The truth is rarely convenient. As March races towards its end and corporate social responsibility (CSR) deadlines looms large, corporate India repeats a predictably familiar cycle, maintaining the status quo. There is a sudden urgency, a flurry of emails demanding updates on spending status and impossible asks of implementing partners to offload the freshly allocated CSR funds. Or worse, what should be systematic social investment degenerates into technically ‘committed’ funds that remain practically inaccessible for years. Procrastination or administrative sleight-of-hand? The reality is that while decision-makers deliberate in comfortable boardrooms, millions across India get pushed by another year to avail basic necessities like clean water, electricity, and essential infrastructure. Real people. Real needs. Real impact delayed.
Each year a resonable amount of CSR fund remains unspent and an even larger amount is spent without any proper need assesment. Without well-defined CSR processes and strategies, corporate philanthropy often becomes a last-minute compliance scramble rather than a driver of meaningful societal change.
With just a few days left until the March 31 deadline to file Corporate Social Responsibility returns for FY2025, you don’t have to do this alone.
The Evolution of Compliance
India’s CSR landscape fundamentally changed further when the “Comply or Explain” (COPEX) approach of 2014 was superseded by 2021’s “Comply or Pay Penalty” (COPP) regime. Action, execution & measured results were further emphasized.
Over the years CSR has seen major shifts – What began as discretionary philanthropy is now a regulated responsibility, with accountability at its core. This mandatory approach to giving represents a paradigm shift in how businesses engage with society and national progress, recasting CSR to a non-negotiable mandate attached with a price tag for falling short.
The two pathways for your unspent CSR Funds
Your company falls under mandatory CSR compliance if it meets any of these thresholds:
Net worth ≥ INR ₹500 crore
Turnover ≥ INR ₹1,000 crore
Net profit ≥ INR ₹5 crore
For Your Ongoing/Multi-Year Projects:
Let’s say you’ve committed ₹50 lakh to a three-year skill development initiative, but spent only ₹15 lakhs this year. Here’s what happens next:
- Transfer the remaining ₹35 lakh to a separate bank account – “Unspent Corporate Social Responsibility Account” – in any scheduled bank within 30 days from the end of the financial year (by April 30th)
- Utilize these funds in pursuance of your obligation towards the CSR Policy within a period of three financial years
- If any amount still remains unused after three years, transfer the same to a Central Government Fund specified in ScheduleVII, within a period of thirty days from the date of completion of the third financial year.
Understanding “Ongoing Project” Status:
An ‘ongoing project’ means a multi-year project having timelines not exceeding three years excluding the financial year in which it was commenced. It includes projects that were initially not approved as multi-year but whose duration has been extended beyond one year by the board based on reasonable justification. Do note, all multi-year projects must come with clearly defined milestones and deliverables and supporting documentation.
Common Mistake: Opening multiple Unspent CSR Accounts for different projects. You need only one account per financial year, not per project.
For Your Single-Year Projects:
If you allocated ₹25 lakh for a one-time school infrastructure project but only spent ₹18 lakh, the remaining ₹7 lakh follows a different path:
- Transfer the ₹7 lakh to Central Government Fund specified in Schedule VII (PM CARES, Swachh Bharat Kosh, etc.) within six months of financial year ending (by September 30th)
- Do not spend this on new CSR activities during the six-month window
- Do not attempt to carry it forward to next year’s CSR budget
Expert Tip: When transferring to Schedule VII funds, obtain and preserve the transfer acknowledgment carefully. During audits, this is typically the first document requested.
Critical Timelines for CSR Compliance
Why do companies struggle to deploy CSR Funds
If you’re facing unspent CSR challenges, you’re likely experiencing one or more of these common scenarios:
1. The Long-Term Project Dilemma
“We committed to a three-year village adoption program, but infrastructure development took longer than expected due to monsoon delays.”
Solution: Properly document your multi-year projects at the Board level, with clear annual spending milestones and contingency plans. Consider seasonal factors, especially if you’re working in rural areas!
2. The Clarity Gap
“We had the budget approved, but weren’t sure if the vocational training program qualified under Schedule VII activities.”
Solution: Obtain written confirmation from your CSR advisors or auditors before project initiation.
3. The Partner Problem
“We couldn’t find an implementing agency with both the required expertise and CSR-1 registration.”
Solution: Develop and maintain a pre-approved roster of implementing agencies across different focus areas. Start building these relationships in Q1, not Q4!
Pro Tip: India’s development sector has deep structural issues. Social impact funding requires both expertise and approvals, but many grassroots partners lack resources because of chronic underfunding and lack of awareness. CSR management firms like ‘Let It Count’ bring valuable expertise that closes this gap, helping you navigate procedural complexities and maximise your organization’s social return on investment.
