Understanding CSR

The need of the hour is to go beyond traditional philanthropic activities and look for synergies in partnerships and funding. Companies have already started employing dedicated CSR experts to chalk out and implement CSR strategies that align with their long term goals

It’s time institutions start having strategies for CSR funds and make optimal use of those funds for effective outcomes

Corporate Social Responsibility is part of the section 135 and schedule VII under companies’ act 2013, which came into effect from April 1, 2014

As per the mandate with effect from April 1, 2014, every company, private limited or public limited, which either has a net worth of 500 crore or more, or turnover of 1000 crore or more, or a net profit of 5 crore or more needs to spend at least 2% of its net profit on Corporate Social Responsibility activities. The net profit considered should be the average net profit of immediate preceding three financial years

Companies today need to constitute a CSR committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director

Role of the Board?

  • After taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed; and
  • Ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company
  • The Board of every company, shall ensure that the company spends, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceding financial years

Companies can undertake the CSR activities

  • Through a registered trust or society
  • Through a company established by its holding
  • Through a subsidiary or an associate company or otherwise