CSR Funding for NGOs 2026: How to Get Listed on Schedule VII

India's corporate social responsibility framework channels roughly ₹29,000 crore annually into social programmes. Much of this flows through NGOs, trusts, and Section 8 companies that qualify as CSR implementing agencies. But accessing this funding is not automatic. An NGO must navigate a specific registration pathway under Schedule VII of the Companies Act, 2013, file Form CSR-1 on MCA21, register on NITI Aayog Darpan, and maintain 12A or 12AA status. This guide explains that entire pathway, from eligibility to proposal presentation, with the current rules as of FY 2026-27.

The Legal Framework: Section 135 and Schedule VII of the Companies Act 2013

India's mandatory CSR framework was introduced through Section 135 of the Companies Act, 2013, which came into force on 1 April 2014. It is the first law in the world to mandate corporate CSR spending through legislation, rather than treating it as voluntary philanthropy. The mechanism works on two levels: Section 135 defines who must spend and how much, while Schedule VII defines what they can spend on.

Any company that, in the preceding financial year, had a net profit of ₹5 crore or more under Section 198, a turnover of ₹1,000 crore or more, or a net worth of ₹500 crore or more, is required to constitute a CSR Committee and allocate 2% of the average net profits of the preceding 3 financial years for CSR activities. As of FY 2024-25, approximately 22,000 companies in India meet at least one of these thresholds.

The Companies (CSR Policy) Amendment Rules, 2021 tightened the framework significantly. Before April 2021, companies could channel CSR funds to any NGO they trusted through informal arrangements. Post-2021, every implementing agency must hold a formal CSR Registration Number (CRN) obtained through Form CSR-1, making the process auditable and reducing fly-by-night operators from accessing corporate CSR money.

What Activities Qualify Under Schedule VII?

Schedule VII of the Companies Act, 2013 (as amended by the Companies Amendment Act, 2019) lists 11 broad activity categories. NGOs operating in any of these areas can potentially qualify as CSR implementing partners for companies whose CSR policies align with these themes:

An NGO's work must demonstrably fall within one or more of these categories to qualify for CSR funds. Companies cannot fund activities outside Schedule VII, even for genuinely charitable purposes. Employee welfare activities (like company canteens or staff training) are explicitly excluded from the definition of CSR expenditure under Rule 2(1)(d) of the Companies (CSR Policy) Rules, 2014.

Eligibility Criteria: Who Qualifies as a CSR Implementing Agency?

Not every NGO can receive CSR funds. Rule 4(2) of the Companies (CSR Policy) Rules, 2014 as amended in 2021 lays down a specific eligibility checklist. Meeting all four conditions is mandatory:

Condition 1: Minimum 3 Years of Existence

The entity must have been registered and operational for at least 3 years as on the date it receives CSR funds. This means a trust registered in June 2024 becomes eligible only from June 2027. The 3-year clock runs from the original date of registration (Trust Deed registration, Society Registration Certificate date, or Section 8 Certificate of Incorporation date), not from the date of 12A certification or Darpan registration. New organisations wanting to participate in CSR projects before reaching 3 years can operate as sub-implementation partners under an eligible lead agency.

Condition 2: 12A or 12AA Registration Under the Income Tax Act

The NGO must hold a valid registration under Section 12A or Section 12AA of the Income Tax Act, 1961. Post the Finance Act 2020 (effective 1 April 2021), all existing 12A/12AA registrations were required to be re-validated under the new Section 12AB process. NGOs that re-registered under 12AB after June 2020 satisfy this condition. The 12A/12AB certificate serves as proof that the Income Tax Department has recognised the entity's charitable purpose, which is a minimum governance threshold for corporate donors.

