India's nonprofit sector facing a crisis? Here’s the inside scoop

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Tata Education Trust, later renewed. This event cast a spotlight on the instability and challenges faced by India’s philanthropies and nonprofits. Shortly after, the Centre for Financial Accountability's parent trust had its Foreign Contribution Regulation Act (FCRA) licence revoked. Many prominent NGOs and think tanks in India are now struggling, along with the communities they serve. In the past few years, the sector has faced administrative hurdles, financial losses, and workforce reductions, retreating from various areas of service. Accurate data on the sector's impact is hard to come by due to the broad definition of civil society organisations, encompassing grassroots groups, large networks, faith-based organisations, research bodies, social movements, and youth groups.

Mapping the nonprofit landscape

In 2012, the Ministry of Statistics and Programme Implementation (MoSPI) conducted a large-scale exercise to map nonprofit organisations (NPOs), identifying 31.7 lakh NPOs from registration records up to 2008 and tracing 6.94 lakh active NPOs through a 2009-10 survey. In November 2022, the Income Tax Department listed 2.52 lakh tax-exempt NPOs, of which 1.64 lakh had valid registration to offer tax deductions to donors. NGOs rely heavily on external grants, and the state has long monitored foreign influence through the FCRA, enacted in 1976.

FCRA purge

The FCRA has undergone several amendments, with all governments scrutinising foreign contributions. The UPA government also cancelled FCRA licences following the anti-nuclear Kudankulam protests. However, the most drastic use of the law began in 2020. All charitable trusts and institutions had to revalidate their registration with the tax department, facing new