The Foreign Contribution (Regulation) Act, 2010 (“FCRA”) governs the receipt and utilisation of foreign contributions and grants in India. Over the years, the Ministry of Home Affairs (“MHA”) has brought in changes to the FCRA framework to seek transparency and accountability for Indian NGOs and not-for-profits accessing foreign funding.
Building on this momentum, the MHA introduced the Foreign Contribution (Regulation) Amendment Rules, 2026 (“Amendment Rules”) on June 22, 2026, via notification S.O. 3272(E). These rules have sought to bring in fundamental changes departing from certain core provisions which were prevalent ever since the enactment of the FCRA by introducing a more purpose-specific and geography-specific approval regime, and more importantly, requirement of objectives/ purpose that ensure that foreign funds reach the last mile intended beneficiaries. The Amendment Rules have also introduced greater organisational accountability by enhancing the level of disclosures required from both existing organizations and organizations seeking registration post the introduction of the Amendment Rules.
‘Key Functionary’
One of the changes is the formal definition of “key functionary”, which replaces multiple terms like key functionary, ‘directors or office bearers’, ‘members of executive committee’ or ‘governing council’ used across FCRA and its Rules without precise meaning. The Amendment Rules now provide an inclusive, comprehensive definition covering directors, partners, trustees, Kartas of Hindu undivided families, office bearers, governing body members, and any person exercising control over an association’s management.
This definitional clarity eliminates ambiguity, ensures uniform application of compliance obligations, and levels the playing field for all organisations operating under the FCRA framework. It signals the government’s commitment to governance consistency by holding the persons having ‘control’ accountable for the actions of the not-for-profit organizations.
Foreign Nationals as Key Functionaries
The Amendment Rules now formally codify what was previously only administrative guidance, that associations with foreign nationals (other than those of Indian origin) as key functionaries will ordinarily require specific government approval. The Central Government retains the flexibility to permit exceptions subject to conditions.
This codification brings legal certainty to organisations, replacing informal FAQ-based guidance with a clear statutory provision. It reinforces the principle that India’s civil society organisations should remain rooted in Indian leadership and accountability, while still allowing for globally collaborative models where genuinely warranted.
Purpose-Specific and Geography-Specific Registration
Perhaps the most transformative change is the move toward purpose-specific and geography-specific FCRA registration. Organisations will now need to identify the precise activities they intend to undertake from a defined Schedule and specify the states and Union Territories where they will operate, whereas earlier the scope of the FCRA objectives was wider and generic to cover any cultural, economic, educational, religious or social programmes.
This may be viewed as a progressive reform but with certain ambiguities. It will encourage organisations to operate with a sharper, more deliberate mandate, reducing the risk of “mission drift” and ensuring that foreign contributions are channelled toward clearly defined, on-the-ground impact activities. Donors and beneficiaries alike benefit from knowing exactly where and how funds will be used, and the actual impact generation from such funds. But what will remain to be seen is if activities which otherwise constituted a social, cultural, economic, educational activity but do not fall within the exact scope of the identified activities as currently drafted under the Schedule, or activities which are related or ancillary to the identified activities, will also be considered to be within the scope of permitted activities under FCRA.
Existing registered associations may need to file the details specifying their purpose and geographic scope as part of the annual return to be filed by the end of the year. There is a separate requirement of making a one-time intimation of the specific purpose and geographical location to the Government of India within a period of 1 (one) year from the date of notification of the Amendment Rules.
Instalment-Based Release of Foreign Contributions
The newly introduced Rule 9A brings a structured accountability mechanism for large grants exceeding INR 1,00,00,000 under the prior-permission route. Organisations receiving grants pursuant to a prior permission must now demonstrate 75% utilisation of a previous instalment, certified by a chartered accountant, before receiving the next tranche.
This is a sound governance measure as it ensures that funds are actively deployed before new tranches are released, reducing the risk of fund accumulation, misutilisation, or diversion. For well-managed organisations with strong financial controls, this process will be straightforward and will further build donor confidence.
‘Reasonable Activity’
For years, the concept of “reasonable activity” under Sections 14 and 16 of FCRA, a basis for registration cancellation or non-renewal, lacked definition. The new Rule 14A remedies this by establishing an objective threshold: utilisation of at least INR 10,00,000 in foreign contributions over the preceding two financial years.
This is a fair and reasonable standard that protects active, well-functioning organisations from arbitrary scrutiny, while ensuring that inactive or dormant registrations do not persist unnecessarily. It promotes a healthy, active civil society ecosystem where FCRA registration is held by organisations genuinely engaged in impactful work. Smaller grantees or those receiving irregular, project-specific funding may struggle to meet this threshold. Even organisations doing significant charitable work funded domestically could fall short if their foreign contribution utilization dips below the specified threshold over 2 (two) years.
Ultimate Donor Disclosures
The Amendment Rules have introduced enhanced disclosure requirements in the Annual Returns, including social media accounts, detailed activity and project reports, fund utilisation breakdowns, and details of publications brought out by the association or the key functionaries, and, most significantly, details of ultimate donors behind Donor Advised Funds and intermediary remittance vehicles.
The Amendment Rules do not, however, clarify the meaning of the terms ‘Donor Advised Funds’, ‘intermediary remittance vehicle’, or ‘ultimate donor’, thereby creating ambiguity as to the exact nature and extent of the disclosures required. This could also pose questions regarding disclosures in instances where there are multiple donors (and in some cases even anonymous donors) or where the funds are being managed and deployed by professional management teams and donors do not influence the purpose or deployment.
These disclosure requirements could also be to align India’s framework with global best practices in anti-money laundering and charitable fund governance.
The Way Forward
By introducing definitional clarity, purpose-driven registration, transparent fund flow reporting, and objective activity benchmarks, the MHA has laid the groundwork for a more stringent, accountable, focused, and credible civil society ecosystem.
While for some organisations this may be a matter of more compliances and streamlining the compliance processes, for some, these changes could pose significant challenges. It also remains to be seen whether the regulator is likely to bring in more clarity on the ambiguities discussed above through these amendments.
We continue to monitor all developments in this space and remain committed to guiding our clients through this transition.
(Views are personal)