Condition 3: NITI Aayog Darpan Registration

Every NGO must register on the NITI Aayog Darpan portal (ngodarpan.gov.in) and obtain a unique Darpan Unique ID before filing Form CSR-1. Darpan registration is free. It requires the NGO's PAN, registration certificate, audited financials for the latest year, and details of key persons (names, Aadhaar, PAN). Approval takes 7 to 14 working days. The Darpan ID is linked to the Government Grants Management System (GGMS) and allows government departments, PSUs, and private companies to verify an NGO's authenticity in real time.

Condition 4: Form CSR-1 Registration on MCA21

The final step is filing Form CSR-1 on the MCA21 portal (mca.gov.in). This generates the unique CSR Registration Number (CRN), which is the formal credential proving eligibility to receive CSR funds. Companies must record the implementing agency's CRN in their CSR-2 annual report, creating an auditable chain between corporate spending and the implementing agency.

Form CSR-1: The Step-by-Step Registration Process on MCA21

Form CSR-1 is filed once and remains permanently valid (unlike annual compliance filings). Here is the complete filing process for FY 2026-27:

The NITI Aayog Darpan Portal: Why It Matters

The NITI Aayog Darpan portal (ngodarpan.gov.in) is the Government of India's centralised NGO database, maintained by NITI Aayog in partnership with the National Informatics Centre. It was launched in 2015 and currently hosts over 2.2 lakh registered NGOs. For CSR purposes, Darpan serves three functions:

Verification by corporates: Corporate CSR teams search Darpan by state, district, and activity area to identify potential implementing partners. An NGO not on Darpan is effectively invisible to a corporate's CSR team conducting digital due diligence.

Cross-verification with MCA: The MCA21 Form CSR-1 system pulls organisation details from Darpan using the Darpan ID. Any mismatch between Darpan data and CSR-1 form data triggers rejection. Keeping Darpan records updated (especially PAN, registration number, and bank details) is therefore operationally critical.

Government grants linkage: Darpan is linked to the Government Grants Management System (GGMS) used by central government ministries to disburse grants to NGOs. An NGO registered on Darpan for CSR purposes simultaneously becomes visible to government departments for grants under the GGMS, opening an additional funding stream beyond corporate CSR.

Darpan registration requires the following documents: NGO registration certificate, PAN, audited financial statements (at least one year), activity report, and Aadhaar and PAN of at least 2 key persons (governing board members or trustees). The registration is free and approval is typically granted within 7 to 14 working days, though peak periods (October to March) can extend this to 21 days.

FCRA Registration: When Is It Required for CSR?

The Foreign Contribution (Regulation) Act, 2010 (FCRA), administered by the Ministry of Home Affairs (MHA), regulates the receipt of foreign funds by Indian associations. FCRA registration is mandatory for any NGO receiving funds from a foreign source, whether a foreign government, foreign company, or foreign individual.

For domestic CSR, FCRA registration is not required. Indian companies spending 2% of their domestic profits on CSR are using Indian-origin funds, not foreign contribution. However, the MCA has clarified through General Circular No. 21/2014 that CSR funds contributed by a foreign company's Indian subsidiary may constitute foreign contribution if the parent company's foreign shareholding meets certain thresholds. In such cases, the NGO receiving funds must hold valid FCRA registration.

As a practical guideline: if your NGO plans to receive CSR from multinational companies (foreign parent, Indian subsidiary), FCRA registration is strongly advisable. For CSR from wholly Indian-owned companies, Darpan and CSR-1 registration are sufficient. FCRA registration, obtained through the FCRA Online portal (fcraonline.nic.in), typically takes 9 to 18 months from application and requires 3 years of prior operation plus a clean income tax compliance record.

Income Tax Implications: For the NGO and the Corporate Donor

Tax Treatment for the Donor Company

One of the most frequently misunderstood aspects of CSR is the income tax treatment for the spending company. The Finance Act, 2014 inserted Explanation 2 to Section 37(1) of the Income Tax Act, 1961, expressly providing that expenditure incurred by a company in accordance with Section 135 of the Companies Act shall not be deemed to be an expenditure incurred for the purposes of business or profession. This means CSR spending is not deductible as a business expense.

