CSR Spends & Impact; An Analytical Study

With the gradual increase in the CSR expenditure, assessment of the impact is required to ensure optimum resource utilization. Technological inventions are paving a smoother path for it.

By Sucheta Karmakar

Conveying to the readers that CSR impact assessment is an integral part of conducting CSR in a full-fledged way.

KOLKATA : It has been 4 years since the Corporate Social Responsibility (CSR) rules were passed. Effective from 1 April 2014, 2013 Regulation Act states that companies whose net worth is of INR 500 Crore or whose revenue sums up to INR 1,000 crore or whose net profit is of INR 5 crore will have to spend 2% of their average profit of previous three years on CSR. The activities can range around several social developmental activities mentioned in the Schedule VII of the Act like education, healthcare, rural development, sanitation and others.

Even before the regulations were imposed, several organizations had started to spend a percentage of their profit to social uplifting. Keeping in mind the prevalence of vast social and economic deprivation it is a necessity to ensure the best impact for each rupee spent.

In Financial Year 2016, INR 8,185 Crores were spent by 1,270 companies collectively, 27% more than spend of INR 6,400 Crores in Financial Year 2015. But whether or not the impact has increased accordingly still remains a topic of debate. The main aim of creating a social impact is missing since the law focuses on what amount is spent, what CSR activities it is spent on and which locations it is spent at and not measurement of the impact.

Initially, CSR was driven by goodwill rather than strategy. Measuring the impact of the CSR initiatives or planning for sustainable interventions was not the focus. But MCA guidelines mandated companies to report their CSR spending and Sustainable Development Goals (SDGs) were announced by the United Nations in 2015. This resulted in attempts by organizations to quantify CSR spending, measure the outcomes accordingly and link them to SDGs.

For a deeper and meaningful impact, organizations need to focus on long term initiatives and not look for instant results. Impact measurement is the need of the hour, it requires to be a continuum and not to be limited to a survey at the completion of activities. One can only realize the impact if the before and after of an initiative are compared with specific metrics. Impact assessment measurement include local livelihood mapping, poverty mapping, economic contributions, learning level tests etc. Technology has enabled companies in numerous ways to plan and evaluate their CSR spends. It encourages transparency and accountability throughout the process.

Software enabled with Geographical Information System(GIS) and Management Information System (MIS) technology contribute in systematic study and analysis of collected data of results compared with the projected aim. It includes measuring the impacts of the initiatives, measuring the magnitude of the impacts and determining the causal factors underlying the impacts. MIS can help in analysis of activity data against projected milestones, measuring effectiveness in dealing with identified problems and efficiency of resource usage. GIS can map the achievements and success stories geographically helping in visualization of the locations of beneficiaries covered. Detailed reports of the CSR projects and policy in terms of achieving the activity outcomes need to be generated.

Impact assessment is not an end-in-itself. It needs to be built into the CSR policy and the path of the project starting with baseline evaluation, milestone wise review and final assessment. Focus of the impact assessment should be on the number of people impacted as well as the change in beneficiaries’ socio-economic situation (or any specific component for which the initiative was planned). An end-to-end assessment needs to be done which can be satisfied by the growing capabilities of technology.

CSR expenditure of India is set to cross Rs 50,000 crore by 2019, tools enabled with latest technology will play a vital role in measuring the impact of CSR activities and ensuring that the money spent on social projects creates genuine social value. So, the question to decide, is whether it is the right time to implement a system of your own too?

About the Author: Sucheta Karmakar, Business Executive Associate – CyberSWIFT Infotech Pvt. Ltd.

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