India is unusual: it is one of the few countries where large companies are legally required to spend on social good. Together they now spend tens of thousands of crores a year — about 34,909 crore in FY 2023-24. But writing a cheque is not the same as changing a life. This explainer follows CSR money along its journey, from the boardroom to the beneficiary, and shows where transparency is won or lost. If you are new to the rules, start with our guides on how CSR funding works and Section 135 compliance.
Where the money starts
Under Section 135 of the Companies Act, qualifying companies must spend at least 2% of their average net profits on CSR. The board, advised by a CSR committee, sets a CSR policy and chooses which causes and projects to fund — within the permitted activities of Schedule VII, such as education, health, nutrition, environment and rural development. In FY 2023-24, education and healthcare together took the lion's share. So the journey begins with a company deciding, in effect, which problems its money will try to solve.
The three routes to beneficiaries
From there, CSR money reaches people in one of three ways:
- Direct implementation — the company (or its own foundation) runs the programme itself, using its staff and systems.
- Through an implementing agency — the company funds an external NGO to deliver the work on the ground. This is the most common route, and it is where the choice of partner matters most.
- Contribution to a fund — the company gives to a fund listed in Schedule VII, such as a national relief fund.
Most on-the-ground impact flows through the second route, which means the credibility of the implementing NGO largely determines whether the money works.
The gatekeeping: CSR-1 and compliance
Not every NGO can receive CSR funds. To be an implementing agency, an organisation must be registered with the Ministry of Corporate Affairs by filing Form CSR-1, and it should hold valid 12A and 80G. This registration is the first filter that keeps CSR money within accountable organisations. A company that skips this check — or funds an unregistered outfit — risks both non-compliance and wasted money. This is why verifying an NGO's credentials is not a formality but the heart of responsible CSR.
Following the money to the ground
Once funds are released, the real work begins: the NGO delivers the programme — building the classroom, running the health camp, training the women's group — and reports progress and spending back to the company. Good CSR relationships involve field monitoring, periodic reporting, and photographic and data evidence. The weakest link is often here: money that is disbursed but loosely tracked, or activities counted without checking whether they actually helped anyone.
Measuring impact, not just spend
The most important shift in Indian CSR is from counting rupees spent to measuring outcomes achieved. The law nudges this along: companies whose average CSR obligation is 10 crore or more must commission an independent impact assessment for large projects. But beyond the legal minimum, serious funders ask harder questions — did children learn, did patients recover, did incomes rise? — and publish what they find. Impact measurement is what separates CSR that looks good in a report from CSR that changes lives.
How transparency is kept — and lost
Several mechanisms exist to keep CSR honest: mandatory disclosure in the board's report, filing of Form CSR-2 with the government, unspent-fund rules, and impact assessments for big programmes. Transparency is lost, though, when project selection is opaque, when funds go to weak or related-party agencies, when reporting is vague, or when success is claimed without evidence. The fix is not more forms but a culture of clear choices, measured outcomes and honest reporting.
What this means for companies, NGOs and citizens
- Companies — choose verified partners, insist on outcome data, and publish honestly.
- NGOs — get CSR-1, keep clean accounts, and report real results to win repeat funding.
- Citizens — read companies' CSR disclosures; public scrutiny improves quality.
India's CSR law moves enormous resources towards development every year. Whether that money reaches the child, the patient or the farmer it is meant for depends on the choices made at each step of the journey. For companies looking to fund verified NGOs, explore NGOLists; for the underlying rules, see our Section 135 compliance guide.
Further reading on NGOLists
- Section 135 CSR Compliance Guide for Indian Companies (2026 Checklist)
- How CSR Funding Works in India: A Guide for Companies
- How to Verify an NGO's Credibility Before Donating in India
- 12A, 80G, CSR-1 & FCRA: The Complete NGO Compliance Guide
- World Food Day: Hunger and Malnutrition in India — What the Data Shows