Charity comes home to India with a $2-b kitty

It’s not just equities alone. Foreign money is pouring into religious and charitable institutions, too, in the country, with overseas donations crossing the $2-billion mark in FY06 — the second year in succession.

Among the religious institutions, which received a sizeable amount of foreign charity money, include major temple trusts like Tirupati Temple in Andhra Pradesh, Jagannath Puri Temple in Orissa and Kolkata-based Missionaries of Charities. According to the latest figures available with the Reserve Bank of India (RBI), gifts and donations by foreigners to Indian charitable and religious institutions amounted to $2 billion in FY06, after peaking to $2.1 billion in FY05.


Interestingly, charity money to trusts is at a high when the government itself is going slow on accepting foreign largesse. Donations and grants through other routes, that is, by other government and multilateral agencies and NRIs to the government has not exceeded $70 million in the last seven years.

Donations include only those made by foreigners in their individual capacity (not through trusts or any such entities), giving money to only entities registered as charitable or religious institution. Analysing the long-term trend, inflows have been higher in years of high economic growth.

Though donations have, by and large, remained way below the $1-billion level over the last 15 years, they had crossed $1 billion in 1995-96 when the economy had grown over 8% then. And again since FY05, with economy clocking in a growth rate of over 8%, the inflows again crossed the $2-billion mark.

Reported as `personal gifts/donations to charitable and religious institutions in India’ as part of private transfer — a section in the current account in balance of payments figures, the inflows are not in central bank’s jurisdiction. While most other forex inflows are monitored under the Foreign Exchange Management Act(FEMA), private donations come under the purview of Foreign Contributions Regulations Act (FCRA), under home ministry.

Bankers say that as per the existing guidelines, they can open accounts and accept such money only after prior approval of the home ministry and from entities registered with the home ministry for the purpose. There are 35,000 such registered entities. In view of the anti-money laundering concerns, these norms have become more stringent, they say.

In the last few years, a number of high net worth individuals, comprising both the Indian Diaspora and others, are known to have made huge donations to various charities in the country in their individual capacity. Some of which is also routed as grants for micro-finance. In FY05, a sizeable amount of charity money is known to have come into the country in aid for tsunami victims after December 2005).

And in terms of remittance facilities available to donors, a number of banks and money transfer outfits have tied up with temples and other religious entities to facilitate online and fast transfer of funds. However, the government is in the process of further tightening the norms, including the definition of donations as well as avenues as to where the funds can be parked, until they are used for the purpose they meant for.

A sizeable portion by way of donations is known to have found its way in to stock markets. A bill cleared by the Cabinet recently proposed to bar entities from investing in capital market instruments, including mutual fund schemes.