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How Indian NGOs can mobilize funds through CSR: A guide

Many Indian companies have been contributing to the society through Corporate Social Responsibility (CSR) arms and foundation since their inception, like Tata group, Aditya Birla group, among many others. So, CSR is not an entirely new concept in Indian context. But the Companies Act 2013 has put CSR in the forefront, with a ‘comply or explain’ mandate, for companies that have more than 5 crores INR as net profit for a year.

This mandate has thus opened new doors for Indian NGOs, and has provided a huge opportunity to be tapped. But not many NGOs have been able to take advantage of this, and thus many still do not have access to CSR funds, because of a number of reasons like lack of initiative, little understanding of the scenario, no network, etc. So, here is a step-by-step guide for NGOs on how they may mobilize CSR funds:

  1. Understand the Clause 135 of Companies Act 2013:

In India, clause 135 of Companies Act of 2013 governs the CSR, and was passed on 29th of August 2013. NGOs need to understand the applicability of the clause on companies, its details, permitted themes for intervention, etc. To give a snapshot, the CSR provisions in the act apply for companies with an annual turnover of 1000 crores INR or more, and with more than 5 crores INR as net profit for a year. The act mandates spending of at least 2% of the average net profit in three consecutive years on CSR activities. The themes are also well-defined, along with what will be and what will not be considered expense on CSR. NGOs may ask a legal consultant to understand the act better.

  1. Statutory requirements for NGOs:

Most of the corporate donors donate only to those NGOs which have certificates like 80G registration (Provides 50% Income Tax exemption to the donor), 12A registration (Tax-free income for NGO), apart from NGO Registration certificate. It is in best interest of the NGO to get these registrations done to increase the chances of receiving funds. Foreign companies may donate funds only if the NGO has an FCRA (Foreign Contribution Regulation Act) registration. Ensure that your NGO has all the documentation in place, and do not forget to renew these every year.

  1. Map and understand the corporate donors in your area:

Map the existing companies in your area. Start by understanding their profile, preferences and policies. Try to find out whether they are already undertaking some activities under CSR. And finally, fix a meeting with the CSR team or HR.

  1. Start building a network:

NGOs need to step-out and explore the various possibilities for funding. Events are being organized by many agencies devoted for CSR. Online and offline campaigns are going on year-round. These events provide a very good platform for active participation, networking with prospective donors, and building relationships. These may result in fruitful associations in long run.

  1. Keep documented evidence ready:

Apart from the legal documents, corporate donors also look for authentic evaluation reports, impact data, and third-party evaluations to ensure that NGO is credible, and is doing outstanding work in its field. Make sure to keep the documentation up-to-date.

  1. Look for resources required:

Indian companies are willing to provide support to NGOs in terms of funding, and also in terms of volunteers for the projects. This will also give them a ‘hands-on’ experience of the NGO sector.

  1. Ask for feedback from your current donors:

Your current donors can help you in improving your systems and processes, but only if you ask for their feedback. Make it a routine activity to ask them for feedback for your processes, communication, engagement strategies and every new thing you implement.

  1. Set expectations right:

It is very important to set the expectations right, since the beginning itself, in terms of requirement of resources, activities under the project, intended outcomes and impact. While it is important to aim for a positive impact for the target community, NGOs must let the donor know that timelines also matter a lot. Social change is certainly not an overnight process, and many other factor come into play in this context. To quote the Head of a renowned Indian CSR foundation, donors need to know that ‘Social development is not a low-hanging fruit, rather it is a seed to be sown which will gradually be grown into the tree of desired impact in the years to come!’