How Indian NGOs Are Funded: CSR, 80G, Grants, FCRA

How do NGOs in India get their money?

Money reaches an Indian NGO along five routes, in different proportions at every organisation: donations from individuals, corporate CSR budgets, government grants, foreign contributions, and self-generated income from fees, sales or membership. The first four are each gated by a separate law, and the gate decides who may give, what the money may buy, and what has to be filed afterwards.

No single statute makes an organisation publish that breakdown in one place. Each source, though, forces a different document into existence, and those documents are either public or reasonable to ask for. A neighbourhood trust living on local giving and a research nonprofit on overseas grants face different filing calendars, different caps and different reasons to turn down work.

How much does an 80G deduction really change what a donor gives?

It cuts taxable income, not the tax bill rupee for rupee, and only for a donor who has stayed on the old tax regime. The Income Tax Department lists Section 80G among old-regime deductions; it is not available to anyone taxed under the default regime in section 115BAC.

Where it does apply, the deduction runs at 100 or 50 per cent of the donation, in some categories subject to a qualifying limit, and cash gifts above ₹2,000 earn nothing. Whether a particular organisation's approval is current is a separate question, taken up in the guide to checking whether an Indian NGO is genuine.

That is set out on the department's page on deductions for individual taxpayers, which as read on 22 August 2026 still sets Section 80G out under the Income-tax Act, 1961.

That Act is no longer the only one running. The e-filing portal's home page records payments under the Income-tax Act, 1961 for dues up to FY 2025-26, and under the Income-tax Act, 2025 for Tax Year 2026-27 onwards. Every section number in this article is therefore 1961 numbering, and its counterpart in the 2025 Act is worth checking before you rely on it.

Approval is temporary too. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 rewrote Section 80G(5): approval runs five years, renewal falls due at least six months before expiry, and a new institution gets provisional approval for three. The same amendment obliged the institution to file a statement of donations with the prescribed income-tax authority and to give each donor a certificate stating the amount, both from 1 April 2021. The gazetted text of Act 38 of 2020 carries the wording.

Those two documents have numbers. Rule 18AB of the Income-tax Rules, 1962 prescribes the statement in Form 10BD, filed by an institution approved under Section 80G. The donor's certificate is issued in Form 10BE, which carries the institution's PAN and its 80G approval number. Both have applied from financial year 2021-22 onwards.

For the organisation this is the least restricted money it will ever hold: no approved activity list, no utilisation certificate, no ministry sign-off. It is also the hardest to raise at scale.

Which companies have to spend on CSR, and what may that money fund?

Companies with net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more in the immediately preceding financial year, and the money may fund only Schedule VII activities. Section 135(5) of the Companies Act, 2013 sets the amount at two per cent of average net profits over three years.

Schedule VII is a list of twelve heads that the Central Government has expanded by notification more than once: hunger, poverty and health; education and vocational skills; gender equality; environmental sustainability; national heritage; armed forces veterans; sports; specified national relief funds; research incubators and named public institutions; rural development; slum area development; disaster management. A cause outside the list is not CSR, however worthy.

Unspent money tied to an ongoing project moves to an Unspent Corporate Social Responsibility Account within thirty days of the year end and must be used within three financial years, with a penalty under Section 135(7) of twice the amount or ₹1 crore, whichever is less.

Where the amount to be spent does not exceed ₹50 lakh, Section 135(9) removes the CSR committee requirement and the Board discharges its functions. One catch was added in 2022: the proviso inserted in Rule 3(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 by notification G.S.R. 715(E) of 20 September 2022 requires a company holding any amount in its Unspent Corporate Social Responsibility Account to constitute the committee anyway.

What must an NGO have in place before it can receive CSR money?

Income-tax standing, a track record of at least three years in similar activities, and a filed Form CSR-1. Rule 4(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, as substituted by notification G.S.R. 715(E) of 20 September 2022, sets the income-tax standing and the three-year track record for an implementing agency the funding company did not itself establish. The registration requirement comes from a different amendment: Form CSR-1 sits in Rule 4(2), inserted by notification G.S.R. 40(E) of 22 January 2021.

The income-tax limb has two doors: registration under Section 12A with approval under Section 80G, or exemption under sub-clause (iv), (v), (vi) or (via) of clause (23C) of Section 10. The 2022 substitution added the second, so 80G approval is not the only way in.

