How NGOs Can Qualify for CSR Funding in India

How NGOs Can Qualify for CSR Funding in India

To get CSR funding in India, an NGO generally needs a suitable legal structure, valid 12A/12AB and 80G registrations, an active CSR-1 registration, and a project that fits Schedule VII of the Companies Act, 2013. It must also show that it can manage funds, measure results, submit reports and meet the company’s due-diligence requirements.

CSR funding is not the same as a general donation. Companies have to follow statutory rules when they spend on corporate social responsibility, so NGOs must present themselves as compliant implementing partners rather than only as organisations seeking financial support.

What CSR Funding Means in India

Corporate Social Responsibility is governed mainly by Section 135 of the Companies Act, 2013, the Companies (Corporate Social Responsibility Policy) Rules, and Schedule VII of the Act.

Certain companies are required to constitute a CSR committee or follow CSR-related governance requirements when they meet any of these thresholds in the immediately preceding financial year:

• Net worth of ₹500 crore or more
• Turnover of ₹1,000 crore or more
• Net profit of ₹5 crore or more

Such companies are generally expected to spend at least 2% of the average net profits of the preceding three financial years on eligible CSR activities. The calculation and treatment of unspent amounts can be technical, particularly for ongoing projects, so companies usually involve their finance, legal or company-secretarial teams.

For an NGO, the important point is that CSR money must be spent on eligible activities. The company cannot simply transfer its CSR obligation to any charitable organisation and treat the matter as complete. It must check the NGO, approve the project, monitor the spending and disclose relevant information.

CSR funding may support activities such as:

• Education and vocational skills
• Healthcare and sanitation
• Nutrition and safe drinking water
• Livelihood development
• Women’s empowerment
• Environmental sustainability
• Rural development
• Support for senior citizens, differently abled people and vulnerable communities
• Disaster management and relief
• Sports development
• Certain research and development activities
• Measures connected with national heritage and culture

The activity must be designed in a way that fits the applicable provisions of Schedule VII. A project may be socially useful but still not qualify as CSR if it does not fall within the permitted categories or if it is structured in a way that the rules exclude.

NGO Eligibility for CSR Funding

Legal form of the organisation

An NGO seeking CSR funding should usually be registered as one of the following:

• A Section 8 company under the Companies Act
• A registered public charitable trust
• A registered society under the applicable Societies Registration law

A company may also implement a CSR project through a government-established entity, statutory body or another eligible institution. However, for most India nonprofits approaching corporate donors, the Section 8 company, public trust or society route is the common starting point.

The legal form alone does not make an NGO eligible. The organisation also needs the relevant registrations, appropriate objects in its governing documents, a working bank account and evidence that it carries out genuine charitable activities.

12A or 12AB registration

An organisation generally needs income-tax registration under Section 12A or 12AB to establish that it is registered as a charitable or religious institution for income-tax purposes.

Many older references use the term “12A registration”. In practice, organisations may hold registration under the current 12AB framework, depending on when and how their registration was obtained.

The registration should be active and consistent with the organisation’s stated activities. If the trust deed, memorandum or objects do not cover the work proposed under the CSR project, the NGO may need to address that issue before applying.

80G approval

An active 80G approval is usually expected by corporate donors. It enables eligible donors to claim a deduction subject to the applicable income-tax rules and conditions.

80G is not a substitute for CSR-1, and CSR-1 is not a substitute for 80G. They serve different purposes:

• 12A/12AB relates to the charitable tax registration of the organisation.
• 80G relates to tax treatment for eligible donations.
• CSR-1 enables an eligible implementing agency to undertake CSR activities for companies under the CSR framework.

The organisation should maintain copies of its registration certificates, renewal or revalidation documents, PAN, governing documents and other tax records in an organised digital folder.

CSR-1 registration

CSR-1 is an important requirement for NGOs that want to act as implementing agencies for CSR projects. The form is filed electronically with the Ministry of Corporate Affairs through the MCA portal.

After successful submission and verification, the organisation receives a CSR Registration Number. Companies commonly ask for this number during their due-diligence process.

