In India, companies must carry out an impact assessment after completing a CSR project to evaluate its effectiveness and determine its impact on the targeted beneficiaries. The impact assessment should measure the project's outcomes and outputs, and assess its contribution to the sustainable development goals. The objective of Impact Assessment under the law is to assess the impact of the project in the community, help companies to assess their CSR allocation and plan strategically considering all the crucial factors based on the feedback and assessment generated from the assessment.
• Minimum average CSR obligation of Rs. 10 crores or more immediately preceding 3 financial years.
• Companies that have CSR projects with outlays of a minimum of Rs. 1 crore.
• The project should have been completed not less than 1 year before undertaking the impact assessment.
• It has to be done only when the above clauses are applicable. Otherwise, it is up to the companies to undertake Impact Assessments voluntarily.
It was suggested that as the need for impact assessment was brought out on 22nd January 2021, the companies are required to conduct the assessment for the projects that ended on or after 22nd January 2021.
Furthermore, it was encouraged for the companies to undertake impact assessments of the previous years as an effort towards Good Practice with the Board's approval
• The Board lays out the eligibility criteria for the selection of the independent organization.
• Also, it is important to note that the expenditure incurred on impact assessment is over and above the specified administrative overheads of 5%.
• The expenditure on Impact Assessment can be incurred separately. However, it should be up to a maximum of 5% of the total CSR expenditure for that financial year or 50 lakh rupees, whichever is less.
• If two or more companies collaborate on a CSR project, they can share the impact assessment carried out by one of the companies for the project to disclose to their Board and in their annual CSR report. The partnering companies can also decide to share the impact assessment cost. However, they must consider the limit as mentioned above.
• The impact assessment report is supposed to be annexed to the CSR report and presented to the Board.
• A web link needs to be shared by the company to view the complete impact assessment reports. Also, an executive summary of the impact assessment reports should be part of the annual report on CSR. This shall be considered as sufficient compliance.
By conducting an impact assessment, companies in India can demonstrate their commitment to CSR and sustainable development while providing valuable insights for future projects. It helps to ensure accountability and transparency and enables stakeholders to assess the company's performance in meeting its CSR objectives.
This article has been published by Give Discover which is an information platform providing browsable and searchable information about social impact in India. The purpose of the article is to simplify information. The above article is no substitute for the legal interpretation of the Bill or Act. Legal advice on these matters is advised and recommended. Give Discover does not take any responsibility for any loss or damage caused to any organization or individual in any manner, due to any step taken, directly or indirectly, based on the above article.
