Good deeds, hard numbers: The auditor shortage

This specialized group, responsible for verifying the real-world impact of social enterprises, is now facing a surge in demand that is severely testing its capacity.

As non-profits increasingly turn to the SSE to raise funds, the credibility of this new-age platform rests on the shoulders of its auditors. They must ensure that every rupee raised translates into genuine, measurable social change.

However, with a limited pool of qualified professionals, the sector is grappling with a potential supply-demand gap, a lack of standardized practices, and the immense challenge of quantifying social good. This has shifted the focus from the SSE itself to the ecosystem of auditors tasked with upholding its integrity.

Launched in 2022, the SSE framework initially mandated that all registered social enterprises (SEs) submit an audited Annual Impact Report (AIR). But a Sebi circular on 19 September 2025 recalibrated this rule, restricting the mandatory audit to only those SEs that have successfully raised funds through the exchange.

“This makes the compliance selectively applicable to fund-raising SEs," explained Preeti Grover, regional council member of the north Indian region at the Institute of Company Secretaries of India (ICSI).

While this eases the burden on smaller non-profits, it sharpens the focus on the quality and rigour of audits for listed entities that have accepted public or investor money. Non-compliance with AIR mandates can result in Sebi penalties ranging from ₹1 lakh per day of violation, or to ₹1 crore, whichever is less, along with potential delisting and loss of tax exemptions.

“Making the AIR mandatory for SSE-listed entities will help bring transparency," said Sanjeev Singhal, a central council member at the Institute of Chartered Accountants of India (ICAI). “NGOs act in a fiduciary capacity for the money they collect, and an audit will make things more transparent."

Measuring impact

The SSE is a regulated platform, created as a segment of existing stock exchanges like BSE and NSE. It allows non-profit organizations (NPOs) and for-profit social enterprises to raise funds from the public. Instead of shares, NPOs can list Zero Coupon Zero Principal (ZCZP) instruments. The goal is to provide a transparent and credible avenue for social organizations to access capital and for investors to support social causes with accountability. Investors evaluate the credibility of the impact report by using methodologies like the social return on investment (SROI), which assigns monetary value to social and environmental outcomes, and environmental, social and governance (ESG) ratings, which are standardized by Sebi.

India has an established framework for social auditors, with professional bodies acting as Self-Regulatory Organizations (SROs) to enrol and regulate social auditors. Presently, around 1,000 assessors in India are enrolled across three such organizations: the Institute of Social Auditors of India (ISAI) under ICAI, the ICSI, or the Institute of Cost and Management Accountants of India (ICMAI).

Unlike a financial audit tracking cash flows, a social impact assessment delves into qualitative change. Assessors must translate a non-profit's mission into verifiable data.

“We start by linking a non-profit’s activities to measurable indicators defined by Sebi’s framework—like number of beneficiaries, income improvement, or access to education and healthcare," said Santosh Kothari, social auditor and partner at accountancy firm SGK & Co. These indicators are then mapped to the ICAI’s Social Audit Standards and the UN’s Sustainable Development Goals.

Anmol Rana, senior partner at the accounting firm Anmol Rana & Associates, breaks it down into core elements. First, the non-profit must clearly state which eligible social activity it is undertaking, such as eradicating poverty or promoting gender equality.

Next, it must define success in numbers. This involves distinguishing between outputs, which are “easy counts like the number of students enrolled," and outcomes, which are “harder but more meaningful—e.g., % improvement in literacy scores."

This meticulous process is fraught with challenges. The primary hurdle, according to multiple experts, is data. "Many NGOs do not have structured systems, especially in remote areas," Kothari noted. Rana echoed this, pointing out that many non-profits lack reliable pre-intervention data, making it difficult to measure change accurately.

Skill shortage

Beyond data, there are human and logistical barriers. “What is feasible or meaningful varies greatly depending on geography, scale, and beneficiary type. One size doesn’t neatly fit all," said Rana, adding that costs for independent assessors, field verification, and travel can also be prohibitive for smaller non-profits.

“One of the biggest challenges lies in building a robust ecosystem of trained professionals who possess the interdisciplinary skills required—ranging from data analysis and field research to ethical governance and sector-specific knowledge," the ICSI stated.

The SSE is gaining traction. Data reviewed by Mint showed that as of May 2025, over 200 non-governmental organizations (NGOs) had registered on SSE platforms managed by the stock exchanges.

This activity fuels the demand for qualified assessors. “Industry forecasts predict the social audit market in India will grow annually by approximately 17%, driven by increased corporate spending in CSR (corporate social responsibility), higher expectations for transparency and strengthening regulatory frameworks," Sanjay Bhardwaj, associate partner at Forvis Mazars in India, said.

The potential scale is immense. “There are over 1 million NGOs in India, and even if 1% of the NGOs decide to list on the social stock exchange, it can offer...a huge professional opportunity," said Singhal.

However, the supply of trained professionals is struggling to keep pace. Presently, there are around 1,000 assessors distributed across three professional institutes—Institute of Chartered Accountants of India (ICAI)—ISAI, Institute of Company Secretaries of India (ICSI) and Institute of Cost and Management Accountants of India (ICMAI).

The ICSI acknowledged that a “temporary supply-demand gap may arise as thousands of organizations gear up for compliances." Rana observed that assessor capacity is growing but “may not scale overnight," suggesting that Sebi's extension of past compliance deadlines acknowledged that the ecosystem was not yet fully prepared.

Corporate entry

In response, the industry is mobilizing. “Initiatives are underway across multiple fronts," ICSI said, referring to its workshops and webinars to empower professionals with expertise in social impact evaluation.

Meanwhile, large professional services firms are also entering the space. Pratiq Shah, a partner at Deloitte India, said the firm is “exploring the establishment of a specialized practice for social impact auditing." It also observed an influx of stakeholders seeking data on the actual impact created through social initiatives.

However, experts caution that social auditing requires a unique skill set. “A firm which is typically into financial audit may not be suitable to carry out impact assessment," argued Nitesh Latwa, a registered impact assessor. He believes professionals with experience in governance or CSR project execution are often better placed to assess social impact.

The scale of opportunity is significant. “If the scale of Indian CSR activity serves as a reference point—corporates spent approximately ₹35,000 crore on CSR in the fiscal year ending 31 March 2024—then it is reasonable to expect substantial growth in the impact assessment sector over the next five years," Latwa noted.

As the industry grows, maintaining independence and credibility is paramount. Grover stressed the importance of a “Chinese wall policy" to separate advising and auditing teams and the “periodic rotation of personnel" to prevent familiarity bias.