Comparative analysis of foreign contribution regulatory mechanisms in India, its neighbours

povertyBy Siddharth Awadhoot

The recent developments in the Foreign Contribution Regulation Act (FCRA) regime and strengthening of restrictions and regulations by the Central Govt. has raised many eyebrows, including the UN. Looking at the foreign contribution regulations in the neighboring countries of India like Sri Lanka and Bangladesh, it is interesting to point out that something similar has been going on in these countries as well, the Governments are curbing the foreign donations and imposing restrictions and broadening the scope of discretionary powers for rejecting the applications to receive foreign funds, it is further interesting to note that despite the ongoing tussles between CSOs and the governments, such restrictions have been imposed in the past decade only.

It can be easily seen that there is a trend in curbing foreign donations of the NGOs by Governments across the globe, either laws allowing Government authorities to monitor and regulate foreign funding have already been incorporated or are in process just as India. The situation pertaining to regulation and monitoring of foreign funding in Sri Lanka is in process while a bill has already been passed in Bangladesh and Nepal allowing the authorities to regulate and cancel foreign funding of NGO with wide discretionary powers.

There are certain other countries in across the globe which are in the process of doing the same by incorporating new domestic laws that are contrary to the spirit of Freedom of Association under ICCPR. It is important to be noted that Nepal, Sri Lanka and Bangladesh have signed and ratified ICCPR just like India.

 Foreign Contribution Regulatory Laws in Sri Lanka

Article 14 of the Sri Lankan Constitution enshrines Freedom of Speech, Assembly, Association, Occupation, Movement[1] with reasonable restriction in interests of national security, national economy, public order, health and morality as given in Article 15.[2] Sri Lanka signed and ratified ICCPR on 11th June 1980 and Optional Protocol in 1997.[3]

NGOs are registered in Sri Lanka under 5 different Acts,

  1. Societies Ordinance of 1891;[4]
  2. Companies Act 2007;[5]
  3. Cooperative Societies Act of 1992;[6]
  4. Voluntary Social Service Organizations Act of 1980; or[7]

This is more or less similar to that of India, India follows the same procedures for the registration of NGOs and NPOs.

Usually these Acts mention about all the requirements pertaining to management of auditing or financial receipts, funding etc. Yet, there have been reports and announcements regarding incorporating laws requiring additional scrutiny and reporting in receiving foreign aid by NGOs.[8] There have also been various reports criticizing authorities trying to control NGOs and their activities in Sri Lanka in terms of a very complicated political context, there have been changes in regulations related to funding of NGOs due to various political situations arising during Tsunami which witnessed greater inflow of foreign funds mostly channeled through International NGOs.[9]

However, political groups especially the majority community that were hostile to NGOs, for reasons related to self-interest and insecurity tried to establish the arguments of imposing religious beliefs and harming national security using foreign aid. In the Budget of 2005, an amendment in Inland Revenue Act deemed 3% of the aggregate amount received by an NGO as profit for the purpose of taxation. The Act was further amended in 2007 and 2008 continuing the policy of taxation.[10]

In April 2014, President of Sri Lanka Mahinda Rajpaksa said that the government is planning to incorporate laws to bring the funding received by the NGOs under direct scrutiny of the authorities who will have the right to review the funding received by them.[11]

In July 2014, National Secretariat for NGOs’ Director Saman Dissanayake told Ceylon today announced that it is enacting a new laws that mandate all the Not for Profit Organizations to register under Ministry of Defense or their bank accounts will be closed, barring them from receiving foreign funding.[12] He also restricted NGOs from participating in Media Activities[13] which was criticized by the US Department of State on grounds of Freedom of Association and Free Speech.[14] Foreign funding is an essential part of Freedom of Association as stated in the UN response to India over FCRA.[15]

After this law is passed, the foreign funding shall be monitored more closely just as it is done in India. Seems like Sri Lanka is following India’s steps when it comes to regulating foreign donations.

Foreign Contribution Regulatory Laws in Bangladesh

NGOs in Bangladesh are registered under the following Acts:

  1. The Societies Registration Act, 1860,[16]
  2. The Trust Act, 1882,[17] &
  3. The Companies Act, 1913[18] (Amended in 1994)[19]

Certain other Regulatory Laws have also been passed with time, these laws have encouraged registration under government agencies despite being registered in the abovementioned Acts. The Foreign Donation (Voluntary Activities) Regulation Rules, 1978 required NGOs to submit some information to the Government in a prescribed form to obtain approval for undertaking projects using foreign aid. [20]

Freedom of Association is enshrined under The Constitution of The People’s Republic of Bangladesh under Article 38 with certain restrictions by law in the interests of morality and public order.[21]

Restriction pertaining to religious, social communal harmony, discrimination on grounds of religion, caste, race, sex and place birth, organizing terrorist act and other objects contrary to the Constitution have been added to form associations after amendment in 2011.[22]