4. The Process Bottleneck
“The project was approved in July, but procurement procedures delayed implementation until Feb.”
Solution: Identify timings for achieving miles major tones and create a fast-track approval and execution process.
Pro Tip: Do not undertake CSR project implementation yourself unless you have a well-planned execution strategy and adequate team supporting it. Implementation through verified and expert NGOs working for years closest to the issues they seek to address is a great way to execute your dream impact.
The real cost of Non-Compliance
There’s something revealing about our evolving relationship with corporate social responsibility in India, from viewing CSR as optional charity to recognizing it as a fundamental corporate obligation, with real financial consequences.
The Ministry of Corporate Affairs now enforces compliance with significant penalties:
- For your company: Up to twice the unspent amount or ₹1 crore (whichever is less)
- For you and other officers: Up to one-tenth of the unspent amount or ₹2 lakh (whichever is less)
Beyond The Financial Hit
With even corporate leaders facing personal financial consequences for CSR failure, social impact is no longer peripheral to business. It is a core obligation of corporate citizenship.
Family-owned/run firms have been critical to India’s growth story, championing social responsibility long before the 2014 legal mandate. As the India Philanthropy report by Bain & Dasra highlights, these firms contribute 65-70% of private-sector CSR spending annually, with the top 2% of family-owned businesses contributing 50-55% of this amount.
Today’s boardroom discussions focus less on mere compliance and more on how effectively corporate resources create sustainable impact. Directors increasingly probe the alignment between business strengths and meaningful social outcomes, recognizing that weak CSR execution signals misplaced priorities—a message that employees internalize and remember.
Perhaps most damaging is the fractured community trust when CSR pledges remain unfulfilled, creating barriers that may prove insurmountable for future engagement.
The path toward meaningful CSR implementation begins with structural reform within corporate processes. Companies that consistently achieve full fund deployment typically embrace a three-part strategy:
- Quarterly spending targets with monthly reviews
- Multiple implementing partners for each focus area
- A dedicated CSR operations manager who isn’t burdened with other responsibilities or outsourced CSR experts managing end-to-end CSR processes
While immediate compliance for FY2025 remains a priority, this is how proactive CSR managers are already planning for more impactful programs next year:
1. Building a Project Pipeline: Identify and nurture relationships with potential implementing partners now to avoid last-minute project searches for next year’s initiatives. Start those conversations in April, not February.
2. Balancing Your Portfolio: Mix long-term flagship projects with smaller, high-impact initiatives that can be can deliver results within a single financial year. A 70/30 split between long-term and short-term projects often works well.
3. Improving Documentation: Create standardised templates for project proposals, monitoring progress reports, and impact assessment to streamline reporting and transparency. Don’t reinvent the wheel for each project—consistency saves time.
4. Elevating Governance: Transition from quarterly CSR Committee updates to monthly check-ins for sustained momentum and agile decision-making. Create a WhatsApp group for your CSR committee to share quick updates between formal meetings.
Or simply outsource your entire CSR Management to experts who take care of everything from strategy and discovery to execution and compliances. Approach CSR execution in the same manner you would strategise your company’s operations.
With the final weeks of March approaching, here are three things you can do tomorrow morning:
1. Calculate Your Exact Position: Get clarity on your exact unspent CSR amount and which projects it relates to.
2. Speak to Your Finance Team: Once you have grounded all the details, reach out to key stakeholders (CEO, CFO, Board members) to discuss compliance status and action plan.
3. Identify: Programs that will best absorb your CSR budgets with the impact you are looking for.
CSR management organizations like ‘Let It Count’ dealing with multiple NGOs/implementation partners across the country have a fair idea on gaps and requirements where your funds can be put to their best use ensuring meaningful impact and and within all compliance measures. (www.letitcount.com).
At its core, CSR is truly an opportunity maximise the social impact of your corporate resources. When aligned with your company’s strengths and purpose, it becomes a strategic platform for social contribution and brand enhancement, not a compliance task. The most effective companies aren’t the biggest spenders, they’re the ones that embed social impact into their way of doing business.
As this financial year wraps up, every decision you make now shapes next year’s success. Strengthening processes, whether in documentation, partnerships, or governance, sets the stage for smoother compliance and greater impact in the long run.
Need help navigating your CSR compliance challenges? Let It Count offers specialised advisory services for CSR fund management and compliance. Contact us for a rapid assessment of your current position (write to us at – contact@letitcount.com)
This article is intended for informational purposes only and does not constitute legal or professional advice. Companies should consult with their legal and financial advisors regarding specific CSR compliance requirements.