CSR (Corporate Social Responsibility)

​​​​​​It is a registration form that is required to be filled out by trusts and non-profit organizations to obtain CSR funds from companies in India. a csr-1 has to be filed with the ministry of corporate affairs (MCA) for verification that the organization is a legitimate registered entity.

​​​

​IS CSR MADITORY FOR TRUST?

     

No, CSR is not mandatory for trusts in India.

CSR (Corporate Social Responsibility) is obligatory for companies under the Companies Act 2013 to spend on social activities. Trusts do not have to do CSR, but they can receive CSR funds from companies if they are registered and genuinely work towards social causes such as education, healthcare, or environmental protection. hence while trusts are not required to do CSR, they can benefit from it if companies choose to donate them.

​

WHAT IS THE ELIGIBILITY CRITERIA  FOR CSR FOR TRUST?

 

In order to receive CSR funds from companies, there are certain eligibility criteria the trust must meet. Here’s a simple explanation:

​

ELIGIBILITY CRITERIA FOR CSR FUNDING FOR TRUSTS:

 

1. Registration:

Trusts seeking to engage in CSR activities need to be registered as public trusts in the state where their office is located.

Trusts seeking to raise funds for corporate social responsibility (CSR) must register with the ministry of corporate affairs (MCA) using a form called csr-1.

• CSR registration:

Any organization applying for CSR funds needs to fill out this form.

upon form submission, they’ll receive a unique CSR registration number, essential for getting funds

​

2. Approved activities:

For the trust to receive funds, it needs to engage in activities listed in schedule vii of the companies act, 2013. these activities include:

• Healthcare

• Poverty and malnutrition

• Environmental responsibility

• Art cultural and heritage

• Promote education

• Reducing carbon footprint

• Diversity and inclusion, etc.

​

3. Transparency: The trust should be clear. they must keep good records of financial reports and audit results. this shows how the CSR money is used. companies often want these papers before making choices.

​

4.Meeting legal requirements: Businesses must follow all relevant laws and regulations. this ensures your company acts legally. following the law protects your business from fines or penalties. it also builds trust with customers. complying with legal requirements is crucial for your company's success.

​​

​

​Why is CSR registration important for trusts? ​

         

  There are several reasons why trusts should register under CSR:​

• Eligibility for funding: Registration makes trusts eligible for receiving funding from various corporates, which earmark a certain percentage of their profits for social initiatives. these funds are needed to ensure support.

• Compliance with regulations: CSR registration ensures compliance with statutory regulations promoted by MCA in India.

• Monitoring and proof: The registration is equally beneficial for monitoring the use of funds and providing proof of any upliftment of the community.

• Transparency and facilitation: It promotes transparency and facilitates businesses in finding and sponsoring reputable organizations.  ​

 

​

​WHAT ARE THR MAIN TYPES OF CSR ACTIVITIES?

 

Corporate Social Responsibility (CSR) involves any and all activities or programs that businesses undertake to benefit society and/or the environment. Different types of CSR activities can be simply explained as follows:

​

1. Environmental Responsibility

Environmental responsibility relates primarily to reducing a company's negative environmental impact. This is shown in the following ways:

• Waste Reduction: Recycling and reducing packaging used in delivering goods/services.

• Renewable Energy Use: Switching to the use of solar or wind energy in operations.

• Resource Conservation: Saving water and energy in their operations.

The intention is to conserve natural resources and promote sustainability.

​

2. Economic Responsibility

Economic responsibility relates to making business decisions that not only benefit the company but also the implementing community and economy. The initiatives include:

• Support for Local Businesses: Purchasing goods and services from local suppliers.

• Investing in Community Development: Providing funds or resources operating or providing locally determined projects to encourage economic growth.

• Creating Job Opportunities: Trained local employees increase the employment rate.

This enhances economic well-being while helping meet corporate business objectives.

 

3. Philanthropic Responsibility

Philanthropic responsibility involves giving back to society through charitable actions. It comprises ways that do this, such as:

• Donating Money or Goods: charitable donations or sponsorship of initiatives that reflect one's values.

• Employee Volunteering: Allowing employees to volunteer during working hours for community service.

• Establishment of a Foundation: Create their own charitable organization to address social issues.

Such actions are meant to help improve quality of life and support various social causes.

 

 

4. Ethical Responsibility

Ethical responsibility demands that business is conducted fairly and honestly. To comply with this responsibility, businesses should:

• Treat employees fairly: Workers are provided with a fair wage and safe working conditions.

• Transparency with stakeholders: providing open communications regarding business practices and decisions.

• Adoption of ethical standards: There should be no discrimination, exploitation, or corruption.

• By upholding good ethical standards, firms engender trust from customers, employees, and the public.

 

WHAT KIND OF CSR ACTIVITIES ARE DONE BY TRUST?

                 

These trusts are involved in various CSR (Corporate Social Responsibility) activity programs aimed at maximizing benefits for society. Here are some key areas of focus for these activities:

 

• Community Development: The major areas which trusts have concentrated upon intercessory development of standard-of-living for marginalized communities include construction of housing, schools, hospitals, and provision of basic services, including but not limited to clean water and sanitation.

• ·Educational Initiatives:  A lot of trusts run various occasions of promoting education, particularly for very poor children. For example, trusts might set up schools, provide scholarships, or local craft training programs.

• ·Health Activities: Trusts may hold health camps, vaccination background drives, and awareness programs on hygiene and nutrition to bring better health practices to the community.

• ·Environmental Conservation:  Some trusts are involved with the environment, taking programs on tree plantation, waste management, and promoting environmentally sustainable practices.

• ·Skill Development :Trusts often do conduct training programs aimed at the uplift of trading skills in common people, which would directly lead to higher quality jobs in the community.

• ·Support for Vulnerable Groups: Trusts may focus on some vulnerable groups-such as women, children, etc.-by providing them resources and support systems. 

 

WHAT IS THE AMOUNT OR LIMIT TO BE SPEND ON CSR ACTIVITIES?

 

In India, companies are required to contribute a fixed percentage of their profits towards Corporate Social Responsibility (CSR) activities. This article outlines the key provisions related to CSR spending by companies:

​

 1.Minimum Spending

• 2% of Average Net Profit

• If companies meet any of the necessary prerequisites for this initiative, they would have to spend a minimum of 2% of the average net profits of the last three financial years on CSR activities. This average will be calculated before tax.

​

 2.Eligibility Criteria

     Companies must fulfill at least one condition to be subjected to this requirement:

• Not less than 500 crore rupees of net worth.

•  An annual turnover of over 1000 crore rupees.

•  Not less than 5 crore rupees of net profits

 

 3.Spending of Unspent Amounts: If the company fails to spend the minimum requirement of 2%, it must provide a rationale in the annual report. Any unspent money should be earmarked for CSR activities in subsequent periods

​

 4.Assessment Impact Spending: Companies have also been allowed to spend money on impact studies of their projects. The maximum spend on this is up to 2% of total CSR spending or 50 lakh rupees, whichever is higher.