Leveraging strength -Not for Profit Organizations and Industries, walking together

CSR law in Companies Act 2013 brought new dimension in community development or social sector. Prior to that Not for Profit organizations had critical role to play in terms of resource mobilization and implementation of projects with social imperatives. Now new CSR rule has not only ensured active participation of industries it has also attracted sizable investments in social sector as well as business practices which are being used to make social projects more beneficial and sustainable.

Although development organizations and industries are working together to leverage from each other’s strength, however I still see some gap in their approach to execute social projects with multilayer interests. It is also evident from recent report of KPMG, which shows that in 2015, about 15% implementation of CSR projects was done by development organization which increased up to 37% in 2017 but drastically went down 9% in 2018. While implementation of CSR projects in combinations (Not for Profit Organization + Industries) has grown up to 91% in 2018 compare to 62% in 2017. But the positive side is that the stake of development organization in attracting financial assistance grew from Rs. 3014 Cr in 2017 to Rs. 3467 Cr in 2018.

Development organizations are more focused to bring positive and social change in community by mobilizing resources, developing innovative practices, working deep at grass root level to create sustainable impact. While Industries see CSR as tool to not only create impact on community, also establishing themselves as socially conscious and responsible organization,  improving the relations with stakeholders etc. Above data reflects that Industries have opted to go more with joint projects instead relying totally on development or community based organizations.

Development organizations and Industries have their own strength as well as interest areas. Both, if work together may create win-win situation for every stakeholders engrossed in projects.  It is for both sides that they need to look where their strength lies and how they can leverage for each other. Coming from Development sector and now working in CSR space I encounter with lots of differences between Not for Profit organization and Industries. Development organizations have impression that Industries are not spending enough on various thematic areas; however Industries think that there are still lack of quality organization to execute CSR projects understating their specific needs and target impact. I feel that there is gap in knowledge and also intrusion in each other’s space. Both need to understand their requirements and build a strategy which works for everyone. At one side, development organizations need space to try out their ideas to bring notable change in community at other side the business challenge or risk from external stakeholders needs to be mitigated through community interventions. ­

Not for Profit organizations and Industries have potential to design, develop, implement, assess and create innovative practices which are sustainable and having long lasting impact on community if they understand and accommodate each other outlook, objectives, requirement, expectations etc. 

Leveraging-strength-Not for profit organizations and industries-Walking together/

CSR-steadily but contributing towards sustainable growth of India

CSR is the means through which Indian Inc. are embarking upon sustainable growth. This journey started a decade ago in 2007 from adoption of inclusive growth plan in 11^th Five Year plan and still making its way towards sustainable growth in India.

Although there are lots of misconceptions about CSR, many corporate citizens see this as philanthropy and have not understood its strategic imperatives in their businesses.   CSR has potential to contribute for every business process, if synced with core business ethos of company. It has ability to contribute to every risk or challenge comes on the way be it production, market penetration, stakeholder management, brand image communication, manpower efficiency, customer quality management or most important profitability. And all of it comes through creating value for societal and environmental challenges. In my opinion, looking at CSR as philanthropic tool is under estimating its value in business process. Thus, integration between CSR and business strategies make it sustainable and lucrative for both sides. Even, every stakeholder engrossed in the strategically designed and developed CSR projects get benefited from its shared growth.

CSR steadily, but significantly started contributing towards sustainable growth of India. The CSR data shared by many companies shows how it has made its presence through various activities and projects across all states and UTs.  Since its inception in 2014, a total of 48,606 CSR projects has been done till 2017. All these projects are spread in 29 thematic areas/sectors aligned with schedule VII of section 135 of Companies Act 2013. The major sectors in which Indian Inc. has spent its CSR fund are; education, skill development, preventive health, sanitation, environment sustainability, rural infra development, agriculture, sports, drinking water and rain water harvesting, Art  & culture etc. The diversification of CSR spent is ensuring the inclusiveness and growth across all the section of society and environment. If we look upon the CSR spent in last 4 years, it also shows the increasing CSR footprints in India. In last 4 years since its inception, Indian Inc has spent Rs 27724.3 Cr[i]. It is notable that CSR spends have increased approx 74% from 2014-15 to 2017-18.

The data reflects that CSR spent grew 27.4% in 2015-16, 15.3% in 2016-17 and 23% in 2017-18. Even, if we look upon CSR spent against prescribed budget, it has also grown from 78.8% in 2014-15 to 92.9% in 2017-18.

