Dear Sir,
We have a query from a Corporate partner on whether they can pay a registered charity organisation, its 10 per cent administration fees to run the projects, because the recent CSR bill caps administration expenses to 5 per cent.
As we understand the current CSR rule. Provision of administrative expenses of 5 per cent in the recent CSR rule is been made to enable corporates to build their internal capacity and / or consult with for profit organisation for CSR strategy / implementation plans etc. Once the corporate donate its 95 per cent CSR funds to a registered charity organisation, the registered charity organisation can charge 10 per cent admin fee from / within the 95 per cent donation received from the corporate to run the project. This does not violate the 5 per cent administration expenses clause of CSR rule.
Please do share your views on the same.
Thanks and regards,
Manish
While the CSR Rules, as notified on 27.02.2014, allowed companies to build CSR capabilities of their personnel as well as those of their implementing agencies through institutions with an established track records of at least 3 financial years, such expenditure were capped at 5% of the CSR expenditure of the company in one financial year.
Providing more clarity to stakeholders, the MCA vide notification dated September 12, 2014 included overhead and administrative expenses within the contours of (5%) five per cent. cap that companies are allowed to spend on building administrative capabilities and staffing. The text of the amended rule 4(6) of the CSR Rules is as follows:
Companies may build CSR capacities of their own personnel as well as those of their Implementing agencies through institutions with established track record of at least three financial years but such expenditure including expenditure on administrative overheads, shall not exceed five percent of total expenditure of the company in one financial year.
I do hope the above clarifies your query.