Ways to implement CSR: directly, through an agency or together

A company can carry out its CSR in three ways: by running projects itself, by funding an eligible implementing agency (an organisation that carries out CSR projects on the company’s behalf), or by working with other companies on a shared project. It can also contribute to the government funds named in Schedule VII, fund certain research and, since 27 May 2026, put up to 10% of the year’s CSR spending into instruments listed on a Social Stock Exchange.

The rules are in Rules 4 and 4A of the Companies (Corporate Social Responsibility Policy) Rules, 2014 (the CSR Rules), made under Section 135 of the Companies Act, 2013. They decide who may do the work, what each organisation must hold, and what the board stays responsible for.

This guide is for CSR heads, company secretaries and finance teams choosing routes for the year.

The routes at a glance

The Ministry of Corporate Affairs (MCA) also recognises two routes that involve no project of the company’s own: contributions to the funds named in Schedule VII, and contributions to the incubators, research projects and research institutions in its item (ix) (FAQ 3.14 of its CSR FAQs, General Circular 14/2021).

A company can mix routes, and the annual action plan records the manner of execution for each project (Rule 5(2)(b)), so you choose project by project.

Doing it yourself

Direct implementation means the company’s own people design and run the project. They may still hire contractors, such as a builder or trainers. What makes it direct is that no implementing agency carries out the project for the company.

• No CSR-1 is needed. The MCA’s FAQs say the question of filing Form CSR-1 “does not arise” when the company carries out CSR activities directly (FAQ 5.8).
• Costs split two ways. Salaries of staff working on a particular project are project costs. The CSR department’s general costs, such as its head’s salary, training, travel and stationery, are administrative overheads, capped at 5% of the year’s total CSR expenditure (Rule 7(1); FAQ 3.2). See CSR budgets and the 5% overhead cap.
• The company can’t keep what it builds. A classroom or water plant paid for with CSR money must be held by an eligible charity, a collective of the project’s beneficiaries or a public authority (Rule 7(4)). See capital assets in CSR.

Through an implementing agency

Most CSR money reaches people through implementing agencies: about 60% of it, according to the MCA’s analysis of companies’ filings reported to Parliament in November 2021.

What every agency needs

• A qualifying legal form. An individual, a partnership or an ordinary company can’t be an implementing agency.
• Income-tax registrations, for routes (a) and (d). The CSR Rules still call them registration under section 12A (or exemption under section 10(23C)) and approval under section 80G of the Income-tax Act, 1961. Since 1 April 2026 they are registration under section 332 and approval under section 354 of the Income-tax Act, 2025, and old registrations carry over until they expire. The FAQs excuse entities set up by a government (FAQ 5.3), and where a state doesn’t require public trusts to register, a trust registered under the Income-tax Act counts as a registered public trust (FAQ 5.4).
• A CSR registration number from Form CSR-1, compulsory since 1 April 2021 (Rule 4(2)). See Form CSR-1.
• Three years of similar work, for independent NGOs only. Routes (a), (b) and (c) have no track-record condition.

The company’s own foundation

A foundation the company sets up qualifies under route (a) as soon as it has its registrations and a CSR registration number, without waiting three years. See setting up a company CSR foundation.

Government bodies and statutory bodies

Routes (b) and (c) cover bodies set up by governments, and statutory bodies such as a university established by an Act of Parliament. Working through them is different from paying a scheme’s bills: the FAQs say CSR “should not be interpreted as a source of financing the resource gaps in Government Schemes” (FAQ 3.17). See CSR and government schemes.

Independent NGOs

Route (d) covers most NGOs. The three years must be in “similar activities”, not just three years of existence: a trust that ran a library for four years and began teaching maths last year may not yet have a track record in maths teaching. That is a judgement, so record how you reached it. See choosing an NGO partner.

The board stays responsible

Whichever agency you use, Rule 4(5) requires the board to satisfy itself that the money disbursed was used for the purposes and in the manner it approved, and the chief financial officer (CFO) must certify this. Nor is money spent when it leaves the company’s account: the FAQs say “mere disbursal of funds for implementation of a project does not amount to spending unless the implementing agency utilises the whole amount” (FAQ 7.4). Release tranches the agency can use within the financial year, under a written agreement: see writing a CSR agreement.

Working with other companies

Rule 4(4) lets companies collaborate on projects “in such a manner that the CSR committees of respective companies are in a position to report separately on such projects”. The FAQs suggest it for companies with small CSR budgets (FAQ 4.5). Each company counts and reports only its own share, and each board keeps its own duties. See collaborating on CSR.

International organisations: advice, not delivery

An international organisation, in the CSR Rules, is one notified under section 3 of the United Nations (Privileges and Immunities) Act, 1947 (Rule 2(1)(g)), which covers many United Nations agencies. Rule 4(3) lets a company engage one “for designing, monitoring and evaluation of the CSR projects or programmes”, and to build the capacity of its own CSR staff. But “an international organisation cannot act as an implementing agency” (FAQ 5.9).

So a UN agency can help design, monitor and evaluate a nutrition programme and train your CSR team, while your own staff or an eligible Indian agency delivers it.

Funds, research and the Social Stock Exchange

Schedule VII funds. A company can contribute to the Swachh Bharat Kosh, the Clean Ganga Fund, the Prime Minister’s National Relief Fund, the PM CARES Fund, or any other fund the central government sets up and the MCA notifies for the welfare of Scheduled Castes, Scheduled Tribes, other backward classes, minorities and women (FAQ 3.15). No other fund counts (FAQ 3.16). In 2023-24, contributions to the PM’s National Relief Fund, the Swachh Bharat Kosh, the Clean Ganga Fund and other central government funds came to about ₹1,001 crore, or 2.9% of all CSR spending, calculated from figures the government gave Parliament in March 2026. These funds are also where unspent money not tied to an ongoing project must go: see unspent CSR money.

Research. Item (ix) covers government-funded incubators and research projects, and publicly funded universities, IITs, national laboratories and named research bodies. See CSR for research and incubators.

The Social Stock Exchange. Schedule VII gained item (xiii) on 27 May 2026, and Rule 4A sets the conditions.

A zero coupon zero principal (ZCZP) instrument is a security issued by a not-for-profit organisation registered on the Social Stock Exchange segment of a stock exchange. It pays no interest and returns no principal; the issuer reports on the project under the rules of the Securities and Exchange Board of India (SEBI). Because the rest of Rule 4 still applies, check that the issuer meets its other conditions, such as holding a CSR registration number. See the Social Stock Exchange.

Choosing a route

Ask whether capable organisations already do the work locally (funding them usually beats competing with them), whether it needs your company’s own skills, what you can staff, and how long you will stay.

Mistakes that stop money counting

• Paying an agency without a CSR registration number, or one quoting a number that belongs to a sister organisation with a different PAN.
• Treating an NGO’s age as its track record. Route (d) needs three years of similar activities.
• Treating a late-March transfer as spending. Only money the agency has actually used counts (FAQ 7.4).
• Giving to a fund that isn’t named in Schedule VII, such as a state relief fund.
• Overlooking FCRA. Under the Foreign Contribution (Regulation) Act, 2010, some Indian companies with foreign shareholding count as a foreign source, so their CSR money can be foreign contribution, which an NGO may accept only with FCRA registration or prior permission. See who counts as a foreign source.