However, if the CSR contribution goes to a fund or institution eligible under specific deduction sections, the company can claim that separate deduction. The most common examples:

This means an NGO holding 80G approval is significantly more attractive to corporate CSR donors, because the company can claim an income tax deduction on top of meeting its CSR obligation. Obtaining 80G certification is therefore a strategic priority for any NGO seeking serious corporate partnerships.

Tax Treatment for the NGO Receiving CSR Funds

For the receiving NGO (registered under 12A or 12AB), CSR receipts are treated as income received in the course of charitable activities. Under Section 11(1)(a) of the Income Tax Act, 1961, income of a charitable trust or institution applied for charitable purposes in India is exempt from tax, subject to two conditions: at least 85% of the income must be applied in the same financial year, and the remaining 15% can be accumulated for future application.

If the NGO is unable to apply 85% in the same year (for example, a large infrastructure project spanning multiple years), it must file a declaration under Section 11(2) with the Assessing Officer specifying the purpose and the period (maximum 5 years) over which the accumulated income will be applied. Failure to comply with the accumulation conditions results in the entire accumulated amount being treated as taxable income.

How Companies Identify CSR Partners: The Due Diligence Process

Understanding how companies select CSR implementing partners helps NGOs position themselves effectively. The typical corporate CSR due diligence process at mid-to-large companies follows this sequence:

Stage 1: Digital Screening (1 to 2 weeks). The CSR team searches the NITI Aayog Darpan portal and MCA21 CSR-1 database by state, district, and activity category. NGOs not appearing on both databases are immediately disqualified. The team then checks the NGO's CIBIL Donor Score (if available), income tax compliance status on the CBDT portal, and any adverse media mentions.

Stage 2: Document Review (2 to 4 weeks). Shortlisted NGOs submit a proposal package including CSR Registration Number, Darpan ID, audited financials for 3 years, activity reports with beneficiary data, board member details, and previous CSR project reports if any. The CSR committee reviews the alignment of the NGO's work with the company's Schedule VII focus areas and geographic priorities.

Stage 3: Site Visit and Verification (1 to 4 weeks). For grants above ₹25 lakh, most corporates conduct a field visit to the NGO's project sites before finalising the agreement. Companies with CSR obligations above ₹10 crore must also commission third-party impact assessments for projects above ₹1 crore under the 2021 Amendment Rules.

Stage 4: CSR Committee Approval and Board Resolution. The CSR Committee recommends the grant to the Board of Directors. A formal Board Resolution authorising the CSR expenditure and naming the implementing agency (with CRN) is mandatory documentation for the CSR-2 annual filing and the Auditor's Report under Section 143(3)(r).

CSR Reporting Requirements: Form CSR-2 and Annual Board Report

Once an NGO becomes a CSR implementing partner for a company, the company must report the arrangement in multiple statutory filings. NGOs should understand these requirements because companies will request specific data from implementing agencies to complete their filings accurately:

Form CSR-2 (MCA21): Introduced by the Companies (Accounts) Amendment Rules, 2022, Form CSR-2 is filed annually as an addendum to the financial statements. It captures project-wise CSR expenditure, the implementing agency's CRN, amount transferred, project name, Schedule VII category, district and state of implementation, and unspent balance. Filing deadline: 31 March of the following financial year. Non-filing attracts a penalty of ₹5,000 per day of default under Section 450 of the Companies Act, 2013.

Annual Report Board Disclosures: Section 134(3)(o) and Rule 8(3) of the Companies (Accounts) Rules, 2014 require the Board's Report to include the full CSR Annexure detailing the CSR Policy, Committee composition, annual action plan, project-wise spending, and reasons for any unspent balance. Implementing agencies are often requested to provide activity completion certificates and beneficiary reports to support these disclosures.

