NGO "officers" are public servants in India under Lokpal Act, warns report marked "for private circulation"

By Our Representative
A new report by AccountAid, an organization in the job of closely watching developments around non-government organizations (NGOs) in India, has caused a flutter among top activists of the country. It has “discovered” that the Lokpal Act “covers” most of the NGOs, saying that their officers are "public servants".
AccountAid, after covering different topics related to NGO regulation or accounting, posts or emails these to about 2,000 persons in NGOs, agencies and audit firms for further discussions.
The report, which is marked “for private circulation”, says that these officers “must declare their wealth annually”, like any other public servants need to, and the Lokpal can “look into” complaints received against them. The Act was passed in 2013, when the UPA was in power.
It says, provisions the Act “apply” to officers of three kinds of NGOs, and they would all be “treated as public servants… These are those established by the Central Government, also called ‘Government NGOs (or GONGOs); those which receive Central Government grants exceeding Rs. 1 crore annually; and those receiving donations of more than Rs 10 lakh annually from “foreign sources.”
Especially focusing on NGOs receiving funds under the Foreign Contribution Regulation Act (FCRA) – whether they are societies, trusts and association of persons – the report says, they would be covered under the Lokpal Act, and it does not matter whether “the NGO is registered under FCRA or has only received prior-permission.”
“In fact, it doesn’t even matter if the NGO has received foreign donation without FCRA permission. The Lokpal Act will still be applicable”, the report says, adding, it would be applicable to all types of societies, “registered or unregistered”, and “charitable, literary or scientific”.
“Special types of societies, such as cooperative societies would get covered if they are receiving donations from a foreign source”, the report says, adding, trusts, formed by registration of a trust deed under Registration Act, 1908, including in states, such as Gujarat and Maharashtra, where they are registered under special laws, “would also be covered.”
Significantly, the report says, non-profit companies – which NGOs are increasingly moving to following the recent FCRA clampdown – “are a glaring, but clear omission.” It adds, “This means sec. 25 or sec. 8 companies getting foreign donations are not covered... Therefore, directors and other officers of such companies do not have to comply with Lokpal Act because of this clause.”
Interestingly, the report says, “The Lokpal Act does not mention the term ‘foreign contribution’ at all. Instead, it refers to donations from a foreign source’, as defined in FCRA, 2010.”
It notes, “Foreign contribution covers ‘donation, delivery or transfer’ of money and material from source are to be considered for Lokpal Act”, though adding, “Loans from a foreign source or subscription to share capital of a non-profit company are not donations and will not be considered for this.”
For NGOs, the report underlines, ‘officers’ of all categories are covered. “Many NGOs have an accounts officer” and he/she would be “treated as a public servant” as the Lokpal Act's provision on 'officer' could be “interpreted as indicating a group of people who manage or control the organization”, it says.
“Clerical or administrative work is covered under this, where discretion or judgement do not play a significant role”, the report says, adding, “Clearly this is a fairly wide definition, and includes governing board members, as well as employees forming part of executive management.”
Then, the report says, “Chief functionaries and people designated as CEO, CFO, COO would be covered. People designated as directors could also be covered. In case of trusts, all trustees would get covered, in addition to senior management of the trust.”
As for CFOs who have a consultancy contract with NGOs, the report says, “In such cases, one should look at the substance of the relationship. If the CFO has executive powers, then he/she would be treated as an officer.”

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