As the financial year draws to a close, many companies find themselves with unspent CSR funds that need to be effectively allocated to meet the CSR Act compliance requirements. Rather than rushing into last-minute expenditures, companies can make meaningful, stretch-free investments in CSR programs that create lasting impact.
Imagine a community facing an urgent crisis. Timely CSR donations can be the lifeline they need! Quick support means faster relief, stronger impact, and builds trust. It’s about being present when it matters most, not just when it’s convenient. Let’s make a difference, right now!
This article explores CSR legislation, the best ways to utilize unspent CSR funds, and how India STEM Foundation (ISF) can help corporates channel their funds into sustainable and high-impact STEM Education programs.
Understanding Statutory and Legislative Rules Governing CSR Funds
The Corporate Social Responsibility (CSR) Act, introduced under Section 135 of the Companies Act, 2013, mandates companies meeting certain criteria to spend 2% of their average net profit from the past three years on CSR activities.
Section 135 of the Companies Act, 2013:
It requires the formation of a CSR Committee and the creation of a CSR policy.
- The companies with a net worth of ₹500 crore or more, or a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more during the immediately preceding financial year are required to spend at least 2% of their average net profits of the preceding three financial years on CSR activities.
- Section 135 aims to encourage companies to contribute to social and environmental development, thereby promoting responsible corporate citizenship.
Schedule VII of the Companies Act, 2013:
This schedule outlines the permissible activities that can be considered CSR. It provides a list of areas where companies can contribute, such as education, healthcare, and environmental sustainability.
Companies (Corporate Social Responsibility Policy) Rules, 2014:
The Companies (CSR Policy) Rules, 2014, aim to ensure that CSR is implemented in a structured, transparent, and accountable manner, maximizing its impact on society.
What Happens to Unspent CSR Funds?
According to the CSR Amendment Rules 2021, any unspent funds must either:
- Be transferred to a designated CSR fund within six months from the financial year-end, or
- Be allocated to an ongoing CSR project within three years, failing which the amount is transferred to government-mandated funds.
Why should you spend CSR FUNDS before the Financial Year ends?
It’s important for companies to prioritize spending their CSR funds before the financial year concludes as Unspent CSR funds can have several implications for companies:
- Legal Issues and Reputation Damage: Companies risk legal penalties and reputational damage by not complying with CSR spending regulations, potentially leading to fines and loss of customer and investor trust.
- Missed Opportunities: Unspent funds mean missed chances to help communities and make a positive impact. This also means missing out on the benefits of good CSR, like better brand loyalty and employee morale.
- Investor Concerns: Investors are increasingly looking at how companies handle their social responsibilities. Unspent CSR funds can make investors question a company’s commitment to ethical practices.
- Increased Scrutiny: If your Company consistently has unspent CSR funds, your business comes under Scrutiny from regulatory bodies.
- Complicated Fund Transfers: When funds are not spent, they often have to be transferred to government run funds, or specific accounts, which adds unnecessary bureaucratic processes.
India STEM Foundation (ISF): A Smarter Way to Spend CSR Funds
ISF is a leading NGO in India that implements Education-based CSR programs, making STEM education accessible to students nationwide. With over 250+ STEM tinkering labs, 500,000+ students empowered, and 25,000+ teachers trained, ISF provides CSR-driven education programs tailored to corporate partners.
CSR Programs by ISF for Effective Fund Utilization
✅ Gyanoday – STEM Entrance Exam Coaching
- Prepare students for JEE, NEET & CUET through structured coaching and mentorship.
✅ Anushikshan – STEM Skill Development & Employability Training
- Empower students with AI, robotics, and coding skills, making them industry-ready.
✅ STEM Teacher Training Program
- Strengthen education by training teachers in advanced STEM methodologies.
✅ World Robot Olympiad (WRO) India
- Support school teams in competing at global robotics championships.
✅ CSR-Driven STEM Tinkering Labs
- Establish state-of-the-art STEM labs for hands-on learning in underserved schools.
Make an Impact with CSR: Partner with ISF Today!
If your organization has unspent CSR funds and is looking for compliant, high-impact programs, ISF can help you seamlessly allocate funds to Education-based CSR initiatives.
✔ 100% CSR Compliance & Transparency
✔ Custom duration CSR programs with structured approach
✔ Scalable, Measurable, and Sustainable Impact
✔ Government & NEP-Aligned Education Programs
✔ Brand Recognition & Employee Volunteering Opportunities
The financial year-end is near! Ensure your CSR funds make a real difference.
Partner with India STEM Foundation today to invest in STEM education and future-ready skills.