Form CSR-1 goes to the Registrar of Companies. Four details matter:

• Who verifies it. A practising chartered accountant, company secretary or cost accountant signs it off digitally.
• What it generates. A unique CSR Registration Number, issued automatically on filing.
• Since when. The requirement has applied from 1 April 2021.
• Who escapes the three-year test. Entities created by the company itself, by government, or under an Act enter through separate clauses.

Those three years are counted as a track record of similar activities, not as time since registration, so a young organisation stays locked out until it can show three years of the work the company wants to fund.

That same 2021 notification caps administrative overheads at five per cent of total CSR expenditure. Its definition of CSR also puts six familiar kinds of corporate spending outside CSR altogether:

• activity undertaken in the normal course of business
• work outside India, apart from training Indian sports personnel representing a State, a Union territory or India
• political contributions
• anything benefiting the company's own employees, as employees are defined in the Code on Wages, 2019
• marketing sponsorships
• compliance with any other statutory obligation under a law in force in India

None of the six counts towards the two per cent, whatever it costs the company.

What does a government grant demand in return?

Paperwork, on a fixed clock. For a non-recurring grant, Rule 238(1) of the General Financial Rules requires a utilisation certificate in Form GFR 12-A within twelve months of the close of the financial year. If it does not arrive, the rule says plainly, the ministry will be at liberty to blacklist the organisation from any future grant, subsidy or other financial support. Recurring grants run on a different clock, and Rule 238(3) drops the certificate altogether where the money only reimburses expenditure already incurred on duly audited accounts.

Rule 228 sets who may be considered: voluntary organisations or non-government organisations carrying out activities that promote the welfare schemes and programmes of the Government, chosen against well-defined criteria of financial resources, credibility and type of activity.

Two thresholds shape what follows.

• The release gate, Rule 238(2). On a recurring grant, the next year's money moves only after a provisional utilisation certificate for the preceding year. Release beyond seventy-five per cent of that year's sanction waits on the utilisation certificate and the annual audited statement together, to the ministry's satisfaction.
• The audit trigger, Rule 236(2)(i). The Comptroller and Auditor General of India shall audit a grantee whose grants or loans in a year are not less than ₹25 lakh and also not less than seventy-five per cent of its total expenditure, and may audit one whose grants or loans reach ₹1 crore.

Once the Comptroller and Auditor General has audited a grantee in a financial year, the audit continues for two more years even if those conditions stop being met. The consolidated text sits in the Department of Expenditure's General Financial Rules updated to 31 January 2026.

Why is foreign money the hardest kind for an NGO to take?

It needs clearance, a named bank account and a tighter spending cap. Section 11(1) of the Foreign Contribution (Regulation) Act, 2010 bars any person with a definite cultural, economic, educational, religious or social programme from accepting foreign contribution without a certificate of registration from the Central Government. Section 11(2) leaves one narrower door open: an organisation that is not registered may accept foreign contribution with the Central Government's prior permission, and that permission is valid only for the specific purpose and the specific source it names.

The 2020 amendment tightened several things at once; three of them change what an organisation can do with the money. Section 17 now requires foreign contribution to be received first into an account designated as an FCRA Account in a specified branch of the State Bank of India at New Delhi.

Section 7 was replaced outright: a registered organisation may no longer transfer foreign contribution to any other person, even to another registered organisation, which ended sub-granting. And in Section 8(1) the ceiling on administrative expenses fell from fifty per cent to twenty.

The gazette text of Act 33 of 2020 shows each substitution. The Ministry of Home Affairs copy of the principal Act linked above is the 2010 text as first enacted and is a scanned image, so sections 7, 8 and 17 read there in their pre-2020 form; the amendments have to be read alongside it.

Registration expires. Section 16 requires renewal within six months before expiry; Section 12(6) sets the certificate's five-year life. Section 14 permits cancellation where the holder has undertaken no reasonable activity in its chosen field for two consecutive years. For an organisation running on foreign contribution that ceiling is a hard limit on what it can pay out of non-project budget lines. It is one input into what the sector pays, not the whole answer; the guide to whether NGO jobs in India pay well works through the rest.

Which funding source carries which legal string?

