In CSR, What is the meaning of the term ‘administrative overheads? What is the maximum permissible limit for administrative overheads?

Super Admin 2023-06-09 13:03:16

Administrative overheads in CSR refers to the expenses incurred by the company for the general management and administration of CSR functions. These expenses include, but are not limited to, the following:

  • Salaries and wages of CSR staff
  • Office rent and utilities
  • IT and telecommunications expenses
  • Travel and entertainment expenses
  • Legal and accounting expenses
  • Training and development expenses

The maximum permissible limit for administrative overheads is 5% of the total CSR expenditure. This means that a company can only spend up to 5% of its CSR budget on administrative overheads. Any expenses that exceed this limit will not be considered as CSR expenditure.

It is important to note that administrative overheads are not the same as direct CSR expenses. Direct CSR expenses are the expenses that are directly incurred in the implementation of a particular CSR project or programme. These expenses are not subject to the 5% limit.

For example, if a company spends ₹100 on CSR, it can only spend ₹5 on administrative overheads. The remaining ₹95 must be spent on direct CSR expenses.

The 5% limit for administrative overheads is designed to ensure that companies are spending the majority of their CSR budget on activities that directly benefit society. It also helps to prevent companies from using CSR as a way to offset their administrative costs.

Here are some tips for keeping administrative overheads low:

  • Consolidate CSR activities: By consolidating CSR activities, companies can reduce the number of people and resources that are needed to manage them.
  • Use technology: Technology can help companies to streamline their CSR operations and reduce costs.
  • Outsource CSR activities: Outsourcing CSR activities can help companies to reduce costs and improve efficiency.
  • Partner with NGOs: Partnering with NGOs can help companies to access expertise and resources that they may not have in-house.

Follow US

Get newest information from our social media platform