Corporate Social Responsibility (CSR) is now a controlled and organized obligation for companies that conduct operations in India. The Companies Act, 2013 obligates businesses that are above certain financial limits to use a part of their profits in CSR activities. But CSR fund is not something that should be given to a random organization. Only NGO eligible for CSR funding in India can receive and implement CSR projects on behalf of corporates. Understanding the eligibility criteria is essential for both NGOs and companies to ensure compliance and impact.
Understanding CSR Eligibility Under Indian Law
Eligibility of NGOs to receive CSR funding is regulated by the Companies act 2013, Section 135 as well as CSR Rules, notified by the Ministry of Corporate Affairs (MCA). These rules provide a clear picture of the entities that can act as implementing agencies. An NGO eligible for CSR funding in India must be a registered and functioning in alignment with activities mentioned in Schedule VII of the Act, including healthcare, education, poverty alleviation, environmental sustainability and child welfare.
Types of NGOs Eligible for CSR Funding
Only certain legal structures qualify as CSR-eligible NGOs. These include:
- Section 8 Companies registered under the Companies Act
- Registered public trusts
- Registered societies
Also, the NGO should ensure that it has completed the past three years of history of conducting similar charitable activities unless it is a company directly formed. This has been necessary to ascertain that an NGO that has access to CSR funding in India is experienced and capable of undertaking projects in a responsible manner.
Mandatory CSR-1 Registration
CSR-1 registration is one of the most significant legal requirements. As per CSR rules, NGOs must file Form CSR-1 with the MCA to become eligible to receive CSR funds. On successful registration, the NGO gets a distinct CSR Registration Number. All NGOs (with or without reputation and influence) will not be allowed by law to undertake CSR-related projects without the approval of CSR-1. This measure enhances the transparency and responsibility of using CSR funds.
Compliance, Governance, and Transparency Requirements
An NGO eligible for CSR funding in India must comply with statutory obligations such as maintained financial records, income tax returns filing, and adherence to FCRA norms if foreign contributions are involved. It must have good governance practices, audited financial statements and a clear impact reporting. The NGOs that are more likely to be accepted by corporations are those ones that show transparency, ethical conduct and quantifiable results because these lead to less compliance risks in the process of CSR audits.
Alignment with Schedule VII CSR Activities
CSR funding can only be used for activities listed under Schedule VII of the Companies Act. NGOs should make sure that their projects are exactly within the allowed categories. Any form of deviation including political activities or acts that only benefit the employees can lead to disqualification. Therefore, the compliance with Schedule VII is one of the fundamental requirements for any NGO eligible for CSR funding in India.
Why Eligibility Matters for Corporates and NGOs
For corporates, when an NGO is compliant, it means that the smooth implementation of CSR, proper reporting, and avoidance of penalties will be ensured. In the case of NGOs, meeting eligibility criteria leads access to systematic funding, long-term partnerships and expanded access to social networks. As an NGO eligible for CSR funding in India, it improves the credibility and makes the organization a reliable implementation partner.
Conclusion
Qualification for CSR funding is not only regarding the charitable motive but also related to transparency, compliance with laws and impact. Those NGOs that meet statutory provisions, uphold standards of governance and are supportive with the CSR goals are crucial in bringing meaningful change and assisting businesses to play their social roles.