An NGO should not treat CSR-1 as a general fundraising certificate. It does not guarantee CSR funding, approval or eligibility for every type of project. It confirms that the organisation has registered itself for the relevant CSR implementing-agency framework.

The details filed in CSR-1 should match the organisation’s legal records. Differences in the name, PAN, registration number, authorised signatory details or governing structure can delay verification.

Three-year track record

For many independent NGOs, the CSR framework expects a track record of at least three years in similar activities before they are appointed to implement CSR projects. This is relevant to entities established by a company or its related entities, government or statutory bodies, and other eligible implementing agencies, depending on the applicable category.

A company may therefore ask for:

• Registration date
• Annual reports
• Audited financial statements
• Previous project completion reports
• Donor references
• Photographs and field documentation
• Beneficiary records
• Monitoring reports
• Evidence of work in the same geography or subject area

A new NGO may still build credibility through smaller donations, partnerships, local institutional support or pilot activities. However, it may be difficult to receive a large, independent CSR project immediately without an established track record.

Documents Companies Usually Review

The exact due-diligence checklist differs from one company to another. Large listed companies may have a formal vendor or implementing-partner onboarding process, while a smaller company may rely on its auditor, finance team or external CSR consultant.

An NGO should prepare a complete documentation pack containing:

The NGO should ensure that its bank account name matches its registered legal name. Personal accounts, informal project accounts and unexplained third-party accounts can create serious compliance concerns.

Companies may also ask whether the NGO, its trustees, directors or senior staff have any relationship with the company’s directors, employees or vendors. Full disclosure is safer than allowing a conflict to emerge later.

Designing a CSR Project That Companies Can Approve

A company is more likely to consider a proposal when it is written as a defined project rather than a general request for operating support.

The proposal should answer five practical questions:

1. What problem exists?
2. Who will benefit?
3. What will the NGO do?
4. How will progress be measured?
5. How will the company know that funds were used properly?

Connect the project to Schedule VII

Start by identifying the relevant CSR category. For example, a project that supports school retention may fall within education and employment-enhancing vocational skills. A maternal-health project may fall within healthcare and sanitation. A water-conservation project may fall within environmental sustainability or rural development, depending on its design.

Avoid using broad descriptions such as “community welfare” without explaining the specific activity. A company’s CSR committee needs to see how the project fits within the statutory framework.

Define the geography

State the district, blocks, villages, wards or institutions covered by the project. If the NGO works in Pune, Nashik, Nagpur or another Maharashtra district, explain the local need without exaggerating it.

Companies often prefer projects near their factories, offices, branches or operational locations, although they may fund projects elsewhere. Local relevance can help, but it does not replace eligibility and project quality.

Describe beneficiaries carefully

State who will participate or receive services. This may include:

• Children in government schools
• Women from low-income households
• Persons with disabilities
• Small farmers
• Patients requiring preventive healthcare
• Youth seeking vocational training
• Communities affected by water scarcity

Use a realistic beneficiary definition. Do not count every person in a village as a direct beneficiary if only a smaller group will attend training or receive services.

Separate activities from outcomes

Activities are what the NGO does. Outcomes are the changes expected from those activities.

For example:

• Activity: provide digital-skills training to young adults.
• Output: training sessions completed and participants attending.
• Outcome: participants demonstrate defined digital skills or move into further education, employment or enterprise support.

The NGO should avoid promising employment, income growth or behavioural change unless it has a credible method for measuring those results. Some outcomes depend on factors outside the NGO’s control.

Build a practical budget

The budget should show:

• Programme personnel
• Training or service-delivery costs
• Materials and equipment
• Travel and field operations
• Monitoring and evaluation
• Communication and documentation
• Administrative support
• Applicable taxes, including GST where relevant

Administrative costs should be explained rather than hidden. Staff salaries, accounting, compliance and reporting are often necessary for a project to operate properly. A transparent budget is more credible than an artificially low budget that leaves out essential costs.

The NGO should also state whether it expects the company to fund the full project or only one component. Co-funding, community contribution and other donor support should be disclosed to avoid double counting.

