By Rasheed Ahmed
Every government has a legitimate interest in knowing who funds organizations working within its borders. Transparency matters. Accountability matters. Preventing fraud, money laundering, terrorism financing, foreign interference, and misuse of charitable funds are legitimate responsibilities of every sovereign state. Few would argue otherwise.
The question is not whether civil society should be regulated. The question is whether regulation strengthens the work of civil society or slowly weakens it.
India’s Foreign Contribution (Regulation) Act (FCRA), first enacted in 1976 and substantially revised in 2010, serves an important purpose. It seeks to ensure that foreign contributions do not compromise national sovereignty, distort public policy, or threaten national security. Organizations receiving foreign funds must register, maintain designated bank accounts, submit audited financial reports, and comply with disclosure requirements. These are reasonable objectives, and most credible nonprofit organizations already maintain audited accounts, donor records, and internal financial controls.
The Government also deserves credit for modernizing the administration of FCRA through the launch of the new FCRA 2.0 digital portal. A single online platform for registrations, renewals, reporting, and compliance has the potential to reduce paperwork, improve transparency, standardize procedures, and make compliance more predictable for both regulators and nonprofit organizations. Technology, however, should simplify regulation—not merely digitize complexity. The true measure of reform is whether organizations spend less time navigating procedures and more time serving the public.
Foreign philanthropy has long contributed to India’s development. Much of this support comes from the Indian diaspora, whose financial contributions are often accompanied by expertise, professional networks, technology, and institutional partnerships. Recent amendments expand reporting obligations, require greater disclosures, and provide the Government with broader administrative powers. Greater transparency is a legitimate goal. The concern is whether the cumulative compliance burden remains proportionate to the risks it seeks to address.
Large organizations may absorb additional compliance costs by hiring lawyers, accountants, and compliance officers. Small community-based organizations rarely have that luxury. Every additional form, disclosure, approval, or renewal consumes time and resources that would otherwise be devoted to teaching children, treating patients, conducting research, or delivering community services. Good regulation should distinguish between organizations that present genuine risks and the overwhelming majority that have demonstrated years of responsible public service. The objective should be smarter regulation rather than simply more regulation.
Public confidence also depends on the consistent and impartial application of the law. In recent years, various nonprofit organizations, including those serving religious minority communities, have publicly expressed concern regarding cancellations, non-renewals, and prolonged delays in FCRA approvals. Regardless of the merits of individual cases, public confidence is strengthened when regulatory decisions are transparent, timely, and based on clearly articulated legal standards.
The new digital portal provides an opportunity to strengthen that confidence. It should evolve beyond a compliance platform into a transparency platform. Alongside application tracking, it should publish , to the extent consistent with national security, privacy, and applicable law, information such as the grounds for cancellations, non-renewals, significant delays, and the status of appeals. Organizations should also have clear opportunities to respond to deficiencies, contest adverse decisions, and monitor the progress of their applications and appeals. Greater transparency by nonprofit organizations can be complemented, where appropriate and consistent with law, by greater transparency in regulatory decision-making.
India has made remarkable progress in reducing poverty, expanding infrastructure, improving literacy, and growing its economy. Yet the country’s continuing social needs remain immense. Government programs, private philanthropy, corporate social responsibility initiatives, community organizations, and diaspora-supported institutions each contribute differently to meeting those needs. They should be viewed as partners in national development rather than competing actors.
Development is ultimately about building capacity. A stronger nation has more capable schools, hospitals, research institutions, community organizations, volunteers, donors, and local leaders. Regulation should therefore pursue two objectives simultaneously: prevent abuse and enable service.
The Government is right to seek transparency, accountability, and safeguards against misuse of foreign funds. Those objectives deserve broad support. The next step is to ensure that modernization also means simplification, that enforcement remains targeted rather than unnecessarily broad, and that procedural fairness inspires confidence across the nonprofit sector.
A confident nation can protect its sovereignty while encouraging philanthropy. The strongest regulatory system is not the one that collects the most paperwork. It is the one that most effectively deters wrongdoing while enabling honest organizations to devote their energy to educating, healing, researching, and serving the people. Regulation should build institutional and community capacity that complements government efforts and helps meet the country’s vast social needs.
In a nation where public food security programs continue to support more than 800 million people, strengthening responsible civil society and welcoming Indian diaspora philanthropy as a partner in national development is a practical investment. India has long welcomed the diaspora to invest in its businesses and economy.
It can continue encouraging responsible diaspora philanthropy, subject to appropriate safeguards that protect sovereignty and national security, as an investment in its people, institutions, and future.
(Rasheed Ahmed is Executive Director Indian American Muslim Council)
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