How Corporate Social Responsibility Funds in India Can Maximise Impact and Efficiency

Big Pools, Bigger Splashes: How Corporate Social Responsibility Funds in India Can Maximise Impact and Efficiency

The Indian government’s vision of socioeconomic development mandated corporates to partner with it by contributing 2% of their net profit towards Corporate Social Responsibility (CSR). Since its inception in 2013, CSR spending has seen a reasonable surge. Recent data shows 2,691 Indian firms spent almost INR 10,000 Crore (USD1.5 billion) on CSR in the financial year 2015-16, up from about INR 9,000 Crore (USD1.4 billion) in the previous year.
The major chunk of contributions, however, comes from large corporates. Data depicts almost 4.5% large firms contributing 80% funds. Such large firms have well laid out systems to deploy their funds effectively. While there are hundreds of small to mid-sized spenders, the limited amount of funding and a lack of judicious spending often plague these spenders. The question, therefore, is how to leverage smaller CSR spenders better.

To tide over the challenges, the article offers suggestions to aggregate the contributions of small to mid-sized spenders under a theme corresponding to sectors aligned with the activities listed under Schedule VII in the CSR Act. Success of the initiative hinges on three key factors, viz., a conducive policy environment, willingness of corporates to collaborate, and robust and transparent decision-making and reporting processes. Large, influential foundations can play a pivotal role in managing and utilising the funds as they have the wherewithal to deploy necessary resources in high-impact projects and organisations.

The authors believe their idea, if implemented well, could be an effective way to unlock a host of opportunities and meet the government’s vision to address the country’s pressing developmental challenges.

This is a summary of the original article.

Read the full article, authored by Keshav Kanoria, alumnus from PGP Co’ 09 and his colleague at Dalberg Advisors - Kartik Srivastava. Keshav is a member of ISB for Good SIG.