How to Approach Companies for CSR Funding

Identify companies with a genuine fit

Begin with companies that have one or more of the following:

• A CSR focus matching the NGO’s work
• Operations in the same state or district
• A published CSR policy covering the proposed activity
• A foundation or social-impact team
• A history of funding similar projects
• A supplier, employee or business connection that creates a legitimate introduction

Study the company’s annual report, CSR policy and disclosures on the MCA or company website where available. Look for the themes it has actually funded, not only the broad language in its policy.

A company that mainly supports education may not be the right prospect for a wildlife project. A company with a strong rural-development portfolio may not have the internal capacity to manage a city-based mental-health project.

Build a short institutional profile

Prepare a two- to four-page profile that covers:

• Legal status and year of registration
• Mission and programme areas
• Locations of operation
• Leadership and governance
• Main achievements, without unsupported claims
• Registrations and compliance
• Current donors or partners, where disclosure is permitted
• Contact details

The profile should be easy to verify. Use exact registration names and dates. Avoid generic phrases such as “working across India” unless the organisation actually has operations and systems in multiple states.

Submit a focused concept note

A concept note can be shorter than a complete proposal. It should include the problem, proposed solution, geography, beneficiaries, duration, broad budget and expected outputs.

Do not send the same proposal to every company. Adjust the language to the company’s CSR priorities, operating area and preferred reporting format.

A good first email is clear about the request. It may ask for an introductory meeting, permission to submit a detailed proposal or information about the company’s application process. It should not attach a very large document without explaining what is inside.

Be prepared for due diligence

The company may conduct a site visit, request references, review accounts, verify beneficiaries or ask questions about prior funding.

The NGO should be able to explain:

• Who approves expenditure
• Who signs cheques or authorises payments
• How procurement is handled
• How beneficiaries are selected
• How complaints are received
• How safeguarding risks are managed
• How unused funds are treated
• How financial and programme reports are prepared

CSR funding often involves an agreement that defines milestones, payment instalments, reporting, branding, audit rights and treatment of unspent funds. Read this agreement carefully before accepting it.

CSR Funding Compliance After Approval

Receiving approval is only the beginning. The NGO needs a system to manage the project and protect both its own reputation and the company’s compliance position.

Use a separate project ledger

The organisation does not always need a separate bank account for each project, unless the agreement requires it. However, it should maintain a separate project ledger or accounting code so that income and expenses can be traced.

Each payment should have supporting records such as invoices, bills, attendance sheets, purchase approvals, payroll records or delivery confirmations.

Do not shift money between project heads without approval. If a major change becomes necessary, document the reason and obtain written consent from the company.

Submit regular reports

A CSR report generally includes both financial and programme information:

• Funds received
• Funds spent
• Balance available
• Activity completed
• Beneficiaries reached
• Progress against milestones
• Delays and corrective action
• Photographs or other evidence
• Next-period plan

A financial statement without programme evidence is incomplete. Similarly, photographs without expenditure records do not demonstrate proper utilisation.

Track outcomes responsibly

Use a baseline or starting position where practical. The measurement method should match the project. For example:

• Education: attendance, assessment or retention indicators
• Healthcare: screenings, referrals or treatment follow-up
• Livelihoods: training completion, placement support or enterprise activity
• Water: structures completed, usage and maintenance
• Environment: area treated, survival checks or community participation

Impact assessment requirements may apply to certain companies and projects based on the thresholds and conditions under the CSR Rules. Even where a formal impact assessment is not legally required, a simple monitoring system helps the NGO report honestly.

Protect beneficiaries

Projects involving children, patients, women facing violence or vulnerable communities require additional safeguards. Obtain appropriate consent for photographs and personal data. Do not publish names, medical information or identifiable images without a lawful and informed basis.

The NGO should have basic policies for child protection, prevention of sexual harassment, grievance handling and data protection where relevant. These policies need to be implemented, not merely kept in a folder.

Understand GST and tax treatment

The GST treatment of grants, sponsorship arrangements, branding rights, training services and other payments can differ. A pure grant may not be treated in the same way as a payment made in exchange for advertising or promotional services.