The Parliament of Bangladesh passed Foreign Donations (Voluntary Activities) Regulation Bill in October 2016, amending the 1978’s Ordinance[23] and the 1982’s Act[24] together in it. As per the provisions of this Bill, in order receive foreign contributions in Bangladesh, an NGO has to register with the NGO Affairs Bureau (NGOAB) and seek FD registration[25] just as it is in India under FCRA Regulations for receiving continuous funding, some of the barriers also include approval for each activity for receiving and using foreign funds, they are also required to maintain a separate bank account for receiving foreign funds[26] which is already in practice in India. This bill gives broad powers to the Government Authorities in NGOAB to cancel the registration if ‘malicious’ or ‘derogatory’ statements are found to make against constitution or constitutional bodies.[27]  This bill has received huge criticism from Newspapers, NGOs and International Rights Organizations.[28]

The Observatory for the Protection of Human Rights Defenders has criticized this bill and citing these harsh restrictions (much of this being already practiced in India) is far beyond what is permissible under International Law regulating the right to freedom of Association and especially Article 22 of ICCPR.[29]

Bangladesh ratified ICCPR on 6th September 2000, Bangladesh has not even submit the Initial Report to the United Nations Human Rights Committee, as stated in a ACHR report published in 2014. The report also criticized the 2014 Bill regulating the foreign funding of the NGOs on grounds of poor status of implementation of ICCPR.[30]

Foreign Contribution Regulatory Laws in Nepal

Nepal is an aid dependent neighboring country of India. Under Article 17 of Constitution of Nepal, right to freedom to form association is enshrined.[31] Having signed and ratified ICCPR and Optional Protocol way back on 14th May 1991.[32]

NGOs in Nepal can be registered in District and Administrative offices of Ministry of Home Affairs, Foreign Civil Society Organisations register themselves under the Social Welfare Councils and Ministry of Foreign affairs. Even though being highly dependent on Aid from foreign resources for Social, Economic and Cultural Development the laws regulating activities of NGOs have multiple barriers like mandatory annual re-registrations and audits[33], Annual Reporting, dissolution etc.[34]

Under the Social Welfare Act, Social Organizations and Institution wishing to receive foreign funding shall submit projects and application to council for approval, no assistance will be given if project found ‘against the national interest’[35]. The section however does not define national interest.

In 2014, Government of Nepal released Development Cooperation Policy, it requires development partners to channel all money through Ministry of Finance[36], essentially terminating direct funding of all NGOs, now they have to be registered with Social Welfare Council and seek prior approval, the policy was criticized by International reports stating it appears to violate the “prescribed by law” standard required under Article 22(2) of ICCPR.[37]

A July 2016 report submitted to Government of Nepal by European Union, citing the study on the enabling environment for CSO in Nepal carried out in 2013, drawing attention towards the difficulties faced in accessing foreign funding by CSOs, suggested making regulations pertaining to foreign funding easy and hassle free. In another mandate by UN to Government of Nepal, various issues related to subjecting foreign funding to annual renewal for organizations working on transitional justice issues were highlighted seeking clarifications.[38]

As the analysis suggests, the legal structure of regulating legal identity, accounting, auditing, funding of NGOs is similar and different in India, Bangladesh, Sri Lanka and Nepal on some or other points. All of them having ratified ICCPR and freedom of association being incorporated and enshrined in their respective Constitutions as Fundamental Rights.  However, one thing remains common in all their domestic legislations, which is the shift towards policies that control and regulate foreign funding received by NGOs, violating international standards of prescribing regulations and also thereby violating the spirit of the “Freedom of Association” as per ICCPR.

Across the Globe, reports have been published regarding domestic laws being enacted to monitor and regulate Foreign Funding received by NGOs. Similar legislations have been passed in Israel[39], Ethiopia[40], Egypt[41], Russia[42], and Nicaragua[43] in the past decade. Restrictive measures have been proposed or considered in various countries in 2012-13 across the globe which tend to restrict and regulate foreign funding received by NGOs as per a report on Global Trends in NGO law by ICNL.[44]

[1]Article 14, Constitution of the Democratic Socialist Republic of Sri Lanka, Published by the Parliament Secretariat, Revised Edition 2015

[2]Article 15, Constitution of the Democratic Socialist Republic of Sri Lanka, Published by the Parliament Secretariat, Revised Edition 2015

[3]Ratification Status for Sri Lanka, United Nations Human Rights, Office of the High Commissioner. (See: http://tbinternet.ohchr.org/_layouts/TreatyBodyExternal/Treaty.aspx?CountryID=164&Lang=EN)

[4]Ordinance No 16 of 1891

[5]Act No. 7 of 2007

[6]Act No. 11 of 1992

[7]Act No. 31 of 1980

[8]Edrisinha Rohan, Sri Lanka, The International Journal of Not-for-Profit Law, Volume 12, Issue 3, May 2010