Through all these data presentation and elaboration I want to make point that CSR has not only started contributing towards sustainable growth but it would be revolutionary if corporate citizens integrate this with its business processes.

CSR must be looked as a tool to not only serve the society and environmental risk, but it will emphasizes to bring across all sections of society, companies, public and private institutions together to ensure sustained growth of India.

Let it not be a mere philanthropic tool.

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[i] Data source- KPMG CSR Survey 2017 and CSR Box

Primary education in India, How CSR can add value to it

India’s primary education delivery system has indeed transformed from its Gurukul to Macaulay’s education system in 20^th century and now Free and Compulsory education system. No one can deny that despite lots of challenges, India has achieved huge milestones in education sector because of its consistent efforts in last many decades by current and successive governments. There is significant access in schooling, increase in enrolments and development of infrastructure in education sector in different part of India.

In existing education service delivery system, there are 3 sources to provide primary education; Government established schools, Government aided schools (run by private institutions or societies) and Private schools. The primary responsibility to provide elementary education to children in country is lies with Government of India with support of their State counterparts. In current scenario Government schools are still largest source to access primary education while numbers of private schools are increasing too.

Some interesting trend emerges from the Annual Status Report 2016 (ASER). Enrolment of students has increased in comparison to its last year tally, the learning ability to students have increased too. The infrastructure has improved in Govt. schools, teacher pupils’ ratio has reached to the desired level, the ratio of gender parity has improved, most of schools are having sanitation facilities etc.

But still, it’s not enough to reach out to the goal for providing Free and Compulsory education to each and every child in the country. In spite of the massive expansion of educational facilities and efforts made for qualitative improvement of elementary education, the problems of access, participation and quality in respect of elementary education continued to persist. This, together with a variety of new challenges and social needs made it imperative to evolve a new design for education.

In my opinion, only few modifications in existing policy would not make any difference until there is paradigm shift in whole education approach. There is no any coherence between existing educational framework and potential employment sectors which is resulting into massive skill initiatives by Govt. After main stream education program, large chunk of youth are going for additional vocational skilling programs to acquire new skill sets to get employment. If, it would have been synced with their main stream education programs certainly they would have reduced time and effort to get employment and even Govt. might have reduced its exchequer on skill projects too.

Indian Inc may play a very crucial role by engaging with various stakeholders and may deliberate upon formulating a new education delivery mechanism. In new system, corporate may invest their earmarked CSR budget to strengthen, school infrastructure, supply teaching learning materials, capacity building of teachers, designing integrated curriculum and course content, use of technology in monitoring, assessment of schools and most important mobilization of students  to improve enrollment and attendance. To make govt. education system lucrative to its customer, corporate may add value by bringing lot of innovative practices from their business experiences.

So my take on this subject, there is need of developing synergy between education policies, course content, service delivery with taking India’s growth (next 25-30 years) in the consideration, especially being attentive to absorb its demographic dividends.  For any strong nation their foundation (children) to be strong as well and this could be achieved only by providing quality education to the children and linking education with nation growth plan. Indian Inc has to think beyond conventional education projects to transformative education projects in various streams. 

ISR - new dimension towards social upliftment

Philanthropy is embedded in the Indian culture since ancient times. But it wasn’t a conscious ‘Giving Action’, people are doing it as and when it was needed.  But in the era of industrialization and complex work environment where lot of inter-relationship is required, social responsibility become very important tool. So now, charity, philanthropy and donation have new name ‘Social Responsibility (SR)’ and steadily becoming part of life style in society with people who can afford this. Social Responsibility can be classified as responsibility lies with ‘Corporate Citizens’ and ‘Individual Citizens’.

Primarily, Corporate Social Responsibility (CSR)  which is now most spread ‘Buzz’ word, is being taken care by Corporate under their business mandate and very much integrated in the business process. CSR has shown its significance as important business tool to respond business challenges derived from various critical stakeholders and complex ecosystem.

But I am here talking about the larger point which is social responsibilities lies with individuals, may afford to be part of healthy society building through ‘Individual Social Responsibility Actions’ (ISR).

