CSR Due Diligence Checklist for Indian NGOs

CSR Due Diligence Checklist for Indian NGOs

A reliable CSR due diligence checklist for NGOs should verify the organisation’s legal identity, tax registrations, CSR-1 status, finances, governance, programme capacity and reporting systems. It should also confirm that the proposed project fits the corporate donor’s CSR policy and complies with the Companies Act, 2013 and applicable CSR Rules.

Corporate donors in India are expected to show that CSR funds are used for eligible activities and implemented through an appropriately qualified agency. For an NGO, this means that a good proposal alone is not enough. The organisation must be able to prove who it is, how it is governed, how it handles money and what evidence it can provide about its work.

This checklist is designed for Section 8 companies, public charitable trusts, societies and other nonprofit organisations seeking CSR support from Indian companies.

1. Understand What Corporate Donors Are Checking

CSR due diligence is the process through which a company assesses whether an NGO is legally eligible, financially responsible and capable of implementing a proposed project.

The company may conduct this review itself, ask an external agency to conduct it or combine document checks with meetings, site visits and references. The depth of review usually depends on the size of the grant, the project location, the subject area and the company’s internal risk policy.

A corporate donor is generally checking five things:

• Whether the NGO legally exists and is authorised to operate.
• Whether it has the registrations required for CSR implementation.
• Whether funds will be used for the stated purpose.
• Whether the organisation can deliver the project responsibly.
• Whether the donor will receive adequate records and reports for its own CSR compliance.

An NGO verification process is not necessarily a sign that the donor distrusts the organisation. It is often part of the company’s internal controls, audit requirements and board-level reporting.

The company’s CSR committee and board may need evidence that:

• The activity falls within Schedule VII of the Companies Act.
• The implementing agency is eligible under the CSR Rules.
• The project is not merely a normal business activity of the company.
• The expenditure is properly tracked.
• The project has appropriate monitoring and documentation.
• Any unspent CSR amount is dealt with according to the applicable rules.

An NGO should therefore prepare a standard due diligence folder before approaching corporate donors. The folder can be digital, but each document should be clearly named, dated and easy to verify.

2. Legal Identity and Registration Documents

The first stage of the CSR due diligence checklist is confirming the NGO’s legal identity.

The legal name should be consistent across the registration certificate, PAN, bank account, tax registrations, agreements, invoices and reports. Differences in spelling, abbreviations or changes in registered address can create unnecessary questions.

Core legal documents

Keep the following documents ready:

• Certificate of registration or incorporation.
• Trust deed, society registration certificate or Memorandum and Articles of Association.
• Rules and regulations or Articles of Association, where applicable.
• PAN card of the organisation.
• Registration number and date.
• Registered office address proof.
• Details of branches or project offices, if relevant.
• Board, trustee or governing body list.
• Resolution authorising the organisation to receive and use CSR funds.
• Details of the authorised signatory.

The exact documents depend on the legal form of the organisation.

A Section 8 company will usually provide its incorporation documents and relevant filings with the Ministry of Corporate Affairs. A public charitable trust may provide its trust deed and registration details issued by the appropriate authority. A society may provide its registration certificate, memorandum and rules.

The NGO should also explain any previous name change, merger, conversion or change in legal structure. If the organisation has operated under a brand name that differs from its legal name, mention this clearly in the proposal.

Check the governing documents

The objects in the trust deed, memorandum or society documents should support the activities for which CSR funding is requested.

For example, an organisation seeking support for a school education project should have objects relating to education, child welfare, community development or a related charitable purpose. If the proposed activity falls outside the organisation’s stated objects, the donor may ask for clarification or amendments.

Review the governing documents for:

• Charitable and nonprofit objectives.
• Rules relating to use of income and assets.
• Appointment and removal of trustees or directors.
• Conflict-of-interest provisions.
• Dissolution or transfer of assets on winding up.
• Authority to open bank accounts and enter agreements.

3. CSR Eligibility, Tax Registrations and CSR-1

The most important part of CSR due diligence is confirming whether the NGO is eligible to act as a CSR implementing agency.

Under the CSR framework, eligible implementing agencies can include a Section 8 company, a registered public trust or registered society with the required tax registrations. An entity established by a company or the Central or State Government may be treated differently under the applicable rules. The corporate donor will usually assess the NGO against the current version of the CSR Rules rather than relying on an informal understanding.

12A or 12AB registration

Income-tax registration under Section 12A or 12AB is generally an important document for NGOs seeking CSR grants. It supports the organisation’s charitable tax status, subject to the terms and validity of the approval.

Keep ready:

• The registration or approval order.
• The relevant application or renewal record, where applicable.
• The validity period.
• Any conditions or notices received from the Income Tax Department.

