NGOs under closer scrutiny: what the 2026 FCRA changes mean for the sector
New rules for foreign-funded NGOs took effect in June 2026, and a wider amendment bill is before a parliamentary committee. Whatever one's view of the changes, compliance is now a core skill for every organisation that receives foreign funds.
During my years at NITI Aayog I worked closely with the voluntary sector. India's NGOs run schools, health camps, disaster relief and livelihood programmes in places government services struggle to reach. They also depend heavily on careful governance, because trust is their only real capital.
That trust is now being tested by stricter rules. The Foreign Contribution (Regulation) Act, or FCRA, governs any Indian organisation that receives money from abroad. In June 2026 the Ministry of Home Affairs notified amended FCRA Rules. Separately, the FCRA Amendment Bill, 2026 was introduced in the Lok Sabha and referred in August to a 31-member Joint Parliamentary Committee, which has been hearing stakeholders.
What the 2026 Rules change
- Activity- and state-specific registration. Organisations must state exactly what they do and where. Existing registrants have a year to specify the purposes and states they want to keep.
- Religious activity. Foreign funds may support worship, religious education, heritage and community kitchens, but not proselytisation.
- Foreign key functionaries. Organisations with foreign nationals (other than Persons of Indian Origin) as key office-holders will ordinarily not be registered. The definition of key functionary now includes directors, trustees and partners.
- Use of funds. At least 75 per cent of earlier funds must be used before further instalments, and at least ₹10 lakh must be spent on approved activities over two years to qualify for renewal.
- Disclosure. The ultimate donor, websites, social media accounts and publications must be disclosed.
The pending Bill goes further, covering what happens to funds and assets when a registration is cancelled, surrendered or lapses. Supporters see it as closing loopholes; critics, including international rights groups, argue it could restrict legitimate civil society work. The Joint Committee's report will shape the final law.
What well-run NGOs should do now
- Map every programme against the activity categories and states you will register for, and do it well before the one-year window closes
- Review your board and trustees against the wider definition of key functionary
- Track utilisation of each grant so the 75 per cent threshold never delays the next instalment
- Publish clear annual reports and accounts; disclosure is easier when it is already routine
- Keep a single compliance calendar owned by a named person, not spread across programme staff
For companies, the changes matter too. CSR partners with foreign funding will face new constraints, and due diligence on implementing partners should now include their FCRA position.
Regulation and a strong voluntary sector need not be in conflict. The organisations that will do best are those that treat governance not as a burden imposed from outside, but as proof of the trust they ask for.