Three ways to deliver CSR

A CSR foundation is the social wing of a company. The company's CSR money flows to it, and the foundation uses that money to run programmes itself or to fund other organisations. Before you set one up or join one, it helps to see where a foundation sits among the choices the law gives a company.

Under Section 135 of the Companies Act, 2013, a company above certain size limits must spend at least 2% of its average net profit on corporate social responsibility (CSR). The CSR Rules, formally the Companies (Corporate Social Responsibility Policy) Rules, 2014, set out how it can deliver that work. There are three main routes, plus the option of working with other companies.

The routes

• Directly: the company's own staff run the projects. No separate organisation or CSR-1 registration is needed, but the company carries all the work and risk itself.
• Through its own foundation: a Section 8 company, registered public trust or registered society that the company sets up, alone or with other companies. This course is about this route.
• Through an independent implementing agency: an NGO the company did not set up. It usually needs a track record of at least three years in similar work.
• In collaboration with other companies: pooling money on a shared project, as long as each company's CSR committee can report on its own share separately.

Notice what this means for a company's own foundation. It doesn't need the three-year track record, so a new foundation can start implementing CSR as soon as its registrations are in place. Module 2 covers those registrations.