Statutory Auditor Report: Under Section 143(3)(r), the company's statutory auditor must report on whether the company has complied with its CSR obligations. Auditors review the CSR-1 numbers of all implementing agencies, the utilisation certificates issued by NGOs, and the bank statements showing fund transfers. NGOs should issue formal utilisation certificates (UC) for all CSR grants received, typically within 30 days of project completion.

Common Mistakes NGOs Make in CSR Applications

Based on the pattern of Form CSR-1 rejections and corporate CSR committee feedback, these are the most frequent errors NGOs make when pursuing CSR funding:

Mismatch between Darpan and CSR-1 data: The MCA21 system auto-validates CSR-1 form data against the Darpan database. Any difference in the organisation's name spelling, PAN, or registration number between the two portals causes automatic rejection. Always ensure both records match exactly, including punctuation and abbreviations.

Expired 12A certificate not renewed under 12AB: The Finance Act 2020 mandated fresh registration under the new 12AB process for all organisations that held 12A or 12AA certificates as of June 2020. Many NGOs did not complete the re-validation. Presenting an old 12AA certificate post-2021 triggers CSR-1 rejection because the MCA system cross-checks with the CBDT database, which will not show the old registration as valid.

Proposing activities outside Schedule VII: A common error is presenting broader social work (livelihood training, skill development) without specifically linking it to a Schedule VII clause. The proposal must explicitly reference the relevant Schedule VII clause (e.g., Clause (ii) for education and vocational skills) and demonstrate alignment with the company's CSR policy, which companies publish on their websites.

Inadequate financial documentation: NGOs with incomplete Darpan filings (missing audited balance sheets or annual reports) lose credibility in corporate due diligence. Maintaining clean, annually updated Darpan records is as important as the initial registration.

Section 8 Company vs. Trust vs. Society for CSR Eligibility

NGOs can be structured as Section 8 companies, public charitable trusts, or registered societies. All three forms are eligible for CSR-1 registration, but they differ significantly in governance, accountability, and corporate donor perception:

For NGOs being newly established specifically to receive corporate CSR, a Section 8 company is the most strategically advantageous structure. Its public MCA filings provide the governance transparency that large corporates (especially listed companies with public CSR reports) require before committing multi-crore grants. Trusts and societies may be better suited for organisations with an established community presence and governance structure already in place.

How NGOs Can Maximise Their CSR Funding Potential in 2026

Beyond the mandatory registrations, NGOs that consistently attract strong corporate CSR partnerships share several operational characteristics:

Maintain a strong digital presence with public impact data. Corporate CSR teams Google every NGO before reaching out. An NGO with a professionally maintained website, annual reports in PDF format, and third-party project coverage in reputable media (not press releases) builds trust before the first conversation. Link your website explicitly to your Darpan ID and CRN for instant verification.

Build measurable outcome reporting. The CSR Amendment Rules 2021's impact assessment requirement (for projects above ₹1 crore) has made outcome measurement a deal-breaker. NGOs that already track and report output metrics (number of beneficiaries, % change in target indicator, cost per beneficiary) are significantly more fundable than those reporting only inputs (funds spent, activities conducted).

Align your Schedule VII positioning explicitly. Do not assume a corporate will infer which Schedule VII category your work fits. Every proposal, website page, and Darpan profile entry should explicitly reference the specific Schedule VII clause your work addresses. Companies' CSR Committees are often time-constrained and appreciate direct alignment mapping.

File annual compliance punctually. Darpan annual updates, IT return filing, and CSR-2 partner data submission should be completed on time, every year. Companies review multiple years' compliance records. An NGO with a 5-year clean compliance trail is viewed as a far safer CSR partner than one with gaps, even if the gaps had legitimate reasons.

Pursue 80G certification proactively. As the income tax table above shows, an NGO holding 80G approval is more attractive because the donor company can claim an additional income tax deduction. The marginal processing effort of obtaining 80G certification from the CBDT is vastly outweighed by the improvement in fundraising positioning. Post-2021, 80G approvals are also issued for 5-year renewable terms under the new Form 10A/10B process, providing greater certainty to donors.