The company agreement should clearly state whether the payment is a grant, a service arrangement or another type of transaction. The NGO should ask its chartered accountant to review GST invoicing, tax deduction, accounting and utilisation treatment before issuing documents.

CSR funds should not be treated as a source of profit for directors, trustees or related parties. Any related-party transaction should be disclosed and handled according to applicable law and the donor agreement.

Common Reasons CSR Proposals Are Rejected

The NGO has missing or expired registrations

An inactive 80G approval, incomplete 12AB records or missing CSR-1 registration can stop a proposal before the programme is evaluated.

The project does not clearly qualify

A request for office renovation, unrestricted promotion, a commercial activity or a project that primarily benefits the company may not qualify as CSR. The proposal must connect the work to Schedule VII and explain the public benefit.

The budget is not credible

A lump-sum budget without quantities, unit costs or explanations makes due diligence difficult. At the other extreme, an overly detailed budget that does not connect spending to activities can also confuse reviewers.

The NGO cannot show past work

Companies usually want evidence that the NGO can operate in the proposed geography and subject area. An annual report, audited accounts and verifiable programme records are more useful than a long list of broad claims.

The proposal promises too much

A project covering multiple states, thousands of beneficiaries and several outcomes may look ambitious but not implementable. A narrower proposal with a clear delivery model is often easier to assess.

Reporting is weak

Companies may avoid organisations that cannot produce utilisation details, beneficiary data or timely reports. Reporting should be treated as part of programme delivery, not an administrative task added at the end.

The NGO relies on personal relationships alone

An introduction can open a door, but CSR approval usually involves several people: the business sponsor, CSR team, finance department, legal reviewers and sometimes the board or CSR committee. The documents must stand independently of the relationship.

Comparison: CSR Funding and Other NGO Funding Sources

An NGO should not assume that a CSR grant can be used in the same way as an unrestricted individual donation. The agreement may impose specific limits on overheads, equipment, staffing, communication and unspent balances.

Frequently Asked Questions

Can a new NGO get CSR funding?

A new NGO can approach companies, but it may not immediately meet the track-record expectations applied to independent implementing agencies. It can begin by completing its registrations, running a well-documented pilot, building governance systems and partnering with an established organisation where appropriate.

Is FCRA registration required to receive CSR funding?

FCRA registration is generally relevant to foreign contributions, not automatically to domestic CSR funding from an Indian company. The NGO should still confirm the source of funds and keep domestic donations separate from foreign contributions in accordance with applicable rules.

Can CSR funds pay NGO salaries and administration costs?

Reasonable programme staff and administrative expenses may be included when they are necessary for delivering the approved project and allowed by the budget or agreement. The NGO should disclose these costs clearly and avoid presenting them as unrelated general expenses.

Can an NGO use CSR funding to build its own office?

A company may scrutinise office construction, property purchases or capital expenditure carefully. Such spending is not automatically eligible merely because it helps the NGO; it must be connected to an eligible CSR project and comply with the applicable CSR rules, ownership conditions and donor agreement.

How much CSR funding should an NGO request?

Request an amount based on the actual cost of a defined project, not on the company’s total CSR budget. Present a phased option if the full programme is large, and explain what can be delivered with each funding level.

Can an NGO apply to several companies for the same project?

It can approach several potential funders, but it must disclose co-funding and avoid claiming the same expense or beneficiary result to multiple donors. Maintain a project-wise and donor-wise accounting trail from the beginning.

Where to Start

First, review the NGO’s legal documents, 12A/12AB status, 80G approval, CSR-1 registration and three-year activity record. Then prepare an institutional profile, a focused Schedule VII-aligned concept note, a realistic budget and a basic monitoring plan.

Next, shortlist companies whose CSR priorities and operating locations match the NGO’s work. Study their CSR policies, contact the appropriate CSR or foundation team, and keep financial and programme records ready for due diligence.

For help reviewing the website, preparing a digital profile or setting up an online system for donor and project reporting, you can talk to the Govindani Infotech team on WhatsApp. Any project-specific commercial proposal or pricing is confirmed by the team directly on WhatsApp.