{"id":124760,"date":"2021-05-12T11:17:03","date_gmt":"2021-05-12T11:17:03","guid":{"rendered":"https:\/\/precoinnews.com\/?p=124760"},"modified":"2021-05-12T11:17:03","modified_gmt":"2021-05-12T11:17:03","slug":"indias-strict-rules-on-foreign-aid-snarl-covid-donations","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/indias-strict-rules-on-foreign-aid-snarl-covid-donations\/","title":{"rendered":"India\u2019s Strict Rules on Foreign Aid Snarl Covid Donations"},"content":{"rendered":"
Bake sales on Instagram. Online fund-raisers involving Hollywood celebrities. Pledges of aid from companies like Mastercard and Google. A middle-of-the-night flight by a FedEx <\/span>cargo plane transporting thousands of oxygen concentrators and masks.<\/p>\n India\u2019s devastating surge in Covid-19 cases has galvanized corporations, nonprofit organizations and individuals in the United States into raising millions of dollars and sending medical supplies to the nation of 1.4 billion.<\/p>\n But a sweeping change to India\u2019s decades-old law governing foreign donations is choking off foreign aid just when the country needs it desperately. The amendment, passed by the government of Prime Minister Narendra Modi in September with little warning, limits international charities that donate to local nonprofits.<\/p>\n The effect is far-reaching. Almost overnight, the amendment gutted a reliable source of funding for tens of thousands of nongovernmental organizations, or N.G.O.s, that were already stretched thin by the pandemic. It prompted international charities to cut back giving that supported local efforts \u2014 and supplemented the government\u2019s work \u2014 in fields such as health, education and gender.<\/p>\n The amended law has forced newly formed charities to rush to find NGOs that can accept their donations without tripping legal wires. And it has smothered nonprofits in red tape: To receive foreign funds, charities must get affidavits and notary stamps and open bank accounts with the State Bank of India, which is government-owned.<\/p>\n <\/p>\n \u201cEveryone was caught off guard, especially given the role that NGOs played in Covid relief last year,\u201d said Nishant Pandey, chief executive of the American India Foundation, one of the largest U.S. nonprofits working in India. \u201cTo come with an amendment like that in the middle of pandemic was problematic.\u201d<\/p>\n Mr. Pandey\u2019s foundation, which has raised $23 million for Covid-19 relief efforts, wired $3 million to its affiliate on the ground on May 5 to build 2,500 hospital beds for Covid-19 patients. A week later, the money still hadn\u2019t cleared, Mr. Pandey said. He attributed the holdup to the new bank requirement; funneling aid through a single bank during a time of overwhelming need can make the process frustratingly slow.<\/p>\n The Modi government has said the amended law would strengthen compliance, improve monitoring and bring more accountability to an important source of funding in the nonprofit sector. The government has also encouraged international donors to contribute to official charities, including one called the PM Cares fund, which was founded last year and is controlled by Mr. Modi and other government leaders. The government, however, provides little clarity around how donations will be used.<\/p>\n The Ministry of Home Affairs in New Delhi did not respond to calls or an emailed request for comment.<\/p>\n The new regulations have \u201cparalyzed\u201d India\u2019s nonprofit sector, a group of 13 NGOs said in a letter that was recently sent to various Indian and U.S. government bodies and shared with The New York Times. The regulatory changes have forced NGOs to \u201cdivert scarce time, bandwidth and human resources\u201d toward compliance rather than delivering relief during the pandemic, the letter said.<\/p>\n The signatories \u2014 including the Center for Advancement of Philanthropy, the National Foundation for India and the Center for Social Impact and Philanthropy \u2014 sought a delay or relaxation of the new restrictions during the crisis. \u201cThe organizations best placed to respond to community needs at the grass roots in a timely, agile manner are unable to access these donors,\u201d the letter said.<\/p>\n India\u2019s needs are pressing. It has suffered more than 22 million infections and over 236,000 deaths, but experts say the toll is severely undercounted. Medical oxygen is in short supply. Hospitals are turning away patients. Only a tiny fraction of the population has been vaccinated. Mr. Modi\u2019s government has come under increasing criticism inside and outside the country over its handling of the second wave.<\/p>\n Nongovernmental organizations help provide basic health services in India, picking up the slack in a country where government spending in that area totals 1.2 percent of gross domestic product. The United States spends close to 18 percent on health care. When the pandemic first surged in India, in March 2020, Mr. Modi asked NGOs to help provide supplies and protective gear and to spread the message on social distancing.