Effective Deployment of CSR Funds - Addl Inputs

Below are the key issues and solutions as identified by you for effetcive deployment of CSR funds. Kindly review and share any additional inputs you may have.

We will soon share this whitepaper with Ministry of Corporate Affairs and other stakeholders so actions can be taken on your recommendations.

Effective Deployment of CSR funds – Key Solutions

1. Strict laws should be brought in covering CSR funds with provisions for heavy financial penalty
2. CSR Funds should be based on turnover above Rs. 500 Crores or Rs. 25 Crores profit, whichever is achieved
3. The amount could be deposited with the Supreme court who could decide how to use it wisely
4. A monitoring cell should be developed in each state to monitor the progress of fund utilisation
5. Every corporate should be advised to prepare advance plan of CSR fund utilization and submit it to the State Government department
6. The Ministry of Social Welfare should create a CSR department in every state
7. This department should identify the companies that score CSR qualification
8. They should also allot issues to each CSR unit
9. There could be a Vigilance Cell in the department of CSR to investigate the realities of the companies who use fraudulent methods of concealing the volume and diversification of profits
10. Independent Audit of CSR Funds by independent Auditors on the line of Bank Audit must be made mandatory
11. The funding details, the nature and scope of the project, the achievements and failures should be made public
12. Company laws on CSR should be made specific and the loopholes in the existing ones should be plugged
13. Using CSR funds for marketing purpose should be made a criminal offence
14. A rating agency could be asked to rate all the NGOs working in the CSR-involved sector, to help corporates allot funds to genuine NGOs only.

Effective Deployment of CSR Funds: Key Issues

1. Many companies show the CSR funds as utilized but actually misuse them
2. In many cases, CSR funds are transferred to the District authority that transfers the funds to Circle Officers. This gives room for corruption
3. Pleasing political parties/leaders using CSR fund is common
4. There is lack of transparency in fund allocation by each corporate entity and details of its utilization
5. Social audit of all items of expenditure done by the company are not done effectively
6. Some corporate authorities distribute crores of rupees to Government Officers through liaising to avoid exposure to misuse of CSR funds
7. No rating of NGOs by Government for CSR investment
8. Penalties for noncompliance of CSR not specific
9. Lack of separate department of CSR within the company for proper CSR implementation and monitoring
10. Company laws on CSR are not very specific
11. Most corporates have little understanding of rules around CSR funds deployment
12. This is one of rare occasions in company act, where the penalty for non-compliance of the regulation is not stipulated
13. Government does not announce regular schemes in which the CSR funds could be utilized
14. Many organizations use the CSR funds for their own marketing expense
15. Often companies have a problem in identifying a genuine NGO to allot CSR funds
16. There are many fraudulent NGOs which misuse CSR funds
17. Many companies hide their profit information to skip corporate taxes. This results in lower amount allocation in CSR funds
18. Some CSR Auditors make money by advising corporates on how to misuse CSR fund. more