How can we support organisations in utilising their unallocated and unspent CSR obligations – while remaining compliant with the law – at the end of the financial year?
As your CSR team coordinates and manages your corporate philanthropy, make sure to have a plan in case of unspent CSR funds. Come March, the pressure to meet compliance obligations may get in the way of having an effective strategy that aligns with your overall CSR objective. Consider this a half-year reminder!
What if the CSR amount is unspent?
In case of on-going projects, companies that have unspent funds must transfer them to an unspent CSR account within 30 days from the end of the financial year.
Unspent CSR amount to be transferred for non-ongoing projects
For non-ongoing projects, the company must transfer it to a fund specified under Schedule VII of the Companies Act such as the Prime Minister’s National Relief Fund and the Clean Ganga Fund. The unspent CSR amount must be transferred within six months from the end of the financial year.
However, we propose 6 other areas of interest where you could spend your unspent CSR funds.
Where else can your unspent CSR amount be invested?
1. Redirect Capital to Research
Contributing to research projects undertaken in the fields of science, technology, engineering, and medicine by public-funded universities and other permitted bodies, in alignment with items aimed at promoting the SDGs (ix)(b).
2. Inject into Incubators
Contributing to incubators and accelerators in STEM such as NSRCEL and CIIE, which are housed within IIMB and IIMA respectively and are aligned with item (ix)(a).
3. Social Impact Schemes
Funding innovative programmes such as Credit Guarantee Schemes for MSMEs, or using funds to unlock additional capital for social programs like skilling programmes, which are aligned to items (ii) and (iii). Contributing to funds aligned with items (v) and (vi) of Schedule VII such as the National Culture Fund, Armed Forces Flag Day Fund, Bharat Ke Veer Corpus Fund, etc., which are specific purpose funds set up to scale social impact.
4. Supporting Capital Requirements of Implementation Agencies
Procuring and handing over capital assets required by eligible implementation agencies that are executing projects or support ongoing infrastructure programmes and require additional funding, aligned with any of the items listed under Schedule VII.
5. Critical Community Causes
Conducting health and wellness camps, providing facilities such as mobile clinics, ambulances, or clean drinking water facilities, community clean-up campaigns, or green initiatives such as tree plantations, aligned with items (i) or (iv).
6) Social Stock Exchange
Companies can now channel 10% of their total CSR spend in the financial year into Zero Coupon Zero Principal bonds issued by NPOs on the Social Stock Exchange. This option is exempt from impact assessments and requires no extra due diligence by a contributing company. Learn about the basics of the Social Stock Exchange here.
FAQs
What are unspent CSR funds?
Unspent CSR funds are the portion of a company’s annual CSR budget that has not been spent, or committed to an on-going project, by the end of the financial year.
What if the CSR amount is unspent?
For on-going projects, the unspent CSR amount must be moved to an unspent CSR account within 30 days from the end of the financial year. For non-ongoing projects, it must be transferred to a Schedule VII fund within six months, such as the Prime Minister’s National Relief Fund or the Clean Ganga Fund.
Can unspent CSR funds be used on other activities?
Yes, if the activity is aligned with Schedule VII, such as research, incubators, social impact schemes, capital assets for implementation agencies, community causes, or Zero Coupon Zero Principal bonds on the Social Stock Exchange.
