Look closely at source and purpose of foreign funding

India’s experience with foreign-funded activism, along with examples from other countries, offers enough reason to revisit the regulatory framework. (Illustration: C R Sasikumar) 4 min readAug 6, 2026 06:21 AM IST First published on: Aug 6, 2026 at 06:21 AM IST Thomas Friedman once said that “the world is flat”. Globalisation has indeed created a level playing field for trade and industry. However, when forces try to make the world socially and culturally flat, it amounts to making it less beautiful. The globalisation of philanthropy illustrates this danger. As Parliament prepares to debate amendments to the Foreign Contribution (Regulation) Act (FCRA), many civil society groups have criticised the proposed changes and levelled serious allegations against the government. But India’s experience with foreign-funded activism, along with examples from other countries, offers enough reason to revisit the regulatory framework.Over time, genuine voluntarism has given way to professionalised activism. Organisations once known for commitment, sacrifice and grassroots engagement increasingly adopted the NGO model, with access to large donor funding reshaping priorities. Some evolved into influential actors that sought to shape public policy, at times reflecting donor agendas more than local needs. The rapid expansion of foreign funding encouraged this shift. The experience of other countries is instructive. In 1997, scholar James Petras, writing on Latin America, argued that foreign-funded NGOs had become adept at designing donor-driven projects while promoting the rhetoric of identity and globalism. He said that this fostered dependence on external funding, aligned organisations with neoliberal priorities, and weakened genuinely autonomous grassroots movements. Researchers in Africa have also pointed out that aid flows have created a vicious cycle of dependency that is proving hard to dismantle. There is also research in India showing that foreign aid does not have a significant impact on poverty alleviation. This is not to point fingers at every funder. There is no need to ban foreign funding. Tighter scrutiny is essential in the interest of the community, donors as well as recipients. Seen this way, the FCRA amendments are aimed at increasing the framework’s transparency and making it risk-ready. They seek to bring administrative clarity, improve monitoring of the use of foreign contribution, enable the identification of inactive associations, fix accountability and ensure that foreign contribution is used only for the purpose it was provided. These amendments will ensure that foreign money does not shape domestic political, social or ideological outcomes in ways that compromise national security and sovereignty. A Supreme Court judgment, in fact, upholds the State’s invocation of sovereignty and national security to regulate foreign contribution. The relevant question is not the cost of compliance to an individual organisation but the source and purpose of foreign funding of activity within India. Besides, the regulatory framework proposed is as per international norms — sovereign states maintain comparable, and frequently stricter, controls over foreign funding of domestic non-governmental activity. The proposed FCRA amendments are both faith-neutral and sector-neutral. They make no distinction between religious and secular organisations or among different faiths. While some groups have opposed the changes, most voluntary organisations — including hospitals, universities, research institutions and service bodies — have not objected. For organisations that use foreign funds transparently and for declared purposes, greater accountability poses no threat. Had the amendments genuinely endangered the voluntary sector, resistance would have been far broader. Beyond FCRA, the government should also address the excessive professionalisation of the sector. It needs to revive India’s tradition of autonomous, community-driven voluntarism r