Funds freeze: Villagers protest against the Kudankulam nuclear power plant, and (below) the Tuticorin Diocesan Association

Mano Thangaraj is a worried man. A supporter of the fight against the Kudankulam nuclear project in Tamil Nadu, Thangaraj is now protesting against the government attempts to “defame” his non-government organisation (NGO), the Global Vision Charitable Trust.

If you are working at an NGO in Tamil Nadu, it’s perhaps time for you to pack your bags. And if your NGO has been in the thick of the anti-nuclear protests, you’d better hurry.

The noose is gradually tightening over thousands of NGOs in the southern state. Facing a funds crunch because of a heavy dip in foreign funding over the last 10 years or so, they are now fighting for survival with a belligerent government cracking down on them for allegedly violating regulations of the Foreign Contribution Regulation Act (FCRA) — under which they get their foreign funds. Some of these NGOs were active in the protests against the Kudankulam nuclear project.

Already, the bank accounts of some NGOs — such as the Tuticorin Diocesan Association and Rural Uplift Centre (RUC) — have been frozen. And while they threaten to file revision petitions permitted under the law, the FCRA has decided to crack down on 12 more NGOs.

“Voluntary groups in the state are a vulnerable lot today,” says Henri Thipagne, the executive director of the Madurai-based People’s Watch. The NGO, fighting for human rights, was paid a visit by the FCRA in February. “The government’s modus operandi is to first send 31 questions to be answered and ask for a host of documents. Then we are visited by the FCRA. The next stage is to have our bank accounts frozen without any explanation,” he says.

Another NGO under fire is the one run by Thangaraj, who claims to have stopped receiving foreign funds since 2010. The NGO plans to appeal against the FCRA order. Thangaraj, who is a member of the Dravida Munnetra Kazhagam, stresses that the money he received from donors was used for rehabilitation after the 2004 tsunami.

According to the FCRA website, 5,827 NGOs in Tamil Nadu (versus 3,000-odd in neighbouring Karnataka or 4,000 plus in Maharashtra) got foreign funds in 2011. About 235 of them were awarded more than Rs 1 crore.

The Tamil Nadu NGOs are not registered under one body, unlike in Maharashtra where they have to register with the Charities Commissioner. The Tamil Nadu NGOs register as trusts or societies with the registrar of societies in different parts of the state and are only accountable for their transactions and activities by providing statements of their annual report and financial transactions to their respective registrar offices. Most registrar offices in the districts have no idea of who is registered with them, as phone calls to several of them showed.

“At one point, when government and other groups became aware of foreign funds, they also jumped into the fray,” says social worker Saulina Arnold of the Tamil Nadu Voluntary Health Association which has 700 NGOs under it. Arnold stresses that some districts alone have thousands of NGOs, many only in name.

Most of the NGOs are involved in child rights, tribals and Dalits, women and health issues, with self-help groups and the unorganised sector. However, the funding has slowly decreased over the last 10 years with donors moving on to poorer regions. Tsunami aid was the last inflow of a flush of foreign funds into the state.

“We prefer to move on to states where the problems are really acute. The human development indices are much better in Tamil Nadu than in places such as Jharkhand, Odisha, Bihar and Uttar Pradesh,” points out G.J. George of the German donor agency, Terre de Hommes. He adds that his organisation is planning to slowly ease out of Tamil Nadu in the next three to five years.

Already, many NGOs have either closed or switched to micro-financing and self-help groups which do not require much funding. “It is a troubled time for us,” says Arnold, whose organisation was once funded by the UK-based Christian Aid. With the amendment of the FCRA in 2010, the rules regarding fund transfers and utilisations have got more stringent, say field workers. No foreign funding can be received without an FCRA number, and the NGOs are required to file their audited financial statements annually.

“Apart from our own stiff scrutiny of fund utilisation by our partners, the FCRA closely monitors our dealings,” George of Terre de Hommes says. A couple of years ago, the body was questioned by the FCRA when it spotted a disparity in its report. “Actually, it was a calculation error,” he adds.

Bimla Chandrasekhar, founder and director of the Madurai-based Ekta Resource Center for Women, who gets funding from New Zealand and Germany, says intelligence bureau officers drop in to inspect their funds. “Our books are open. There are checks and balances at every stage,” she says. But, she adds, it’s “difficult” to quantify the money used in creating awareness about entitlements and rights. “It is a very fine line. If you are educating people on the right to question, it can be construed as an anti-state activity if a government project is involved. What’s wrong is when someone gets money for education on rights and diverts it for another reason like a purchase,” Chandrasekhar says.

In Delhi, home ministry officials were unavailable for comment, as were Chennai police functionaries.

Some believe that NGOs in the state need to be regulated in the state. “Most NGOs fudge their accounts and make some adjustments since they may not have adequate funding for a particular activity,” says Samuel Raj, assistant professor, Madras School of Social Work. “But they should not be siphoning money elsewhere.”

It’s not just the government which is scrutinising the NGO accounts. Donors too don’t part with money easily unless they know how it’s being used. “The onus is on us. Every donor agency makes it its responsibility to have its own counter checks,” says Mercy Felcita of the Chennai-based liaison office of the Italian funding agency, Cesvi.

But accountability apart, what worries the NGOs is that the government moves seem linked to the anti-nuclear protests. Some members of the Tuticorin Diocese Association, for instance, belong to the Catholic fishermen community, who are part of the agitation .

The home ministry notice to the group, which is supported by funding from Germany and the Vatican and runs schools, parishes and orphanages, states that the Diocese “violated the provisions of the FCRA act 2010” and in the public interest its bank account has been frozen.

“It is a protest of the people; we are being unjustly victimised by the government,” says Father William Santhanam, the spokesperson. “Initially, the Bishop gave moral support to the people in his parish who support the movement against the nuclear plant. We have not made any financial commitment to them.”

The RUC, which received a similar notice from the ministry freezing its bank account, filed a revision petition on February 21 claiming that the order was “arbitrary and contrary to law”. The petition states that officers who inspected its records did not come up with any “illegality”. Maria James, the secretary, says they have provided all the details of their financial transactions and their beneficiaries from 1982 to 2011.

Clearly, there are good NGOs and bad NGOs. But social workers fear that the good work being done by reputed NGOs is getting undermined in the crackdown.

At the same time, it’s a wake-up call to the NGO community to get its act together. They have nothing to lose but their funds.