Corporate Social Responsibility Is a Strategic Endeavour

Businesses with CSR budgets need to pick causes and NGOs that make for a strategic fit as every worthy cause can’t be funded and a differentiated approach would work better

After having lobbied policymakers for years since 2014 on how they could deploy corporate social responsibility (CSR) funds, Indian companies ran into some essential amendments made in 2021. The games promoters played included many innovations, such as setting up their own non-profit units and trusts to siphon funds and using third parties to route money back to their pockets for a commission. The idea behind India becoming the world’s first country to have a CSR tax was undermined by such silly games, resulting in a sub-optimal impact of this initiative on the ground.

Last year’s amendment requiring audits by independent agencies for spends over ₹10 crore and projects over ₹1 crore was a good move to stop leaks from CSR allocations. With nearly two-thirds of India still living in poverty by today’s quality-of-life standards, the importance of CSR can’t be overestimated. Companies should take CSR more seriously and responsibly as calls for stakeholder capitalism get louder across the world. Partnerships with non-profit organizations (NGOs) to identify causes to fund are the ideal way to get win-win outcomes. With a good partner and actual do-gooder results to show, the gains would be added revenue, increased media exposure, positive public relations or some combination thereof (for both).

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Before allocating CSR funds, pick a cause that has a natural affinity with the business. An anti-littering campaign could work better than building toilets, or imparting rural youth with skills that will be valuable. A cause that fits both CSR guidelines and the enterprise strategy can have a sustainable impact. Internally, the project could be treated as ‘cause marketing’, which differs from philanthropy in that the latter generally involves donations, while this is about strategic engagement and active relationship building for goals to be met.

Why CSR? Giving back to society is the broad objective. But what if you could build your brand and business while doing social work? Taking care of local communities around factory locations, as Tata Steel has done in Jamshedpur for decades before India’s CSR mandate, can go a very long way. Well chosen cause marketing can enhance brand value, even if its top- or bottom line benefits are not immediately apparent.

Whether mandated or not, companies need to use CSR fund wisely, instead of it being a sign-off item for the chief financial or human resources officer, who may be inclined to allot money to something that catches the CEO’s fancy. Firms need to check for strategic fit. Every worthy cause cannot be funded. Just as one’s business strategy must deliver differentiated offerings, so should CSR initiatives. Look for NGOs with missions similar to yours and think of value addition.

Here are a few guidelines for CSR efforts:

Give more than just money: Don’t just allot funds. Involve the business as a true partner, attend joint meetings, conduct regular reviews on progress, put in place some measures and make valuable suggestions for a more professional approach to managing the cause. Remember, the NGO partner may not have the kind of talent your organization may have. This doesn’t mean you impose your thinking on the NGO or micromanage things. It should be collaborative in spirit to nurture relationships and get better outcomes. The key word is ‘co-creation’. But if an aim requires ₹2 crore and you offer ₹20 lakh, you cannot expect to have much say.

Also Read: What is CSR – Corporate Social Responsibility?

Set clear objectives and expectations: Unless these are set out with clarity and all stakeholders are aligned with them, you cannot expect any trust or proper execution. It is best to state all these before inking a partnership pact. It’s important to be upfront.

Let the partner know of your business needs: NGO partners should know that companies which award money from their CSR budgets are sincere about the causes they pick, but have business interests too. Unless these needs are met, the long-term sustenance of the cause being marketed will be in doubt. Critically, companies will want appropriate branding in all social programmes they undertake, and this can be a sore point sometimes. How much brand exposure is a question that will always come up in discussions with an NGO or stakeholders.

Keep communications channels two-way: To build and sustain successful partnerships, both the company and the executional agency should strive to keep communication channels open all the time. Substantial donors may get a board seat in the NGOs whose work they support. Companies should seek membership of a steering committee.

Bridge language gaps between the NGO and the company: As both tend to focus on different aspects of the same cause, this divergence could become a serious threat to proper execution. For instance, many non-profits do not have reliable data systems to track progress and develop appropriate metrics. They are also publicity-shy, often. To them, what matters is the do-gooder work, regardless of its relevance to public relations and the benefits that can be had. Here is where business executives can be of aid, perhaps by explaining how good PR can help the cause.

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Put metrics and governance systems in place: Both partners should know if the mission is getting accomplished and whether progress is on track. Companies can adopt two types of metrics, one set to measure the impact of the CSR cause being supported, and another to track the level of awareness within the community. It’ll help deepen involvement. (Source: Mint)