Managing Non-Profit Trust Accounts and FCRA Compliance Entry in Tally Prime

What is FCRA?

FCRA stands for the Foreign Contribution (Regulation) Act. It is a law enacted by the Ministry of Home Affairs (MHA) in India to regulate and monitor any foreign hospitality or foreign financial contributions received by individuals, non-profits, trusts, and NGOs.

The main objective of FCRA is to ensure that foreign funds are used strictly for their intended social, educational, religious, economic, or cultural activities, preventing money laundering, unauthorized foreign influence, or diversion into illegal/unapproved operations.

Key Statutory Rules & Compliance Constraints

When recording or managing FCRA foreign transactions in Tally Prime, you must comply with strict legal rules enforced by the government:

[Foreign Donor]
       │
       ▼
[SBI New Delhi Main Branch (NDMB)]  ◄── Mandatory Designated Receipt Account
       │
       ▼
[Secondary Utilization Account]     ◄── Optional (Local Scheduled Bank)
       │
       ▼
[Project Expense / Vendors]        ◄── Direct End-Use (Sub-granting Banned)

1. The Single Gate Rule (SBI NDMB Mandate): All foreign contributions must first land directly into the NGO’s designated FCRA account at the State Bank of India (SBI), New Delhi Main Branch (NDMB), Sansad Marg. No other bank account can receive foreign money directly.

2. Zero Co-mingling (Isolation Rule): Foreign funds can never be mixed with domestic donations, interest, or local operational capital. They must sit in separate bank accounts and separate ledger groups.

3. No Sub-Granting (Transfer Ban): An FCRA-registered NGO cannot transfer foreign funds to another NGO, trust, or entity—even if the receiving entity also holds a valid FCRA registration. Funds must be spent directly on project execution.

4. 20% Administrative Expense Cap: A maximum of 20% of total foreign contributions received in a financial year can be spent on administrative expenses (e.g., executive salaries, office rent, utilities). The remaining 80% must go directly to program/project activities.

5. Interest Treatment: Any bank interest earned on the FCRA bank account is legally treated as Foreign Contribution. It must be credited back to the FCRA ledger and allocated to cost centers under foreign receipts.

6. Utilization Accounts: Funds can be moved from the main SBI NDMB account to a secondary “Utilization Bank Account” in a local scheduled bank solely for operational convenience, but no local funds can ever be deposited into this utilization account.

Master Configuration & Ledger Group Mapping

To handle this exact scenario without breaking FCRA compliance rules, create your masters under these specific parent groups:

Step-by-Step Execution Sequence

Step-1

Where to Verify Compliance Reports

• For Cost Center & Grant Tracking:

  Go to Display More Reports > Statements of Accounts > Cost Centres > Category Summary.

  • Select FCRA Projects.

  • You will see total inflows (₹402,000) minus expenses (₹50,000), leaving an exact unutilized balance of ₹352,000 for the EcoEarth Grant.

• For Balance Sheet Isolation:

  Go to Gateway of Tally > Balance Sheet.

  • Look under Capital Account (or Current Liabilities).

  • Expand FCRA Restricted Grants to prove that foreign contribution balances are sitting isolated from domestic general operational capital.

• For Statutory FC-4 Annual Audit Support:

  Go to Display More Reports > Account Books > Cash/Bank Book(s).

  • Open SBI FCRA Main Account to export a clean statement showing zero local deposits, direct interest additions, and end-use project utilization payments.