cannot escape the rigour of FCRA.

Political objectives:

  • However, the court wholesomely agreed that organisations with “avowed political objectives in its memorandum of association or bye laws” cannot be permitted access to foreign funds. Such organisations were clearly of a political nature.
  • The verdict came on a petition filed by Indian Social Action Forum challenging certain provisions of the Foreign Contribution Regulation Act (FCRA), 2010 and the Foreign Contribution (Regulation) Rules of 2011, both of which confer the Centre with “unguided and uncanalised power” to brand organisations ‘political’ and shut down their access to foreign funds.
  • The FCRA 2010 prohibited acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest.

Why political organisations are debarred funding?

  • The purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds.
  • Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected.

Risks involved in foreign funding:

  • Influence: The indirect funding by foreign countries via the NGOs has potential to influence the government’s schemes and implementation of policies.
  • Interference: The pumping in of millions of dollars has been seen in past with a particular motive through NGO route to interfere in the strategic independence of the country.
  • Vested interests: India today has a range of NGOs and organisations which in the pretext of social cause who are running a propaganda against the government machinery and hampering the implementation of schemes with the means of unwelcome protests and strikes.
  • Biased Media: The unregulated foreign funding through NGOs has potential to unnecessary bash the government, shape public narrative and create an atmosphere of fear and rumours in the country.

Questions raised:

  • How much freedom can be given to NGOs on the acceptance of money from foreign sources?
  • How much ruckus in the name of hartals and strikes can be tolerated?
  • What are the rights of the common man affected from the blockades and strikes?
  • Is the money used to fund the NGOs is white money?

Way Forward:

  • Need for a revised Audit mechanism to pump out the details of the foreign funding received by the NGOs.
  • Annual declaration of Audit accounts by NGOS.
  • More transparent laws to monitor the usage of funds by the NGOs.
  • Stringent punishment for showing fraudulent data.
  • Clear definition of overtly political activities and normal activities.
  • Need to set the definition or threshold of legitimate political activities.
  • Banning the NGOs if the activities are contrary to their founding objective.
  • Transparent laws to enhance the degree of democracy in India.


The Supreme court’s decision has try to balance the provisions of FCRA Act and the funding from Foreign sources. However, given the lack of transparency and huge amounts of funds diverted to the NGOs in the pretext of social cause, the need of the hour to formulate the threshold of the political activities by NGOs to be qualified as safe to receive the funds and above which actions must be taken under the FCRA Act, 2010.

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