[9]Asian Development Bank, Civil Society Briefs: Sri Lanka, 2015

[10]Section 102, Inland Revenue Act No. 10 of 2006

[11]Library of Congress, Global Legal Monitor, Sri Lanka: Amendment Planned for NGO Funding Rules, Apr 29 2014 (See: http://www.loc.gov/law/foreign-news/article/sri-lanka-amendment-planned-for-ngo-funding-rules/)

[12]http://www.tamilguardian.com/content/government-close-bank-accounts-ngos-not-registered-mod?articleid=11504

[13]http://www.tamilguardian.com/content/severe-restrictions-placed-ngo-activities-ministry-defence?articleid=11474

[14]http://www.tamilguardian.com/content/us-%E2%80%98concerned%E2%80%99-about-mod-circular-restricting-ngo-activities?articleid=11498

[15]Kiai Maina, Analysis on International Law, Standards and Principles Applicable to the FCRA 2010 and FCRR 2011 by the UN Special Rapporteur On The Rights to Freedom Of Peaceful Assembly and of Association. April 2016

[16]Act No. XXI of 1860

[17]Act No. II of 1882

[18]Act No. VII of 1913

[19]Act No. 18 of 1994

[20]XLVI of 1978

[21]Article 38, Part III, Constitution of People’s Republic of Bangladesh, 1972

[22]Section 16, Constitution (Fifteenth Amendment) Act, 2011 (Act XIV of 2011)

[23]XLVI of 1978

[24]ICNL, Civil Freedom Monitor: Bangladesh, October 2016

[25]OMCT, World Organisation Against Torture, Bangladesh: Restrictions on foreign funding for NGOs must be dropped, December 2014

[26]South Asia Citizen’s Web, Bangladesh: New law regulating NGOs is draconian – say Newspapers, NGOs and international rights organizations, October 2016

[27]The Daily Star, Provision in NGO Bill: NGOs term it oppressive, October 2016

[28]Dhaka Tribune, “Cabinet-approved NGO draft law comes under fire”, 2 December 2014, http://www. dhakatribune.com/bangladesh/2014/dec/02/cabinet-approved-ngo-draft-law-comes-under-fire

[29]Article 22, 1966 International Covenant on Civil and Political Rights (ICCPR), United Nations General Assembly

[30]Asian Centre for Human Rights, Civil and Political Rights in jeopardy in Bangladesh: A shadow report to the United Nations Human Rights Committee on the status of implementation of the ICCPR, 16th March 2015                      

[31]Article 17(2)(d), Part 3, Constitution of Nepal, Published 20th Sept 2015  (2072.6.3)

[32]Ratification Status for Nepal, Office of the High Commissioner, United Nations Human Rights

[33]Associations Registrations Act, 2034 (1979) Act No. 10 of 2034

[34]ICNL, Civic Freedom Monitor: Nepal (See: http://www.icnl.org/research/monitor/nepal.html)

[35]Section 16 and 17, Social Welfare Act, 2049 (1992) Act No. 29 of 2049

[36]Government of Nepal Ministry of Finance, “Development Cooperation Policy, 2014,” (See: http://www.mof.gov.np/uploads/document/file/DCP_English_20140707120230_20140721083326.pdf.)

[37]Rutzen Douglas, Aid Barriers and the Rise of Philanthropic Prtectionism, Internal Journal of Not-for Profit Law. Vol 17 No. 1 March 2015.

[38]Office of the United Nations High Commissioner, Special Procedures of the Human Rights Council. UA G/SO 217/1 G/SO 214 (67-17) Assembly & Association (2010-1) G/SO 214 (107-9) G/SO 214 (53-24) Truth (2011) NPL 1/2013

[39] EU criticises Israel law forcing NGOs to reveal foreign funding (See: http://www.bbc.com/news/world-middle-east-36775032)

[40]Kendra E Dupuy, James Ron & Aseem Prakash (2015) Who survived? Ethiopia’s regulatory crackdown on foreign-funded NGOs, Review of International Political Economy, 22:2, 419-456, DOI: 10.1080/09692290.2014.903854

[41]Egypt Law on NGO Foreign Funding (See http://www.africanews.com/2016/11/22/egypt-law-on-ngo-foreign-funding-the-morning-call/)

[42]ICNL,NGO Law Monitor: Russia, Barriers to Resources (See: http://www.icnl.org/research/monitor/russia.html)

[43]Article 4, The Law to Create the Financial Analysis Unit.

(See: http://www.icnl.org/research/library/files/Nicaragua/ley_uaf_2012.pdf)

[44]Legal and Regulatory Framework for Civil Society: Global Trends in 2012-13, ICNL (See: http://www.icnl.org/research/trends/Global%20Trends%20in%20NGO%20Law%20Final%20October%2016.pdf)

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