Collaborating on CSR: co-funding, pooled funds and partnerships

Companies can work together on CSR. Rule 4(4) of the Companies (CSR Policy) Rules, 2014 (the CSR Rules) lets a company collaborate with other companies on projects, as long as each company’s CSR committee can report separately on them. Collaboration ranges from two companies funding the same NGO project, through pooled funds and foundations set up by several companies, to partnerships with government and philanthropic foundations.

Done well, it lets small budgets reach a scale none could reach alone, shares the cost of due diligence and evaluation, and spares partners from serving many funders with different demands. Done badly, it blurs who paid for what. This guide covers what the rules allow, the common models, how to keep reporting separate, governance and the pitfalls.

What the rules allow

Around that rule:

• Small budgets are the obvious case. The Ministry of Corporate Affairs’ (MCA) FAQs say a well-designed project can be managed with small CSR funds too, and point such companies to collaboration under Rule 4(4) (FAQ 4.5, General Circular 14/2021).
• Each company keeps its own duties. Its board must satisfy itself that its money was used as approved, backed by its CFO’s certificate (Rule 4(5)), and it reports its own spending in its annual report on CSR and in Form CSR-2.
• Impact assessments can be shared. An assessment one company commissions for a common project can be shared with the others for their boards and annual reports, and the collaborators decide how to split the cost, each within its own limit under Rule 8(3)(c) (FAQ 9.7).
• A joint foundation is allowed. Rule 4(1)(a) covers a Section 8 company, registered public trust or registered society “established by the company, either singly or along with any other company”.
• The usual rules apply to each company’s share: Schedule VII and its exclusions, an eligible implementing agency with a CSR registration number, and the rules on unspent money.

Models of collaboration

One structure doesn’t work: a company can’t simply hand its CSR money to another ordinary company to spend, because an ordinary company isn’t an eligible implementing agency under Rule 4(1). Pool through an eligible agency, or through a foundation you set up together. See ways to implement CSR.

Keeping reporting separate

Rule 4(4)’s test is practical: could each company’s CSR committee report on its own share tomorrow? Build that in from the start.

• Separate shares. Give each company its own budget lines, or a fixed percentage of every line, written into the agreement.
• Separate releases and certificates. Each company releases its own tranches and receives its own utilisation certificates.
• Separate year-end statements. Only money the agency has actually used counts as spent (FAQ 7.4), so each company needs to know how much of its money was used by 31 March. Each deals with its own unspent amount, through its own Unspent CSR Account or a transfer to a Schedule VII fund.
• Separate decisions on ongoing projects. Each board identifies its own ongoing projects and their year-wise allocations (FAQ 6.4).
• Honest results. If three companies fund a project that reaches 10,000 people, none of them reached 10,000 people alone. Report the project “with” the co-funders, or report the share each funded.

Governance: who decides what

Write it down before money moves:

• A steering group of the funders and the implementing agency, meeting at set intervals, with clear decision rules.
• A lead partner for due diligence, monitoring and reporting, chosen for capacity rather than size.
• Shared due diligence, with consent. One funder can run the checks to an agreed standard and share the file with the NGO’s permission, but each board still decides for itself. See choosing an NGO partner.
• Data sharing. Agree what data about participants is shared between funders, why and how it is protected. The main duties under the Digital Personal Data Protection Act, 2023 apply from 13 May 2027; share counts rather than names wherever you can.
• Entry and exit. Say how a new funder joins, and what happens when one leaves: notice, the effect on the budget and who covers the gap.
• Branding. Agree how each funder is acknowledged, and keep it modest. Brand building as a collateral benefit is acceptable, but companies “shall not use CSR purely as a marketing or brand building tool” (FAQ 4.3).

Pooled funds and joint foundations

A pooled fund suits companies in the same district, sector or group that want a shared, long-term programme. The cleanest form is usually a Section 8 company, registered public trust or registered society that the companies set up together, which qualifies under Rule 4(1)(a) once it has its income-tax registrations and a CSR registration number. See setting up a company CSR foundation.

Three rules shape a pooled fund:

• No endowment from CSR money. A contribution to the corpus of any entity hasn’t counted as CSR spending since 22 January 2021 (FAQ 3.5).
• Spent means used. Money paid into the pool counts as each company’s CSR spending only when the pool uses it (FAQ 7.4), so plan disbursements within the year.
• Re-granting needs care. If the pool funds other NGOs, require each to meet the same eligibility tests, including a CSR registration number, and take advice on how the arrangement is treated under the CSR Rules and income-tax law. Foreign contribution can’t be passed on at all: section 7 of the Foreign Contribution (Regulation) Act, 2010 bars it.

Working with government and other funders

Government. Companies can work alongside government programmes, but the FAQs say CSR “should not be interpreted as a source of financing the resource gaps in Government Schemes”, though a board “may undertake similar activities independently” within the Rules (FAQ 3.17). In practice, design your own project that works with schools, health centres and anganwadis, rather than paying salaries or bills a scheme should cover. Government-established bodies (Rule 4(1)(b)) and statutory bodies (Rule 4(1)(c)) can be implementing agencies, and a public authority can hold CSR-funded assets (Rule 7(4)). CSR spending in aspirational districts reached ₹1,402.89 crore in 2022-23, according to figures the MCA gave Parliament in December 2024. See CSR and government schemes.

Philanthropic foundations. A foundation’s own grant isn’t CSR money, so the CSR Rules apply only to the company’s share: keep it in separate budget lines and accounts. If the other funder is foreign, its money is foreign contribution, which the NGO can accept only with FCRA registration or prior permission and must keep apart. For outcome-based models, see impact investing and blended finance.

Finding partners. The MCA’s National CSR Exchange Portal lets companies search for implementing agencies and projects by sector, state and district, which can help co-funders find shared work.

Pitfalls

• No agreed lead, so nobody owns monitoring.
• One company’s money covering another’s late tranche, which muddles both companies’ accounts.
• Double counting of beneficiaries or outcomes in each funder’s reports.
• A funder leaving without notice, and a gap nobody planned for.
• Competing branding demands that turn the project into an advertising board.
• Sharing participants’ personal data without a clear purpose and consent.
• Treating a co-funder’s due diligence as a substitute for your own board’s decision.