Monitoring CSR projects: what the rules ask and how to do it

Monitoring is how a company checks, while a CSR project runs, that the money is being used as approved and the work is on track. The CSR Rules make it a board duty: the board must satisfy itself that funds disbursed were used for the purposes and in the manner it approved, and the chief financial officer (CFO) must certify this.

Monitoring isn’t the same as evaluation or impact assessment, which ask after the event what changed and why. It is the routine of data, visits, conversations and financial checks that lets you fix problems while there’s still time. This guide covers what the rules ask, a monitoring plan, field visits, financial checks, outside monitors and what to do when a project slips.

What the rules ask

The rules are in Section 135 of the Companies Act, 2013 and the Companies (CSR Policy) Rules, 2014 (the CSR Rules). The Ministry of Corporate Affairs’ FAQs call CSR “a Board-driven process” (FAQ 2.3) and say the government has “no direct role” in approving or implementing projects (FAQ 2.4, General Circular 14/2021). Nobody outside the company will monitor your projects for you.

Three activities are easy to confuse:

• Monitoring happens during the project, by you and the partner, against the plan.
• Evaluation happens at set points, often by an outsider, and asks whether outcomes were achieved and why. See baselines and evaluation.
• Impact assessment under Rule 8(3) is required of companies with an average CSR obligation of ₹10 crore or more, for projects of ₹1 crore or more completed at least a year before, through an independent agency. See impact assessment under the CSR rules.

A monitoring plan for each project

Agree a one-page plan with the partner before the first tranche, and attach it to the agreement.

Keep it proportionate: a ₹10 lakh, one-year grant needs a lighter plan than a ₹3 crore, three-year programme. Our guides to choosing indicators and the results chain and logframe go deeper.

Indicators, data and dashboards

• Few, meaningful indicators. Outputs, such as sessions held or kits given, show activity. Outcomes, such as children reading or incomes rising, show change. Track both, but judge the project on outcomes.
• A baseline first. Without a measured starting point you can’t show change later.
• Count people once. Keep people reached separate from people who benefited, and record gender, age, disability and location where they matter.
• Check the data. Each quarter, compare a sample of reported figures with registers, test results or receipts. Precise, modest numbers with a method beat big round ones.
• Look for confirmation from outside. A result the partner reports, you observe and a school or health centre confirms carries more weight than one the partner reports alone.
• One dashboard per project, on one page: spending against the plan, milestones, outcome indicators, risks and incidents.

Field visits that tell you something

• Prepare. Read the last report, note the milestones due and pick a few claims to check.
• See the work, not just the office: a class, a camp or a training session.
• Talk to participants without the partner’s staff present, with their consent and in their language.
• Check records: attendance and stock registers, and receipts for a sample of spending.
• Agree actions in writing within a week, and check at the next visit that they happened.
• Be a good guest. Give notice, keep the group small, pay your own way and never stage photographs.

Financial checks and utilisation certificates

The CFO’s certificate rests on documents, so collect them through the year rather than in March:

• A utilisation certificate with each tranche, showing spending against each budget line, certified by the partner’s auditor or a chartered accountant. See reporting to funders.
• Reconcile reported spending with the budget, and ask about large variances early.
• Sample-check vouchers on visits.
• Track interest. Interest on CSR funds held by the partner is surplus, which must stay within CSR (Rule 7(2)).
• Keep an asset register of anything built or bought, with its holder under Rule 7(4).
• Get a statement as at 31 March within days of the year-end. Only money the agency has actually used counts as spent (FAQ 7.4), and unspent money for ongoing projects must reach the company’s Unspent CSR Account within 30 days, so this statement drives the year-end decisions. See unspent CSR money.

Outside monitors

For large, remote or technical projects, an outside agency can monitor for you, checking data, visiting sites and reporting independently. A company may also engage an international organisation, such as a United Nations agency, for monitoring and evaluation, though not to implement the project (Rule 4(3)).

• Write terms of reference that say what to check, how often and how to report.
• Check the monitor’s independence from the partner.
• Budget it as a project cost. Expenses directly incurred on monitoring a particular project aren’t administrative overheads (Rule 2(1)(b)).
• Keep the board’s duty in view. Hiring a monitor doesn’t move responsibility for the Rule 4(5) satisfaction.

Don’t confuse outside monitoring with the independent impact assessment that Rule 8(3) requires at least a year after a large project ends.

When a project goes off track

1. Talk early. Ask the partner what is happening before drawing conclusions. Partners who raise problems first are the ones to trust with more.
2. Diagnose. Is it the design, the delivery, the context (a flood, an election, staff transfers), the partner’s capacity, or misconduct?
3. Re-plan. Agree changes with the partner. On the company’s side, changes go through the CSR committee and the board (Rule 5(2), proviso), and money can move from one project to another if the board and committee record the change (FAQ 6.7). In exceptional circumstances, the board may modify or abandon an ongoing project on the committee’s recommendation (FAQ 6.6), but no ongoing project may run beyond three years after the year it started (FAQ 6.3).
4. Pause tranches if the risk is serious, such as suspected fraud, double funding or harm to people. Follow your anti-fraud policy, and report any suspicion of the sexual abuse of a child to the police, as the POCSO Act, 2012 requires.
5. Exit if you must, with notice and with a plan for the people served and for any assets.

Reporting up

Each quarter, give the CSR committee one page per project: spending against plan, milestones, outcome indicators, risks and incidents. At the year-end, prepare a pack: utilisation statements, unspent amounts by project and whether each belongs to an ongoing project, capital assets and their holders, and the evidence behind the CFO’s certificate.

The same records feed the annual report on CSR, Form CSR-2 and, for large listed companies, the BRSR. Keep one project register as the source for all of them, so the figures always match.