An organisation should check whether its registration is active and whether it has moved from an older registration format to the applicable current regime.

80G approval

Corporate donors commonly request the NGO’s 80G approval because it relates to tax deduction treatment for eligible donations. The donor may ask for the approval order, validity and any conditions.

The NGO should not describe a donation as tax-deductible without checking the applicable rules and the nature of the payment. The donor’s finance team or tax adviser should confirm the treatment.

CSR-1 registration

A CSR-1 filing is a central part of CSR compliance for eligible implementing agencies. The form is filed electronically with the Ministry of Corporate Affairs, and the organisation receives a CSR Registration Number after successful filing and verification.

The NGO should keep:

• A copy of the filed CSR-1.
• The CSR Registration Number.
• The acknowledgement or verification record.
• Details of the authorised person associated with the filing.

The name and legal details in CSR-1 should match the organisation’s other records. If the NGO has changed its name, trustees, directors or registered office, check whether updates are required.

CSR-1 does not replace the NGO’s legal registration, 12A or 12AB approval, 80G approval or financial reporting. It is one part of the eligibility and documentation process.

FCRA status

Foreign Contribution Regulation Act registration is relevant when an organisation receives foreign contribution. Domestic CSR funding from an Indian company is not automatically foreign contribution merely because the company has foreign shareholders or belongs to a multinational group.

Do not present FCRA registration as compulsory for every domestic CSR grant. Instead, maintain accurate records showing whether the organisation has:

• FCRA registration or prior permission.
• A designated FCRA bank account, if applicable.
• Foreign contribution received during the relevant period.
• Separate accounting and reporting arrangements.

If a donor’s payment originates from outside India or the donor proposes a cross-border structure, obtain professional advice before accepting the funds. FCRA compliance, permitted use of funds and bank-account requirements can be fact-specific.

Other commonly requested registrations

Depending on the donor and project, the NGO may also be asked for:

• NGO Darpan ID.
• Professional tax registration.
• Shops and Establishments registration.
• GST registration, if applicable.
• Labour registrations.
• Local permissions for operating a centre or facility.
• Approvals for work involving children, healthcare or regulated services.

NGO Darpan may be requested in due diligence even when it is not the document that establishes CSR eligibility. The organisation should provide it if available, while making sure that the information is current.

4. Governance and Conflict-of-Interest Checks

A donor needs confidence that decisions are made for the organisation’s charitable purpose rather than for the personal benefit of trustees, directors, staff or connected businesses.

Governance checks often reveal more about operational maturity than a brochure does.

Prepare the following:

• Current list of trustees, directors or governing body members.
• Profiles of key decision-makers.
• Minutes of recent board or governing body meetings.
• Annual general meeting records, where applicable.
• Conflict-of-interest policy.
• Related-party transaction policy.
• Procurement or vendor selection policy.
• Whistleblower or grievance policy.
• Child protection and safeguarding policy, where relevant.
• Anti-fraud and anti-bribery policy.
• Data protection and confidentiality policy.

The donor may ask whether any trustee, director or senior employee has a commercial relationship with a vendor, consultant or partner involved in the project. The correct approach is not to hide such relationships. Disclose them, record the conflict and explain how the conflicted person is excluded from the decision.

Governance questions to review internally

Before submitting documents, ask:

• Who can approve expenditure?
• Who can operate the bank account?
• Are two authorised people required for payments?
• Who reviews monthly financial statements?
• Are trustees or directors paid, and under what approval?
• Are related-party transactions recorded?
• Who receives complaints from beneficiaries?
• Who investigates allegations of misuse or misconduct?
• How are important decisions documented?

A small NGO does not need the same administrative structure as a large institution, but it does need clear responsibility and evidence of oversight.

5. Financial Due Diligence Checklist

Financial review is usually one of the most detailed stages of CSR due diligence. Corporate donors want to understand the organisation’s income, expenditure, reserves, liabilities and ability to manage restricted project funds.

Documents to prepare

Keep the following for the latest completed financial years, as available:

• Audited financial statements.
• Balance sheet.
• Income and expenditure account.
• Receipts and payments account.
• Notes to accounts.
• Auditor’s report.
• Income-tax returns.
• Bank statements.
• Budget for the proposed project.
• Details of existing grants and restricted funds.
• Utilisation certificates.
• Management response to audit observations.
• Details of loans, liabilities or pending litigation.

The donor may ask for more than one year of records to understand whether income is stable or dependent on one grant. It may also compare audited figures with bank statements, annual reports and information submitted in the proposal.

