The practice of Corporate Social Responsibility (CSR) in India is no longer optional; it has become a legal requirement under the Companies Act, 2013. For corporates, making a CSR donation involves more than simply providing funds—it requires adherence to a systematic compliance policy. Likewise, NGOs seeking such donations must meet specific eligibility criteria and maintain clear, verifiable records. Understanding the compliance process, required documentation, and qualification requirements for NGOs is essential to ensure CSR donations are both effective and legally compliant.
Understanding Corporate CSR Compliance in India
In India, corporate donations are also dictated by the Companies Act, 2013 that renders CSR a legal requirement of given businesses. The compliance level with CSR is found in those companies which pass any of the following levels:
- Net worth of ₹500 crore or more
- Turnover of ₹1,000 crore or more
- Net profit in a financial year of 5 crore and above.
Such companies must:
- Spend at least 2% of their average net profits from the last three years on CSR activities.
Ensure that spending aligns with activities listed under Schedule IX, such as:
Key Areas Covered by Schedule IX:
- Eradicating Hunger and Poverty: Activities focused on poverty reduction, improving health and sanitation and providing access to safe drinking water.
- Promoting Education and Skill Development: Including support for special education, vocational skills for children, women, the elderly, and the differently-abled, as well as livelihood enhancement projects.
- Promoting Gender Equality and Women’s Empowerment: Efforts to empower women and reduce inequalities faced by socially and economically backward groups.
- Environmental Sustainability: Initiatives for ecological balance, conservation of natural resources, animal welfare, agroforestry, and protecting flora and fauna.
- Cultural Preservation: Actions to promote and protect art, culture, and the preservation of national heritage.
- Rural Development: Activities aimed at improving rural infrastructure and livelihoods.
- Disaster Management: Contribution to relief, rehabilitation, and reconstruction efforts during natural disasters.
- Support for Research: Contributions to public-funded universities, research institutions, and national laboratories to promote Sustainable Development Goals (SDGs).
- Setting up Social Facilities: Creation of facilities like old age homes, day care centers, and hostels for women and orphans.
Compliance documents that a corporate requires from NGOs for CSR Donation
To be eligible, an NGO must have the following documents:
- Incorporation under Section 12A
- 80G of the income tax act,
- CSR-1 form
- By laws/ trust deed
- FCRA (for foreign fundraising)
- PAN, and registration details.
- Detailed Project Proposal
- Detailed Budget
Those needs guarantee that CSR contributions are channeled in organizations with demonstrated capacity, responsibility and responsiveness to legal provisions.
Required Documentation after receiving donation/completion of the project
For NGOs, compliance and accountability are just as important as receiving funds. After receiving CSR donations, an NGO must provide:
- Donation receipts with the NGO’s name,
- Utilization certificates confirming funds were used for the agreed purpose.
- Annual reports and audited financial statements showing accurate accounting of CSR contributions.
- Project progress reports (if requested), to help corporates evaluate outcomes against proposed objectives.
- Final Impact reports describing how much of the impact is achieved.
These documents not only support the donor company’s compliance process but also build credibility and long-term trust between corporates and NGOs.
Conclusion
CSR in India has a defined framework and set of rules of corporate donations, which are beneficial both to the corporate and NGOs. In the case of companies, CSR compliance guarantees responsible and open distribution of finances. In the case of NGOs, eligibility and delivery of appropriate documentation is important in order to gain and maintain support. When these processes are observed by both parties, CSR donations will be a strong instrument in promoting sustainable development and social challenges in the country.