Budgeting a proposal: costs, overheads and tranches

A CSR budget should show what a project will cost, line by line, when the money will be needed, and what each rupee buys. Build it from the activities in your proposal, include the true cost of running the project, including your own staff and administration, and show the company how the money will be used within each financial year.

This guide is for NGO programme and finance staff. It covers the budget lines, your administrative costs and how CSR funders treat them, capital items, GST and staff costs, contingencies and interest, tranches, cost per beneficiary, and a sample budget. For the proposal itself, see writing a CSR proposal.

Start from the activities

A budget is the proposal in numbers, and a CSR team will read the two side by side. So:

• Cost every activity. If the proposal promises monthly parents’ meetings, the budget should show what they cost.
• Explain every unit cost. Show the workings: 12 facilitators × ₹5,000 a month × 12 months. Base rates on your last project’s actual costs, quotes or published rates, and say which.
• Split by year, and if you can by quarter. Money a company gives you counts as its CSR spending only when you use it (Ministry of Corporate Affairs FAQ 7.4), so the timing of spending matters as much as the total.
• Show other funding. If another funder pays for part of the project, show it, so nobody pays twice for the same cost.

The budget lines

The MCA’s FAQ 3.2, written about companies’ own CSR budgets, gives the salaries of “school teachers or other staff” on an education project as project costs. The same logic applies to your budget: people who deliver the project are a direct cost, not overhead.

Your administrative costs, and how companies treat them

Overheads are often misunderstood in CSR budgets, but the rules are simpler than they sound.

That cap is about the company’s own CSR department. The MCA’s FAQ 3.3 says expenses incurred by implementing agencies on the management of CSR activities “shall not amount to administrative overheads and cannot be claimed by the company”. Nothing in the CSR Rules caps an NGO’s own administrative costs on a project funded with Indian CSR money. Our guide to CSR budgets, tranches and the 5% cap explains the company’s side.

In practice, companies differ. Some allow a percentage for your organisational costs; some fund the same costs only as itemised lines, such as a share of your accountant’s salary and your rent; some resist them altogether. Ask early, and show what the line pays for.

If the money is foreign contribution, the rules change. A company that counts as a foreign source under the FCRA gives foreign contribution, and an NGO may spend no more than 20% of the foreign contribution it receives in a financial year on administrative expenses (section 8 of the FCRA). See what FCRA is.

Capital items and who will own them

So for every capital item, say in the budget who will hold it. A tablet or a vehicle for your own team can be held by your NGO. A water plant may be handed to a gram panchayat, which is a public authority. Agree any handover with the future owner before you budget. The FAQs say stamp duty and registration fees on transferring an asset count as CSR spending in the year of transfer, so include them.

Plan for upkeep too. Ask who will pay to run and repair the asset in its fifth year, and put the answer in your proposal. See capital assets in CSR.

Don’t ask for an endowment. Since 22 January 2021, a contribution to the corpus of any entity hasn’t counted as CSR spending (FAQ 3.5).

GST and staff costs

• GST on what you buy. Budget prices including GST. If your NGO isn’t registered for GST, or its own services are exempt, it generally can’t claim back the GST it pays, so that tax is a real cost. See GST for NGOs.
• GST on the grant. A grant for which the company gets nothing in return isn’t payment for a supply. If the company receives services, advertising or deliverables it owns, the money may be payment for a taxable service; sponsorship, for example, is taxable. Keep the agreement a grant, and take advice if it isn’t.
• Statutory staff costs. Include the employer’s provident fund and ESI contributions where they apply to you, and gratuity: since the labour codes came into force on 21 November 2025, fixed-term employees earn gratuity after one year of service instead of five. See the four labour codes.
• Increases. For a multi-year project, allow for pay and price increases in later years, and state the rate you assumed.

Contingencies and interest

A contingency line covers costs nobody could foresee, such as a sudden rise in a key price. Some companies accept a small one; others prefer contingencies built into unit costs. Either way, agree in the MoU that it can be used only with the company’s written approval.

Interest earned on CSR funds in your bank account is surplus from CSR activities (FAQ 3.4). Under Rule 7(2), surplus can’t become a company’s business profit; it must be ploughed back into the same project or otherwise used for CSR. Keep the grant in a separate account or ledger, report the interest in every utilisation certificate, and agree its use with the company.

Tranches and the financial year

Companies release CSR money in tranches, instalments linked to progress. Design them with the company, around your spending plan:

• Make the first tranche big enough to start well: hiring, training, materials and a buffer.
• Link later tranches to milestones you can show, such as centres opened or a baseline completed, and to a utilisation certificate for the previous tranche.
• Fit each year’s tranches to that year’s spending. Money you haven’t used by 31 March doesn’t count as the company’s spending, so don’t accept a tranche you can’t use in time.
• Budget each year of a multi-year project separately. An ongoing project can run for up to three years after the year it starts, and the company plans and reports it year by year.

Cost per beneficiary

Divide the total cost by the number of people the project serves to get a cost per beneficiary, and, better, divide it by the number who achieve an outcome to get a cost per outcome. CSR teams use both to compare proposals.

Use them with care. Costs are higher in remote places and for people who are harder to reach, and a low cost per head can mean thin, poor-quality work. Count each person once. If you give a cost per outcome, say how much of the change you expect would have happened anyway.

A sample budget

The first year’s money comes in three tranches: ₹8,00,000 on signing in April, for hiring, training, tablets, materials and the first months’ pay; ₹7,00,000 in October, once the centres are running and the first utilisation certificate is in; and ₹4,74,500 in January, after the half-year report. Each is sized to be used within 2027-28.

The cost is about ₹10,560 per girl over two years. If the share of girls reading a Class 3 text rises from 31% to the target of 55%, about 86 more girls will read at that level, a cost of about ₹44,000 for each, before allowing for change that would have happened anyway.

Common mistakes

• Round numbers with no workings, or totals that don’t add up.
• Administrative costs hidden inside programme lines.
• No pay increases, employer contributions or gratuity for staff.
• Forgetting audit fees, assessments, asset transfers and maintenance.
• Capital items with no named owner.
• One tranche for the whole year, or a March tranche that can’t be used by 31 March.
• A budget that tells a different story from the proposal.