CSR Gap for NGOs: Corporate Social Responsibility (CSR) has emerged to be a pillar in the developmental setup of India, and companies are required to invest some part of their profits in social development activities. There is a strongly marked disconnect in this respect, as recent discoveries of the Bharat NGO Report 2025 reveal, albeit with the most lucrative environment that any organisation in the non-profit sector has had the privilege to be chasing down, the system is literally disregarding small and grassroots NGOs. Although these smaller organisations are well-established locally and directly target the urgent needs of local populations, like education, healthcare, livelihoods, and women’s empowerment, they do not have an easy time tapping into corporate CSR funds.
The report also shows that the big, urban-based NGOs have the CSR allocations in their hands and have well-established compliance mechanisms and visibility. On the other hand, small NGOs are described by barriers such as fixed reporting systems, a lack of internet presence, and weak networks to access companies. The unequal distribution of funding creates a paradox in which resources are available, yet are unable to reach people directly involved with marginalised populations.
It is not only a question of equity to bridge this CSR gap, but a prerequisite to making CSR investments create a material impact on the ground. The question now arises as to how the exceptional value of small NGOs can be leveraged and how to rethink the CSR approach to ensure that company resources can be redirected into community-based, inclusive development.
Also Read: Government Grants vs Corporate CSR Funding
Table of Contents
Understanding the CSR Disconnect in India
Corporate Social Responsibility (CSR) was seen as an effective mechanism to direct the resources of the private sector to serve the common good. The CSR mandate in India, as specified by the Companies Act, 2013, has galvanised massive funds which making it one of the biggest CSR mandates in the world. Yet, this is the increasing worry expressed in the Bharat NGO Report 2025: the gap between CSR funds and the small NGO sector has grown.
These huge, well-established NGOs with well-constructed governing mechanisms, reporting systems, and an urban presence often consume major portions of the CSR budgets. They are seen as low-risk partners, capable of fulfilling the needs and producing an impact that can be quantified. Marginalised are the small and grassroots NGOs, which have a wide presence in the community and understand the locality better. They lack interest in corporations because of their potential in writing sophisticated offers, adhering to strict auditing standards, and their poor online reputation.
This lack of connection brings a paradox. Corporations are interested in quantifiable social deliverables, but they want to avoid engaging those who are nearest to the problems. The outcome of this combination will be an inequitable distribution of resources where changes to the grassroots will not be funded adequately, and investment in CSR will be over-city or large-scale. One of the matters that should be controlled to achieve the initial vision of CSR-inclusive and community-based development is it.
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Challenges Faced by Small and Grassroots NGOs
Although small and grassroots NGOs are crucial in solving local problems, they cannot access CSR funding easily because they are continually challenged. According to the Bharat NGO Report 2025, these organisations do not necessarily have to be marginalised because they fail to be effective, but there are certain systemic challenges to enabling smaller, more peripheral NGOs to thrive.
Part of the major challenges are:
- Compliance and Regulatory Burdens: Detailed financial audits, impact reports, and certifications are the most common requests and reports that companies make. When small NGOs have scarce administrative resources and staff, they fail to live up to these expectations.
- Poor Visibility and Branding: Grassroots organisations often simply cannot afford to invest in professional communications, websites, or media coverage, so it becomes hard to get corporate attention.
- Small NGOs have Little Access to Networks: Small NGOs in rural or semi-urban contexts have limited access to corporate CSR departments or funding organisations and have no role in decision-making.
- Resource Constraints: These NGOs work with low funding and focus on delivering programs rather than on capacity-building programs like training, adhering to technologies, or measuring the impact.
Corporations appear to view small NGOs as high-risk collaborators because of their undocumented and scalable nature, even though they have a grassroots influence.
These problems compound each other in such a way that the organisation that is closest to the communities is underfunded again and again, making the CSR even more disconnected.
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The Consequences of the CSR Gap
The sidelining of small and grassroots NGOs in mainstream CSR funding has implications well beyond the effectiveness of the Indian development agenda. As corporate money is pouring into the field, it is concentrated in mega-sized and urban-based NGOs, which can lead to geographic and community-wide inequity.
Among the most important impacts are:
- Rural, tribal and underserved: Marginalised Communities Left Behind: The grassroots NGOs tend to be located in urban and rural areas. The most vulnerable groups are locked out of development programs when they are not funded.
- Less Local Ownership: Larger organisations are less likely to have CSR projects which are compatible with the cultural and social environment of the local communities, further undermining the long-term sustainability of CSRs.
- Failure to allocate resources efficiently: Overallocation on large-scale projects, which are felt but not seen, will open up short-term visibility to the corporates, but the strategies will not trickle down to the ground level where the structural problems lie.
- The inability to develop small NGOs: With no access to CSR funds, small NGOs cannot invest in capacity building, technology, and expanding their influence, thus leaving them in a rut of stagnated growth.
- CSR Vision Diluted: CSR should have been designed to build partnerships that are inclusive and community-oriented, but this vision fails when the parties that are most in touch with realities on the ground are not included in the partnerships.
Lastly, the CSR gap compromises the non-profit ecosystem and the transformative potential of corporate social investments in India.
Also Read: How to Apply for Government Grants for NGO
Bridging the Divide: Pathways for Inclusive CSR
The only way through the CSR gap is to redefine the relationships between corporates and grassroots NGOs. In Bharat NGO Report 2025, compliance and accountability are never too small a matter and a more transparent approach is needed to ensure that the funds reach organisations with a good presence and influence in communities.
The main ways of going across this divide are:
- Capacity-Building Support: Corporations can invest in building the institutional capacity of small NGOs, such as training them on reporting and the adoption of digital systems, rather than them not having systems.
- Decentralised CSR Models: Corporations have access to credible local NGOs through a regional CSR hub or consortium and can fund locally relevant projects.
- Collaborative Platforms: In the quest to improve the visibility, transparency, and trust of the corporates, digital platforms can be developed that connect the known grassroots NGOs.
- Bended Funding Processes: Corporations can also fund smaller grants rather than just big projects to fund grassroots projects and reach and include more people.
- Policymaking Interventions: To generate this distribution balance of resources, regulators may summon corporates to invest part of the money in small and rural NGOs.
The potential of CSR can also be tapped by letting corporations build partnerships based on transparency, inclusivity, and trust. The concept of empowering small non-governmental organisations is not only greater than empowering the non-profit ecological bubble but also ensures that the investments of the CSR lead to far more lasting and profound change at the grassroots.
Also Read: Government Grants Available for NGO
Frequently Asked Questions (FAQs)
1. Why are small NGOs finding it difficult to lay hands on CSR funds?
Small NGOs may struggle with a number of issues, such as compliance capacity, visibility, weaker corporate networks, and resource limitations, thus being less appealing to corporates than large NGOs.
2. How does Bharat NGO Report 2025 inform us about the CSR gap?
According to the report, a significant portion of corporate CSR spending goes to large, urban based NGOs as corporate CSR expenditure level increases. Grassroot organizations lack funding even though they have a powerful local influence.
3. What is the effect of the CSR disconnect on communities?
Small NGOs are sidelined hence some marginalized and rural communities are not always brought on board in the development process, rendering the whole CSR investments ineffective.
4. What can corporates do to help small NGOs?
Corporates can also support capacity-building, develop flexible funding models, work together via digital platforms, and decentralize their CSR strategies to involve grassroots organizations.
5. What is the importance of closing the CSR gap with regards to the growth of India?
Proper financing of CSR, good grass-root organizations, all round development and the very purpose of CSR which is to see sustainable and community based development.
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