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Between a Rock and a Hard Place

The impact of the Amendment to the FCRA 2020 on the arts and culture sector.

By Arundhati Ghosh and Menaka Rodriguez

Much has been written in the past months about the Foreign Contribution Regulation Act (FCRA) Amendment, published in The Gazette of India on September 28, 2020. After the new and contested laws for labour and farmers, many argue that this is the next ‘throttler’. This will severely incapacitate the not-for-profit sector and civil society organisations, preventing them from doing what they do best (and often better than most governments): supporting millions of disenfranchised people: dalits, women, the disabled and those who are vulnerable in our societies including political, social, and sexual minorities. A large part of the arts and culture sector falls under the not-for-profit umbrella and will also feel the impact.

Let us examine the five key aspects of this Amendment and their implications for arts and cultural organisations:

1. No foreign funds received by an NGO can be transferred to anyone: This will impact every medium to large organisation in the sector which gives grants and fellowships to support artistic work, as well as those who work closely to build networking and alliances among smaller organisations and individuals through project-making. The reason given for this new rule is that the funds could be used to possibly threaten the country’s security. This is unfounded, since earlier too there was a restriction: funds could only be transferred to those who had prior permission from the Ministry of Home or an FCRA registration certificate, which meant that these funds could be tracked to the last person receiving it. Also, all FCRA-registered organisations need to report to the Home Ministry every few months on their receipts and disbursements of foreign funds, as well as declare these funds on their own websites. This stringent new rule will make it impossible for larger organisations, which have the bandwidth for fundraising from international organisations and the diaspora, to share that support with grassroots ones. Furthermore, larger organisations which can raise such funds will now be pushed to do their own projects, thus completely shutting off collaborative projects where funds transfer is needed. Most of these opportunities will thereby be lost to the arts and culture sector which flourishes on collaborations, exchanges and sharing of expertise and resources.

2. Only 20% foreign funds can be used for administrative costs: This is a death knell for the sector since the most significant resource on any project for the arts and culture are people, places, and infrastructure, most of which, unless ‘creatively’ accounted for, will show up as administrative costs. For the most part, even in funded projects, people are paid a pittance. They will be further squeezed. Given that most arts and culture professionals are freelancers working from one project to another, this will further shrink available paid opportunities for employment and engagement. It will be impossible to run projects solely based on foreign funds. And since decision-makers of local funds rarely consider the arts a priority in giving, the sector is bound to feel the stress of limited funding. This will impact the ability of the sector to undertake a variety of projects, affecting the arts and culture landscape in the country.

3. FCRA accounts of all organisations will now have to be opened at the State Bank of India’s Sansad Marg branch in Delhi: This means about 20,000 NGOs trying to open and manage bank accounts in one branch of a public sector bank. That is, assuming we all have the bandwidth to do so, and can all do it in time (the deadline is March 31, 2021), in a COVID-19 year when travel is severely compromised. Is this public sector branch prepared to handle this number of new accounts? And for what purpose exactly, when in any case the Ministry of Home has all FCRA-registered organisations reporting to it regularly? This puts in place unnecessary processes and burden on the arts and culture organisations which are already overworked and underpaid, in an environment that is hyper-regulated.

4. Organisations can be stopped from using foreign money with a summary enquiry by the government: This means all arts and culture organisations which are critical of governments and, actively or through the work they do, challenge power, must be cautious of ‘summary enquiry,’ whatever that might mean. If issued, the government will seal the FCRA account of the organisation for 180 days, extendable to another 180. As the provisions and recourse for this are still unclear, this seems extremely arbitrary and harsh. Small- to medium-sized organisations losing six months of funding would mean that they will be unable to support staff or their activities, and this will shut many of those down.

5. The Amendment is implemented as on September 29, 2020; however the rules are not out yet as of end-October: This means that in a year when arts organisations are already under the pressure of the pandemic, the limited funding and programming that exists will be further burdened and hampered by these new restrictions.

An important aspect of the impact of these new rules is that compared to other non-profits — like those in areas like health, education, environment etc. — the arts and culture sector sector depends much more on foreign funds and collaborations than on local contributions. This is because very few foundations, trusts and corporates in India have arts and culture on their agenda for support, as part of their philanthropic activities or corporate social responsibility spending. The limited funds available are already under great pressure due to the effects of the pandemic and its economic fallout.

In short, the long-term impact of the new rules in the FCRA Amendment make the situation for arts and culture professionals more daunting than for others..

PS: Most rules have a caveat that special government permissions can be taken to get around it. But there are no details on how or where this might apply, opening this up to total arbitrary decision-making.

The authors are Arundhati Ghosh (Executive Director) and Menaka Rodriguez (Head - Resource Mobilisation and Outreach) at India Foundation for the Arts, a registered public trust and one of the few nation-wide non-profit grant-making organisations of its kind in India in the culture sector.


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