“Eventually, ISR has brought new dimension towards social upliftment”

Although there is no fundamental change in the nature of activities are being done under Corporate Social Responsibility (CSR) and Individual Social Responsibility (ISR), as upliftment of society is in the core of the both practices. However, in Indian context both are being practiced separately as CSR and ISR which is also known as part of Employee Engagement Activities. And this happen only because of CSR law, which is in effect from 2014. So, CSR is something which being practiced by the corporate citizen for improving the living condition of communities around its business locations. However, ISR is being developed as culture within organization to engage its workforce in various community projects as their individual responsibility towards society.

ISR is about an individual becoming responsible in his/her actions that have affects on communities outside his/her immediate circles. The immediate circle being friends or acquaintance from their surroundings.    ISR is not only about committing acts of charities or working for communities where you have material interest. These only form of ISR, which is a broader concept that can be manifested through actions as below;

•         Philanthropic behavior of individual
•        The campaigner, volunteer and activist instincts in the individual which picks up and support the issues which affects to the society.
•      The above two coupled with an individual being ethical (integrity, honesty) in his/her towards dealings.

An evolution of CSR in India

Evolution of CSR in India by Manish Kumar Singh on Scribd

Is CSR spent is indicator to measure the Impact?

In the fourth year since the Companies Act 2013, and the introduction of Section 135 notification, companies continue to measure their social and environmental performance along with their financial performance.

With India being one of the first countries to mandate Corporate Social Responsibility (CSR), there is a growing interest among various stakeholders to see how the scenario is progressing.

The Companies Act, 2013 and the CSR Rules (The Act) came into effect from 1 April 2014. The Ministry of Corporate Affairs is responsible for the enforcement of the Act and its regulation.

As per the Act, companies having a net worth of Rs 500 crore or more, or a turnover of Rs 1000 crore or more, or a net profit of Rs 5 crore or more in a given financial year are required to spend 2 per cent of their profits on CSR programmes. As CSR expenditure for 2017 is yet to be disclosed, we analyse the CSR trends from last year, in 2016.

In 2016, Reliance Industries Ltd continued to hold the top spot with respect to CSR expenditure, however decreasing its CSR expenditure from Rs 760.6 crore to Rs 652 crore.

NTPC Ltd rose up the ranking in terms of CSR expenditure, increasing it from Rs 205.2 crore to Rs 491.8 crore, holding the second spot in 2016 in terms of CSR expenditure.

The Oil and Natural Gas Corporation Ltd fell down one spot in CSR expenditure from 2015 to 2016, decreasing CSR expenditure from Rs 495.2 crore to Rs 421 crore. Tata Consultancy Services Ltd rose up one rank in CSR expenditure, increasing it from Rs 210.4 crore to Rs 294.2 crore.

Other companies in the top 10 CSR spenders in 2016 include South Eastern Coalfields Ltd (Rs 270.9 crore), ITC Ltd (Rs 247.5 crore), Central Coalfields Ltd (Rs 212.8 crore), NMDC Ltd (Rs 210.1 crore), Tata Steel Ltd (Rs 204.5 crore) and Infosys Ltd (Rs 202.3 crore).

As per the Act’s requirements and public disclosures of top 100 companies’ profits, they were required to spend Rs 7233 crore against which companies committed Rs 7355 crore (higher by Rs 122 crore) and had spent Rs 6518 crore (90 per cent) in 2016. This is higher as compared to 2015 wherein the companies had spent Rs 5115 crore (79 per cent) against the requirement of Rs 6490 crore. An increase of 11 per cent spends was observed during 2016 as compared to 2015. The average spending per company had also seen a nearly 15 per cent increase in 2016.

As per a report by KPMG, compliance to the requirements of the Act had improved in 2016. A positive trend in the availability of information can be seen as compared to 2015. Similarly, strengthening of governance mechanisms for CSR projects was also visible.

Overall CSR spending had increased and thematic areas of health, education and sanitation witnessed higher budget allocation from corporates and a few corporates had gone beyond the 2 per cent mandate and spent more on CSR.

However according to Sudhir Sinha, CEO of CSR Inc, “While it can be acknowledged that the cumulative CSR spend has seemingly increased with more numbers of companies joining the league under the laws, CSR in the current form of understanding and practice in India is unfortunately very 'transactional'. Approach to CSR is piecemeal and unstructured.”

“If these trends continue, CSR will fail to reach its purpose and objectives. There is, therefore, a need for the government, companies and civil societies to go for the meaningful and impactful CSR spend," added Sinha.