Separate project accounting

CSR funds should be traceable from receipt to expenditure. A project-specific ledger, cost centre or bank-account arrangement can help, depending on the donor’s requirements and the NGO’s accounting system.

The organisation should be able to show:

• Amount received.
• Date received.
• Approved budget.
• Amount spent under each budget head.
• Vendor or beneficiary payment details.
• Balance remaining.
• Interest earned, if applicable.
• Unspent amount.
• Assets purchased.
• Supporting bills and vouchers.

Do not shift money between budget heads without recording the reason and obtaining the donor’s approval where required. If the project changes because of local conditions, document the change instead of relying on a verbal understanding.

Administrative costs

Donors often ask how much of the grant will support programme delivery and how much will cover administration, monitoring, staff supervision, finance and reporting.

Under the CSR Rules, administrative overheads have a prescribed limit in relation to the company’s total CSR expenditure. This limit applies within the CSR framework and should not be treated as a universal rule that every individual NGO budget must copy without analysis.

The proposal should make reasonable distinctions between:

• Direct programme costs.
• Field staff and implementation costs.
• Monitoring and evaluation.
• Finance and compliance.
• Communication and documentation.
• General administrative overhead.

A transparent budget is more useful than an artificially low overhead percentage that makes the project impossible to manage properly.

GST and invoices

GST treatment depends on the nature of the supply, the organisation’s registration status and the contract structure. A grant or donation is not automatically treated the same way as a taxable service.

If the corporate donor is paying for defined services, deliverables or event-related arrangements, the tax position may differ from an unconditional charitable contribution. The NGO should not add GST or issue a tax invoice without checking the facts with its accountant.

6. Programme, Safeguarding and Operational Capacity

Legal documents show that an NGO exists. They do not prove that it can deliver a project in a safe and effective manner.

Corporate donors may review the organisation’s programme model, staffing, geographical presence, partnerships and monitoring systems.

Programme documents

Prepare:

• Organisation profile.
• Annual reports.
• Project concept notes.
• Theory of change or results framework.
• Baseline information, if available.
• Beneficiary selection criteria.
• Implementation plan.
• Activity calendar.
• Risk register.
• Monitoring indicators.
• Previous donor reports.
• Photographs and communication material with appropriate consent.

Avoid presenting inflated beneficiary numbers. Explain whether a person is a direct participant, household member, student reached through a school or a person reached through an awareness activity. Clear definitions make the proposal more credible.

Field capacity

The donor may ask:

• Does the NGO have staff in the project location?
• Who will supervise the work?
• Does the organisation have local government or community permissions?
• Does it depend on another NGO for implementation?
• How will attendance, distribution or service delivery be recorded?
• What happens if a key staff member leaves?
• How will the project continue after the grant ends?

If the NGO uses local partners, disclose the arrangement. The donor may need to review the partner separately, and the main NGO remains responsible for contract management and reporting according to the agreed structure.

Safeguarding

Projects involving children, women, persons with disabilities, patients, elderly people or vulnerable communities require stronger safeguards.

The NGO should have practical procedures for:

• Consent and assent.
• Safe staff recruitment.
• Background checks where appropriate.
• Supervision of volunteers.
• Reporting abuse or exploitation.
• Handling complaints.
• Protecting personal information.
• Taking and using photographs.
• Referring serious cases to appropriate authorities.

For healthcare projects, the NGO should also clarify professional qualifications, clinical responsibility, patient records, referrals and applicable permissions. A corporate donor may ask for licences or registrations connected with a clinic, diagnostic service, pharmacy or medical camp.

7. Project Fit and CSR Compliance

A company cannot treat every charitable activity as CSR expenditure. The proposed activity must fit the permitted areas under Schedule VII and the applicable CSR Rules.

Common CSR themes include:

• Education and vocational skills.
• Healthcare and sanitation.
• Eradicating hunger, poverty and malnutrition.
• Gender equality and support for women.
• Environmental sustainability.
• Rural development.
• Support for persons with disabilities.
• Disaster management and relief.
• Sports promotion.
• Livelihood enhancement.
• Research and development in specified areas.
• Support for armed forces veterans and their families, where applicable.

The exact classification should be made carefully. A project description such as “community development” is too broad on its own. Explain the problem, activity, beneficiaries and relevant Schedule VII category.

Activities that need caution

A CSR proposal may be questioned if it:

• Benefits only the company’s employees.
• Is a normal business activity of the company.
• Is primarily a marketing or sponsorship arrangement.
• Supports political activity.
• Is conducted outside India without fitting the permitted exception.
• Is designed mainly to create a brand advertisement.
• Duplicates a statutory obligation of the company.
• Uses funds for an ineligible contribution or purpose.

