FCRA and Administrative Expenses
Excess Administrative Expenses – one of the reason to cancel FCRA Registration
FCRA department may cancel your organization registration if you have excessive Administrative and Salary Expenses. Last month, FCRA Department has cancelled registration of SABRANG Trust. In the order regarding cancellation, one of the findings is, administrative expenses were excessive than permitted by FCRA and no approval was taken. See para 5 of this order.
How much Administrative Expenses Allowed in FCRA?
As per Section 8 (1) (b) of the FCRA, 2010
“shall not defray as far as possible such sum, not exceeding fifty per cent. of such contribution, received in a financial year, to meet administrative expenses:”
So as per FCRA, limit for administrative expenses are 50%.
What is considered as Administrative Expenses?
Definition of Administrative Expenses is given in the Rule 5 of FCR Rules, 2011. You can read it from here.
Let us interpret this rule.
- As per Rule
- (i) salaries, wages, travel expenses or any remuneration realized by the Members of the Executive Committee or Governing Council of the person;
- (ii) all expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel;
- (iii) all expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premise(s) from where the organisation or Association is functioning, stationery and printing charges, transport and travel charges by the Members of the Executive Committee or Governing Council and expenditure on office equipment;
- iv) cost of accounting for and administering funds
- (vi) cost of writing and filing reports;
- (vii) legal and professional charges;
- viii) rent of premises, repairs to premises and expenses on other utilities:
- * This interpretation is Author’s own view and kindly take expert opinion before taking any decisions based on this interpretation
- Our Interpretation *
- Any payments to Governing Board Members, Trustees, Exe committee members whether in the form of consultancy, remuneration, honorarium, wages, travel should include in the Administrative Expenses. However, program staff salary and travel is to be considered as project expenses.
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Any payments to managers or co-ordinators, coordinating activities and persons of the organization should be considered as administrative expenses.
- All the expenses related to Functioning office are considered as administrative expense. However, expenses related to the premise specifically and exclusively used for the project activities, like Training Centers, Library etc.. are not considered in the administrative expenses.
- Salary of accountant or office support staff and travel and other expenses of them should be considered as administrative expenses.
- Any expenses related to documentation whether it is consultancy, salary, wages, travel etc.. should considered as administrative expenses.
- Audit Fees, Advocate Fees, Legal fees should considered as administrative expenses.
- Rent, Rates and taxes of Admin office and field office should considered as administrative expenses.However, expenses related to the premise specifically and exclusively used for the project activities, like Training Centers, Library etc.. are not considered in the administrative expenses.
- * This interpretation is Author’s own view and kindly take expert opinion before taking any decisions based on this interpretation
1. Can we account any sponor related expenses within India – stay, travel ticket etc.
2. Can we account international travel of Board members for sponsor finding, promotional work, fund raising etc.