According to Ministry of Corporate Affairs (MCA) about Rs. 28,111.63 crore has been spent on CSR activities during the period from April 1, 2014 to November 30, 2017. While the numbers look impressive, there are three critical challenges that we need to address and how we resolve them now, will determines the future of CSR in India.
Corporates finding it difficult to utilize the money
MCA has observed that, out of 5,097 companies that filed annual reports until December 31, 2016, for the financial year 2015-16, only 3,118 had done some CSR expenditure. Many of the companies made their CSR investments to the Prime Minister’s Relief Fund. Companies not spending on CSR gave multiple reasons such as non-finalisation of location of the project, technical difficulties and inability to build a team to implement and manage these programs. But with the new discussions around penalizing companies, it looks more difficult a path for the Corporates in future.
Maximum CSR spends limited to a few states
The most developed states in India namely, Maharashtra, Gujarat and Karnataka are receiving the most amount of CSR funds. Corporate India is also biased towards certain cause areas such as education, healthcare, water and sanitation. Areas such as technology incubation, supporting sports, veterans, arts & culture remain towards the bottom of the list of causes supported through CSR by Corporate India.
What’s happening is, there is a preference for convenience of implementation over the real on-ground needs when deciding which programs to undertake and where.
Smaller NGOs not able to manage expectations
NGOs face difficulties in coping up with the corporate expectations. Companies expect tangible results too soon. NGOs generally fail to convey the complexities and time-intensive nature of social development process. Due to the advent of the legislation, there are strict norms of reporting the CSR programs. NGOs are expected to report in the required format and keep track of every single penny.
Hence, companies prefer channelizing their CSR funds through larger NGOs since they have evolved organizational practices. That is making it more difficult for smaller NGOs who are working closer to the grassroots in getting CSR funding.
When we look at these CSR challenges, while it needs time to evolve; companies are already warming up to the idea of including CSR as part of their strategy; technology and data driven efforts will be the catalyst for a sea change needed in the way CSR is implemented in India.
While the world around us is working on data analytics and making better decisions based on that, CSR is still driven by intuitions and whole lot of paperwork or excel sheets. That needs to change, and companies need to make the most of this unexplored potential of data and technology which can transform the way CSR is managed. From streamlining all the processes, to making it paperless, more impact and result-driven, technology will help them see the last mile reach with every penny spent.
Companies can actively leverage technology in not only reporting but planning, implementing, monitoring and impact assessment of their CSR interventions.
On the other hand, technological advancements in CSR will also help smaller NGOs that are working at ground zero. Making them more accessible, accountable and streamlined in their efforts, will give corporates the confidence to invest in newer geographies and areas that need funding.
With only a small portion of companies leveraging technology to build an impact driven CSR program, we still have a long way to go. Having said this, Indian CSR and sustainability, is going to be an exciting space to watch in the next 3 years. There is a promising future for India, if we get this right.
(About the Author: Abhishek Humbad and Richa Bajpai, Founders at Goodera, a technology platform that helps companies measure the progress and impact of their CSR, Sustainability and Volunteering initiatives.)
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