The four regulated sources differ less in scale than in what they forbid. The strings come from four documents: Schedule VII to the Companies Act, 2013, the Income-tax Act's Section 80G, GFR Rule 228 and the FCRA Account requirement in Section 17, as substituted in 2020. Individual giving carries the loosest strings, foreign contribution the tightest, and CSR and government grants sit between, each restricting the purpose rather than the amount. Nothing stops one organisation holding all four, provided the books stay separate.

Source	What the organisation must hold	Limit written into the rule
Individual donations	Section 80G approval, valid five years	No deduction on cash gifts above ₹2,000
Corporate CSR	12A with 80G, or a section 10(23C) exemption, plus a CSR Registration Number	Purpose confined to Schedule VII
Government grants	Eligibility under GFR Rule 228	CAG audit from ₹25 lakh and 75 per cent of expenditure
Foreign contribution	FCRA certificate and an FCRA Account at the specified State Bank of India branch	Administrative expenses capped at twenty per cent

What gets filed afterwards differs at every gate. Donations produce a Form 10BD statement of donations and a Form 10BE certificate to each donor. Corporate money is reported inside the funding company's Board's Report. A non-recurring government grant closes with the utilisation certificate in Form GFR 12-A. Foreign contribution is accounted for annually to the Central Government in Form FC-4, prescribed under Rule 17.

Which four documents show where a specific NGO's money comes from?

Four documents answer it, and an organisation that has them can send all four in one reply: the Section 80G approval order with its validity dates, the CSR Registration Number, the FCRA registration number, and the income schedule of the latest audited accounts. The last is where the proportions show up.

Corporate money leaves a second trail. Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, in the form given to it by notification G.S.R. 40(E) of 22 January 2021, makes the funding company publish an annual report on CSR inside its Board's Report, in the Annexure II format that sets out its total CSR obligation, what it spent, and any balance left in its Unspent Corporate Social Responsibility Account.

The largest funders leave more than a report. Rule 8(3), which G.S.R. 40(E) of 22 January 2021 inserted, requires companies whose average CSR obligation over the three immediately preceding financial years is ₹10 crore or more to commission independent impact assessments of projects with outlays of ₹1 crore or more that were completed at least a year before the study, and annex the reports. Running those numbers against the registers, rather than trusting a scanned certificate, is a separate exercise.

What does an organisation's funding mix tell you before you join or give?

Where the money comes from sets the shape of the work. CSR and grant money buys defined deliverables inside a fixed window, and unrestricted individual donations pay for everything no funder wants to fund. The window is written into the rules. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, notified as G.S.R. 40(E) on 22 January 2021, define an ongoing project at Rule 2(1)(i) as one whose timelines do not exceed three years excluding the financial year in which it was commenced.

The two overhead ceilings bite in different places. The five per cent cap on a company's CSR outlay covers only the company's own general management of its CSR function; Rule 2(1)(b) of those same 2021 rules excludes what is spent directly on designing, running, monitoring and evaluating a project, so an implementing NGO's project staff are not inside it.

The twenty per cent cap on foreign contribution does bind the FCRA holder itself, and for an organisation running on foreign money it is a real constraint on non-project pay. Grant instalments wait on utilisation certificates, which is why a confirmed start date slips. And a base concentrated in one source is fragile: a cancelled certificate, a late filing, or one company changing its CSR theme can close a working programme.

Earned income, the fifth route, is limited by the organisation's own constitution rather than by a funding law. A Section 8 company holds its licence on the conditions in Section 8(1) of the Companies Act, 2013: it must intend to apply its profits or other income in promoting its objects, and to prohibit any dividend to its members. A trust deed or a society's memorandum draws the same line through its objects clause.

Fees, sales or membership income that sits inside those objects is ordinary; a line of business outside them is a question for the registration documents and the income-tax approval, not for the four laws above.

One route sits outside the map entirely. None of these four laws lets an organisation raise money from the students it hosts, and cash moving from a student towards the host inverts the whole structure: why a host asking a student for a registration fee is the scam pattern is worked through separately. AICTE's National Internship Portal is a separate route again, described in the step-by-step guide to that portal.

If raising and managing this money is the part you find interesting, it is a defined career track, mapped in the guide to development sector career paths.