Unspent CSR Funds: How the Unspent CSR Account Works

Before 2021, a company that did not spend its full CSR obligation only had to explain why in its board report. Today the rules are stricter: unspent money must be either committed to ongoing projects or transferred to a government fund.

Two categories of unspent CSR

1. Money allocated to an ongoing project

An ongoing project is a multi-year project, lasting no more than three years beyond the year it starts, that the board has approved. Any amount allocated to it but not spent by year-end must be transferred to a special bank account, the Unspent CSR Account, within 30 days of the end of the financial year.

The company then has three financial years from the date of transfer to spend it. Anything left after that must go to a fund listed in Schedule VII within 30 days.

2. Money not linked to an ongoing project

Unspent CSR that is not tied to an ongoing project must be transferred to a fund listed in Schedule VII, such as the PM CARES Fund, within six months of the end of the financial year.

Penalties

Non-compliance attracts monetary penalties on the company and on officers in default, set as a multiple of the amount due, subject to caps. Penalties for CSR non-compliance are imposed in practice.

Turning unspent funds into impact

The Unspent CSR Account is often seen as a compliance burden. It can also be an opportunity: it gives companies up to three years to fund patient, multi-year programmes that need time to show results, such as child nutrition, foundational learning or flood resilience.

To use it well, companies need:

• a clearly defined ongoing project with milestones;
• a credible, CSR-1-registered implementing partner; and
• a monitoring system that tracks spending against the three-year deadline.

Orvys designs ongoing projects that meet these requirements and put unspent CSR to work where it is needed most.

General information only, not legal advice.