Sub granting under FCRA

Under the current Foreign Contribution (Regulation) Act (FCRA) framework in India, the answer is no.

The Foreign Contribution (Regulation) Amendment Act, 2020, introduced a strict prohibition on the transfer or sub-granting of foreign funds to any other person or organization, regardless of whether the receiving entity is registered under the FCRA or has prior permission.

Key Points:

• Complete Ban: The law explicitly prohibits the transfer of foreign contributions to any other person or organization. This means an FCRA-registered entity cannot "pass on" or sub-grant funds received from foreign sources to other local entities, such as Self-Help Groups (SHGs), local trusts, or other NGOs.

• Scope: This restriction applies to all "foreign contribution" funds. Under the law, even if you receive funds in Indian Rupees (INR) from a foreign source, those funds are classified as foreign contributions and are subject to these stringent regulations.

• Legal Standing: The 2020 Amendment effectively ended the practice where larger intermediary NGOs would receive a large grant and then distribute it to smaller, grassroots organizations. This has been consistently upheld and further reinforced by subsequent rules and judicial interpretations.

• Consequences of Violation: Non-compliance, including the unauthorized transfer of funds, can lead to the suspension or cancellation of an organization's FCRA registration, the freezing of bank accounts, and potential legal prosecution.

Summary: The law as it stands today does not provide a legal mechanism for an FCRA-registered entity to donate or transfer foreign contribution funds to another entity. Any such transfer would be a violation of the FCRA regulations. You are advised to consult with a legal professional specializing in FCRA compliance for specific guidance on how your organization might structure its operations within these legal boundaries.