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CS Professional · CSR and Social Governance · Contribution of Non-Corporate Entities in Social Governance

Mehta & Sons, a partnership firm in Surat, donates a part of its profit every year to a local trust running a hospital, and its partners also serve as trustees of that trust. A student argues that only companies can contribute to social governance. Which response is correct?

Non-corporate entities such as partnership firms, trusts and societies also contribute to social governance by funding or running social activities. The mandatory statutory CSR spending obligation, however, applies to qualifying companies, not to firms, so the statement that only companies contribute is wrong.

  1. ACorrect, because only companies are subject to mandatory social obligations
  2. BCorrect, because trusts cannot receive donations from firms
  3. CIncorrect, because non-corporate entities such as firms and trusts also contribute to social governance, though not under the company CSR mandateCorrect
  4. DIncorrect, because partnership firms are covered by the same mandatory CSR provisions as companies

Explanation

Social governance extends beyond companies to trusts, societies and firms that undertake or fund social causes. The statutory CSR spending mandate applies to companies meeting the thresholds, not to partnership firms, so the last option is wrong.

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