Since their beginnings, numerous Indian businesses have given back to society through their Corporate Social Responsibility (CSR) departments and foundations, including the Tata Group and other companies, among many others. CSR funding for NGOs are not wholly a novel idea in the Indian setting.
However, the Companies Act of 2013 has prioritized CSR, requiring businesses with net profits of more than 5 crores INR per year to “comply or explain.”
“Corporate Social Responsibility (CSR)” refers to the actions done by a corporation in fulfilment of its legal duty under Section 135 of the Act in accordance with the terms of these rules but does not cover actions taken in the course of the firm’s regular operations.
Thus, this mandate has given Indian NGOs new opportunities and opened new doors for them. But few NGOs were able to benefit from this, and as a result, many continue to lack access to CSR funding for NGOs for a variety of reasons, including a lack of initiative, a lack of knowledge of the situation, a lack of a network, etc. So, the following is a step-by-step instruction manual for NGOs on how they might raise CSR funds:
Understanding the Companies Act 2013’s Clause 135
CSR is governed in India by clause 135 of the Companies Act of 2013, which was passed on August 29, 2013. NGOs must comprehend the provision of companies’ applications, their specifics, approved intervention themes, etc. In a nutshell, businesses with a yearly revenue of at least 1000 crores INR and a net profit of at least 5 crores INR are subject to the CSR provisions of the act.
According to the regulation, companies must invest at least 2% of their annual net profits in CSR initiatives over the course of three years. The topics and what will and won’t be regarded as an expense of CSR are both clearly stated. NGOs may consult a lawyer to better comprehend the act.
Legislative prerequisites for NGOs:
The majority of corporate donors exclusively give to NGOs that have certificates such as 80G registration (which offers the donor a 50% income tax exemption) and 12A registration (which grants the NGO tax-free income) in addition to NGO Registration certificates.
The NGO should complete these registrations as soon as possible to improve its prospects of funding. Only organizations registered under the Foreign Contribution Regulation Act (FCRA) may accept donations from foreign corporations. Make sure your NGO has all the necessary paperwork, and don’t forget to renew it annually.
Locate and comprehend the local corporations that give:
A map of the local businesses should be created. Learn about their profile, preferences, and policies first. Try to learn if they are already engaging in CSR-related initiatives. Finally, schedule a meeting with the HR or CSR teams.
Begin constructing a network:
NGOs must take risks and investigate all available financing options. Numerous CSR-focused organizations host events. All year long, campaigns are run both online and offline. These gatherings offer a great setting for interaction, relationship-building, and networking with potential funders. Long-term, these could lead to successful associations.
Keep supporting documentation on hand:
Corporate donors look for real evaluation reports, impact statistics, and third-party evaluations in addition to the legal paperwork to confirm an NGO’s credibility and ability to perform excellent work in its field. Keep the documentation current at all times.
Look for the necessary resources:
Both financially and through volunteers for the projects, Indian businesses are prepared to support NGOs. They will also have “hands-on” experience with the NGO sector as a result of this.
Ask current donors for input:
Only if you do will your current donors be able to assist you in enhancing your systems and procedures. Asking for their opinions on your procedures, communications, engagement methods, and any new initiative you introduce should become a regular practice.
Set realistic expectations:
It’s critical to establish realistic expectations from the outset on the need for resources, project-related activities, anticipated results, and effects. While it’s crucial to focus on having a good effect on the target population, NGOs must also make the donor aware of how critical timetables are. Social change is undoubtedly not a process that happens quickly, and many other factors are at play in this situation.
The focus of NGOs and CSR funding has, appropriately, been on tackling emergency relief actions since the COVID-19 outbreak entered India, from supplying migrants with necessities to offering tailored assistance to end-beneficiaries.
However, this short-term effort could unintentionally have a negative long-term effect on NGOs, particularly those that receive a lot of CSR funding for NGOs. They assist our society throughout the year, not just in times of need. They interact with groups that the government finds challenging to reach (like street children), assist in addressing issues that are challenging to address (like domestic abuse), identify areas where the government can improve, and even promote innovation. Today’s NGO sector is essential to helping society’s marginalized people.