Impact of CSR: formula sheet

Key formulas

Results chain

Inputs → Activities → Outputs → Outcomes → Impact

Use this to show how impact differs from outputs and outcomes. Impact sits at the end of the chain.

Impact (attribution view)

Impact = Change observed with the project − Change that would have occurred without it

This is a concept, not a number to compute in most answers. It stresses attribution and the baseline or comparison group.

Output vs outcome vs impact

Output = what is delivered; Outcome = short/medium-term change; Impact = long-term change attributable to the project

Always give a one-line example for each. Examiners reward the contrast.

Stakeholder impact map

Stakeholder → Effect of CSR → Evidence or example

Use this three-part line for every stakeholder in an answer.

Output versus outcome

Output = activity delivered; Outcome = change in people's lives

Impact assessment looks at outcomes, not just money spent or items delivered.

Core stakeholder groups

Communities, employees, customers, investors, environment

These are the five groups this topic expects you to cover.

Impact assessment under CSR Rules

Independent agency assessment for eligible projects of companies meeting the threshold in the CSR Rules

State the exact thresholds from the Rules in your answer only if you are sure of them; otherwise say 'as prescribed in the CSR Rules'.

Five heads of CSR impact on business

Brand reputation + Financial performance + Risk management + Competitiveness + Long-term sustainability

Use as the answer skeleton for any question on business impact.

Business case logic

CSR action → stakeholder trust → lower risk and higher loyalty → better long-term performance

This is a causal argument, not a guarantee. State that results depend on genuine, well-run CSR.

Balanced evaluation rule

Benefits + Costs/Limitations = Balanced conclusion

Short-term cost and unproven financial link must be mentioned to score in analytical questions.

Company applicability

Average CSR obligation of the 3 immediately preceding financial years ≥ ₹10 crore

Use the obligation under section 135(5) (2% of average net profit), not actual spending. If the obligation is at 2%, this broadly means average net profit of about ₹500 crore.

Project applicability

Outlay ≥ ₹1 crore AND completed at least 1 year before the impact study

All conditions must be met. Ongoing or recently completed projects are not yet covered.

Who conducts it

Independent agency

The agency must be independent of the company's CSR implementation.

Reporting

Report placed before the Board + annexed to the annual report on CSR

The prescribed format of the annual CSR report has a place for details of impact assessments done under Rule 8(3).

Expenditure cap

Bookable cost = lower of (5% of total CSR expenditure of that financial year) and ₹50 lakh

Cost above the cap cannot be counted as CSR spending. It is borne by the company outside CSR.

Impact (basic logic)

Impact = Endline value − Baseline value (adjusted for what would have happened anyway)

Without the adjustment you may credit your project for change caused by other factors.

Results chain

Inputs → Activities → Outputs → Outcomes → Impact

Outputs are what you deliver. Outcomes and impact are the changes in beneficiaries. Do not mix them up.

SROI ratio

SROI = Present value of social benefits ÷ Present value of investment

A ratio of 3:1 means ₹3 of social value for every ₹1 invested. Benefits are discounted to present value.

Logframe matrix columns

Narrative summary | Indicators | Means of verification | Assumptions

Rows are goal, outcome, output and activity.

Evaluation criteria

Relevance, Effectiveness, Efficiency, Impact, Sustainability

Use these as a checklist to structure a written evaluation answer.

Impact assessment trigger

Average CSR obligation ≥ ₹10 crore in the 3 preceding years AND project outlay ≥ ₹1 crore AND completed ≥ 1 year ago

All three conditions must be met. Report goes to the Board and is annexed to the annual report on CSR.

Impact assessment cost limit

Counted toward CSR = lesser of 5% of total CSR expenditure for the year or ₹50 lakh

Applies to the cost of the impact assessment, not to the project spend.

Disclosure channels

Board's report + annual action plan + CSR-2 + website + BRSR/GRI

Know what each carries and who is covered. BRSR applies to listed entities as SEBI specifies; GRI is voluntary.

Website disclosure

CSR Committee composition + CSR policy + approved projects

Required where the company has a website, so the public can access them.

Quick revision

• Impact is the lasting change caused by a project, not the money spent or activities done.
• Outputs are direct products; outcomes are short to medium term changes; impact is the longer-term effect.
• Stakeholders include beneficiaries, employees, community, shareholders and regulators.
• Business gains from CSR include reputation, trust, employee engagement and lower risk, but these are not guaranteed.
• Impact assessment under the CSR Rules applies only when the stated conditions are met; check them each time.
• Assessment should be done by an independent agency where the rules require it.
• Know the main methods and tools, and the purpose of each, in one line.
• Impact reports go to the Board and are disclosed as the rules and annual report requirements say.
• Link impact findings to the next year's action plan and CSR policy.
• Main limits: attribution, time lag, quantifying social benefit, poor data and cost.
• In case answers, write provision, facts, conclusion.

Common mistakes

• Treating outputs as impact, for example saying 'we built 10 toilets so impact is 10 toilets'. Fix: Ask what changed for people. Toilets built is output. Improved sanitation and health is outcome or impact.
• Confusing outcome with impact. Fix: Outcome is nearer and narrower. Impact is longer-term, broader and attributable to the project.
• Writing only about benefits to the company, such as brand value. Fix: Lead with the benefit to the stakeholder, then mention the indirect gain to the company.
• Covering only communities and ignoring employees, customers and investors. Fix: Use the five-group checklist before you write.
• Stating that CSR always increases profit. Fix: Say CSR can support financial performance through loyalty, cost savings and investor access, but evidence is mixed and short-term costs exist.
• Writing only about brand image. Fix: Cover all five heads, even briefly, so the answer looks complete.
• Using actual CSR spend instead of the CSR obligation to test the ₹10 crore threshold. Fix: Always compute 2% of average net profit for each of the three years and average those amounts.
• Applying impact assessment to every project of a covered company. Fix: Check outlay of ₹1 crore or more and completion at least one year earlier for every project.
• Treating outputs as impact, such as saying 500 toilets built is the impact. Fix: Ask what changed for people. Toilets built is an output; fewer school dropouts among girls or fewer illnesses is the outcome or impact.
• Skipping the baseline. Fix: Always name the baseline survey first. Without it, change cannot be measured.

Exam tips

• Always define the three terms with one example from the same project. This earns marks quickly.
• In case questions, label each fact in the case as input, output, outcome or impact before concluding.
• Use the words attribution and baseline. They show you understand why impact is harder than counting outputs.
• Link the concept to the CSR Rules and Board reporting, but avoid quoting thresholds you are unsure of.
• Finish with a clear conclusion in one or two lines, as the paper expects provision, analysis and conclusion.
• Use stakeholder headings in your answer so the examiner sees coverage at a glance.
• Tie every effect to a concrete activity or Schedule VII area; generic claims score lower.
• For 'evaluate' or 'comment' questions, always include limits and how impact is measured.