... a Test of Civil Society’s Freedom?

Regulating voluntary organisations that receive foreign contributions is not new to India. The Foreign Contribution Regulation Act (FCRA), introduced in 1976, was itself rooted in concerns that foreign powers could influence the country’s political and social systems. A new law came in 2010, followed by more stringent provisions in 2020. The amendments proposed in 2026 appear to take this regulatory framework a step further. While preventing foreign interference and protecting national security are legitimate objectives, it is equally important to ensure that an independent civil society is not weakened in the process.

The first fact that deserves attention is the sharp decline in the number of NGOs registered under the FCRA. According to data from the Union Ministry of Home Affairs, more than 22,000 FCRA registrations have been cancelled since 2015. By September 2026, the number of active organisations had fallen to 14,466. Yet the flow of foreign contributions has not declined proportionately. Recent reports indicate that foreign contributions reached about Rs.22,974 crore in 2024–25. In other words, while the number of organisations has fallen significantly, the volume of funds available to the remaining organisations continues to be substantial.

The Government’s concerns cannot simply be dismissed. Foreign contributions must be transparent and accountable. If such funds are used in ways that threaten national security, public order or involve unlawful activities, the Government is justified in taking action. The 2026 provisions also seek more detailed disclosures on the utilisation of funds, donor information, organisational activities and project-wise expenditure. Such transparency, in itself, is not contrary to democracy.

But there is a thin line between regulation and regulation that undermines institutional autonomy. A major concern with the proposed amendment is the possibility that assets created with foreign contributions could come under the control of an officer appointed by the Government if an organisation’s FCRA registration is cancelled or expires. If the registration is not subsequently renewed, such assets could potentially be transferred to a Government department or sold. Powers with such far-reaching consequences require clearly defined standards, independent review and stronger judicial safeguards.

At the same time, dependence on foreign contributions cannot be a permanent solution. India’s domestic philanthropy sector has expanded considerably in recent years. The India Philanthropy Report estimates that private philanthropy reached around Rs.1.43 lakh crore in financial year 2025. Yet the funding requirements of the social sector are growing faster than the resources available. The funding gap was estimated at nearly Rs.16 lakh crore in 2025 and could reach Rs.18 lakh crore by 2030. Domestic philanthropy, therefore, cannot immediately replace foreign contributions.

Corporate Social Responsibility (CSR) represents another important source of funding. CSR expenditure by registered companies reached Rs.22,563 crore in financial year 2025, an increase of 17.5 per cent in a year. Education, skill development, healthcare and sanitation remained among the principal areas of expenditure. But CSR funding is also more likely to flow towards projects that are visible and measurable to companies. Areas such as rights advocacy, independent research, social accountability and issues concerning marginalised communities may not find comparable access to unrestricted funds.

The real question, therefore, is not whether foreign funding should exist or disappear. All forms of funding must be transparent, accountable and lawful. At the same time, neither donors nor funding agencies should acquire a position from which they can determine the independence and priorities of the civil society organisations receiving their support. Treating foreign contributions as inherently suspect is as problematic as accepting them without adequate scrutiny.

Indian democracy needs not only an accountable Government but also an independent civil society. Organisations running schools, hospitals, old-age homes and rural development programmes perform functions different from those working on human rights, environmental protection and social justice. Yet all have a legitimate place in a democracy. The objective of FCRA reform, therefore, should be transparent regulation of funds, not administrative control over civil society.

A more sustainable approach would be to strengthen domestic philanthropy, make CSR more effective, broaden the participation of small donors and establish a relationship of trust and dialogue between the Government and NGOs. Foreign contributions can remain a supplementary source of support for India’s social development, but they should not become its principal foundation. Equally, the growth of domestic funding should not become an excuse to financially weaken independent and critical voices within civil society.

In a democracy, transparency requires regulation; freedom requires protection. The real test of the future FCRA framework will be whether it can uphold both.