The company’s CSR policy and board approval remain important. An NGO should ask the donor to state the intended CSR category, reporting format and approval conditions in the grant agreement.

Impact assessment and reporting

Some companies may be required to conduct impact assessment for qualifying CSR projects under the applicable CSR framework. Even when not mandatory, the donor may request an outcome review.

The NGO should agree early on:

• Baseline and endline expectations.
• Output and outcome indicators.
• Reporting frequency.
• Site-visit arrangements.
• Beneficiary verification.
• Financial utilisation format.
• Treatment of unspent funds.
• Asset ownership.
• Public disclosure and communication rights.

Do not promise outcomes that cannot be measured. A useful indicator should have a clear definition and a practical source of evidence.

8. Build a CSR Due Diligence Data Room

A structured data room makes NGO verification faster and reduces repeated email exchanges.

Create folders such as:

1. Legal registration
2. Tax and CSR registrations
3. Governance
4. Finance and audit
5. Programme documents
6. Policies and safeguarding
7. Proposed project
8. Previous donor reports
9. Bank and payment details
10. FCRA records, if applicable

Use clear file names, such as:

• 12AB_Approval_Order_Year.pdf
• CSR-1_Registration_Record.pdf
• Audited_Financials_FY_Year.pdf
• Board_List_As_On_Date.pdf
• Project_Budget_CSR_Donor_Name.xlsx

Do not upload sensitive documents to a public website or share unrestricted links. Use access controls and provide files only to verified donor representatives.

Protect personal data

Financial records, beneficiary lists, Aadhaar details, medical information, phone numbers and bank details should not be shared casually. Where possible:

• Remove unnecessary personal information.
• Mask account numbers and identity documents.
• Use beneficiary codes instead of full names.
• Share data only for a stated purpose.
• Restrict download permissions.
• Maintain an access log.
• Follow the organisation’s privacy and security procedures.

A donor may need evidence of beneficiaries, but it does not automatically need every identity document. Share the minimum information necessary for verification.

Review documents before sharing

Check that:

• Documents are current.
• Names and addresses match.
• Expired certificates are not presented as active.
• Financial years are labelled correctly.
• Signatures and stamps are genuine.
• Bank details match the legal entity.
• Draft documents are clearly marked as drafts.
• Explanations are provided for gaps or exceptions.

If an approval is pending, say so directly. A clear explanation is generally better than submitting an incomplete document without context.

Comparison: Basic, Strong and High-Maturity Readiness

Frequently Asked Questions

Is CSR-1 registration compulsory for every NGO?

CSR-1 is generally required for an eligible implementing agency that seeks to undertake CSR activities on behalf of a company under the CSR framework. The organisation should verify its status against the current CSR Rules and maintain the CSR Registration Number in its donor documents.

Can an NGO receive CSR funds without FCRA registration?

An NGO can receive domestic CSR funding without FCRA registration when the payment is domestic and does not constitute foreign contribution. FCRA requirements may apply if the funds or transaction structure involves foreign contribution, so the NGO should review the source and route of funds before acceptance.

Does a small NGO need audited financial statements?

Corporate donors commonly request audited financial statements, even from smaller NGOs. The applicable audit requirement depends on the organisation’s legal structure, income and other circumstances, but proper accounts, bank records and expenditure support should be maintained in all cases.

Can CSR funds be used for NGO staff salaries?

Staff costs can be part of a legitimate project budget when the personnel are involved in implementing, supervising or monitoring the approved activity. The budget should explain the role, allocation method and period, and the donor’s agreement should specify how such costs are treated.

Should an NGO create a separate bank account for every CSR project?

Not every project automatically requires a separate bank account, but the funds must be traceable and separately accounted for. A project ledger or cost centre may be sufficient in some cases, while a donor may contractually require a separate account or payment arrangement.

What should an NGO do if a donor asks for documents it cannot provide?

Respond with a clear explanation and offer an alternative document where appropriate. Do not alter, backdate or misrepresent records; if the missing document is essential, discuss whether the organisation can obtain it before the grant is approved.

Where to Start

Begin by creating a document inventory covering legal registration, PAN, 12A or 12AB, 80G, CSR-1, governance, audited accounts, bank details, policies and programme records.

Next, check that the organisation’s name, address, authorised signatory and registration details match across all documents. Prepare a one-page project note with the CSR category, beneficiaries, activities, budget, monitoring indicators and implementation risks.

Finally, create a secure data room and nominate one person to handle donor questions. Keep a renewal calendar for tax approvals, CSR records, audits, licences and key policies.

For help with an NGO website, donor-facing documentation system or secure digital workflow, you can talk to the Govindani Infotech team on WhatsApp; project scope and pricing are confirmed by the team there.