<\/p>\n At the same time, India\u2019s relationship with NGOs \u2014 a catchall term for the roughly three million nonprofits working across the country, including religious, educational and advocacy groups \u2014 has occasionally been fraught.<\/p>\n Various governments have tried to regulate the flow of foreign aid into the country. The original legislation, called the Foreign Contribution Regulation Act, was passed in 1976 by the government of Prime Minister Indira Gandhi with the aim of limiting foreign involvement in domestic politics.<\/p>\n In 2010, the law was amended to put some curbs on foreign investment. In 2015, a year after Mr. Modi came to power, his government tightened restrictions on some prominent charitable groups including the Ford Foundation, citing national security.<\/p>\n In September, the Indian government raided the premises and froze the bank accounts of Amnesty International, forcing it to close its India operations. Amnesty said the actions were reprisals for criticizing India\u2019s human rights record. The government said the organization had violated India\u2019s rules on foreign funding.<\/p>\n The ties between Indian NGOs and their foreign benefactors had long been symbiotic: Global foundations provided the money, while local nonprofits brought the expertise. They obtained a license under India\u2019s law so that they could accept foreign funds, but relied largely on donations \u2014 called sub-grants \u2014 from foreign nonprofits that worked in India rather than solicited grants directly from abroad.<\/p>\n Last year, about a quarter of India\u2019s NGO funding \u2014 roughly $2.2 billion \u2014 came from foreign donors, according to Bain & Co., the consulting firm. The September amendment, which was met with a backlash from India\u2019s vocal community of activists, changed the landscape drastically.<\/p>\n \u201cIt came into existence so quickly that there was not the kind of public input or eyes on it that could tell you why it came into existence,\u201d said Ted Hart, the chief executive of Charities Aid Foundation of America, an Alexandria, Va., nonprofit. \u201cIt was a shock.\u201d<\/p>\n Charities Aid Foundation\u2019s India counterpart was forced to relinquish a major part of its business model, which involved making grants to smaller nonprofits that could carry out the work, Mr. Hart said. Now, both entities are directly managing the programs they support rather than sub-granting, he said.<\/p>\n \u201cRegulations are happening,\u201d Mr. Hart said. \u201cWe have to comply.\u201d The foundation has recently provided over 75,000 K-N95 masks to state governments and is distributing dry rations to poor communities.<\/p>\n Some nonprofits have resorted to creative workarounds.<\/p>\n Direct Relief, a Santa Barbara, Calif., nonprofit, recently wired $2.5 million to United Way in Bangalore. The funds were raised by an Indian organization called Act Grants from mostly Silicon Valley donors. But Act Grants, which was set up by the country\u2019s start-up community during the pandemic, didn\u2019t have government approval to receive foreign funds. Procuring it would have been time-consuming, said Thomas Tighe, the president and chief executive of Direct Relief, so his firm helped channel the money through United Way.<\/p>\n \u201cThey had supporters but didn\u2019t have a mechanism to get the funds over, so we said, \u2018Let us help you do that,\u2019\u201d Mr. Tighe said. <\/p>\n Direct Relief, which has long worked with FedEx, also partnered with the shipping giant to charter a Boeing 777F to transport supplies to India free of cost.<\/p>\n The Indian diaspora of about four million people in the United States has swung into action. Some have given money to online platforms such as GiveIndia that route money to Indian nonprofits set up to receive foreign contributions.<\/p>\n It took just a few days for Indiaspora, a nonprofit community of mainly Indian-American donors, to raised around $5 million, including $1.6 million through an online fund-raiser in Hollywood.<\/p>\n \u201cThe approach we\u2019ve taken is that the house is burning,\u201d said Indiaspora\u2019s founder, M.R. Rangaswami, a Silicon Valley investor and entrepreneur who lost his sister to Covid-19 in India. But his group is stepping carefully in giving that money away. It decided to stick with a small group of well-established nonprofits to which to direct its funding.<\/p>\n \u201cThe way we\u2019re handling our giving is that we\u2019re making sure that the organizations are F.C.R.A. compliant,\u201d Mr. Rangaswami said.<\/p>\n Nicholas Kulish and Karan Deep Singh contributed reporting.<\/p>\nUnderstand the Covid Crisis in India<\/h4>\n
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