ANALYSIS
India is effectively the first country to mandate a minimum CSR spend. How to make use of it.
Malnutrition is one of the many problems arising from uneven distribution of resources that plague the country today. The UN Food and Agriculture Organization (FAO) states that 194.6 million people in the country are undernourished. It is ironic that one of the largest economies in the world is also a home to the largest population of undernourished people in the world. However, on the positive side, several proactive steps are being taken by those in the 'haves' category to help those in the 'have nots' category; the Corporate Social Responsibility (CSR) mandate is one such step.
CSR as a concept is not new for Indian corporates—companies like the Tata Group and Infosys have been actively involved in philanthropy for a while now. But now it is mandatory for corporates above a certain size to undertake CSR activities to contribute towards social development; courtesy, the Companies Act, 2013.
The CSR clause in the Companies Act, 2013 (clause 135) makes it mandatory for companies with net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more, or a net profit of Rs. 5 crore or more during a financial year to spend at least 2 percent of their average net profit on CSR activities. It effectively makes India the first country in the world to mandate a minimum CSR spending, which, in turn, is expected to result in a significant rise in CSR spend.
According to the Indian Institute of Corporate Affairs, 16,352 Indian companies fall into the CSR ambit now that the Companies Act, 2013 has become law. It is estimated that their CSR commitments amount to over 25,000 crores annually. These funds can be channelized towards social welfare. Efficient use of these funds can help us in our pursuit of Sustainable Development Goals (SDGs) such as ending poverty in all forms, ending hunger, achieving food security, ensuring inclusive and equitable quality education, and so on. The availability of these funds puts us in a better position in our pursuit of SDGs.
Despite having the options to undertake CSR activities either on their own or through their non-profit arm, corporates would prefer to partner with not-for-profit organisations with a proven track record. If they are to build the required infrastructure, they have to channelize funds and time towards training employees, hiring people, and getting consultants on board among other things. Instead, they can get into a partnership with a not-for-profit and use the latter's expertise and groundwork. It is a symbiotic relationship between corporates and not-for-profit organisations, with the latter getting a sustainable source of funds.
When corporates look for not-for-profit organisations to work with, they look at specific markers such as … Number of years in operation, Reach, Relevant experience, Infrastructure
Leadership, Necessary registration and documentation and Reputation
Of these markers, the reputation is important because of two things: (i) the number of not-for-profits mushrooming every year and (ii) trust deficit between corporates and not-for-profits.
It is important that not-for-profit organisations establish themselves as credible organisations, or else they may fail to take advantage of the CSR mandate. Transparency and accountability are key to trust and reliability. It is not just important to utilise the grants received in the most efficient manner, but equally important to communicate the same. In the long run, accountability translates into enhanced performance for the organisation. Not-for-profits are accountable to its donors (incl. the corporates with whom they partner), beneficiaries, and the Government.
Corporates will prefer to work with organisations with robust accounting mechanisms. Audit reports, internal and third-party evaluation reports, data from impact studies undertaken by reputed survey firms, stakeholder feedback, case studies, beneficiary stories, key partnerships, etc., help in establishing credibility. Even awards, recognitions, and news coverage have substantial weightage in this context.
All this information should be documented in the form of collaterals and made available in the public domain through websites, newsletters, bulletins, press releases, etc. Considerable efforts have to be invested in devising a comprehensive communications strategy to establish the credibility of the organisation. It can attract other corporates who are looking for a well-known not-for-profit to work with.
It is also advisable to get 80G and 12A registrations for donations from within the country and FCRA registration for overseas donations. While these registrations are primarily used for donations, they also lend credibility to the organisation.
CSR mandate is an opportunity for not-for-profit organisations to mobilise resources to pursue the cause that they have taken up. Similarly, for corporates, it's an opportunity to give back to the society in an organised manner. The idea is to promote inclusive growth and create an equitable environment for all sections of the society. Not-for-profits can take the lead to form a synergetic relationship with corporates to address socially relevant issues, thus making the most of this opportunity.
Chairman, The Akshaya Patra Foundation
DNA TV Show: Why Gautam Adani charged with bribery and fraud in US
IND vs AUS: Records Virat Kohli can break during Border-Gavaskar Trophy
Diljit Dosanjh fans get angry over Ananya Panday's birthday post for her grandmother, here's why
Reddit suffers outage with ‘upstream connect error’ message, says 'currently investigating...'
Border-Gavaskar Trophy: How has Jasprit Bumrah fared in Tests in Australia?
Delhi records coldest night of the season, temp drops to...
Crossing the Line: Ukraine's Use of Storm Shadow Missiles and the Escalation of Conflict
When Malaika Arora talked about the controversial ‘instant pleasure’ ad, it was for…
This is the world’s most expensive shopping street, not Fifth Avenue, New Bond Street, it is...
Big setback for Gautam Adani, Kenya cancels Rs 6216 crore deal with Adani Group due to...
Viral video: Man’s jugaad to stay warm in winter will leave you SHOCKED, watch here
Hinduja Group firm gets key approval for acquisition of Anil Ambani's debt-ridden Reliance Capital
Viral video: Middle-Class man lives dream of having tea at Taj Hotel, netizens applauds
Shloka Mehta looks stunning in white floral kurta as she clicked with Akash Ambani, it costs Rs....
Who is Sagar Adani, Gautam Adani's nephew, accused of bribery, fraud charges in US?
IND vs AUS: Jasprit Bumrah, Pat Cummins eye historic captaincy milestone in Perth Test
PayPal down: Several users face issue while logging into accounts, say 'no one could...'
BGT 2024, Ind vs Aus: Can Shubhman Gill be the new Cheteshwar Pujara? Is he really ready?
The Ultimate Guide to Luxury Gifting: Discover Heirloom Pashmina by Pashmina.com
Effortless Relocations: The Perks Of Professional Removalists In Melbourne
Watch: Pakistan fan with 'Imran Khan' poster asked to leave Hobart stadium in Australia
International Criminal Court issues arrest warrant against Israeli PM Benjamin Netanyahu for...
What is demisexuality? Everything you need to know about this lesser-known sexual orientation
WATCH: World’s shortest woman meets world’s tallest woman, video goes viral
IND vs AUS 1st Test: Predicted playing XIs, Perth weather forecast and pitch report
IND vs AUS: When will Rohit Sharma join India squad? Check latest update
'Scam 2024': Diljit Dosanjh lookalike pranks people on Pune streets, video goes viral
Delhi Air Pollution: Centre announces staggered work timings for govt employees; check details
Mukesh Ambani's Reliance Jio loses nearly 80 lakh subscribers in just 30 days, BSNL adds...
IND vs AUS, 1st Test Dream11 prediction: Fantasy cricket tips for India vs Australia match
This country has most expensive passport in world, not US, UK, UAE, it costs Rs...
Amitabh Bachchan opens up on Aishwarya Rai-Abhishek Bachchan divorce rumours
Amid rising air pollution, Delhi-NCR's crematorium records cleanest air; check AQI here
Revolutionising Medical Imaging: Venudhar Rao Hajari’s impact on healthcare technology
Abhishek Gupta and Onevision Media: Scaling brands on social media
Video shows Korean girl eating jalebi for first time, her reaction to Indian sweet goes viral
Cristiano Ronaldo confirms THIS YouTube star as his next guest, says, 'Will break Internet'
Delhi Assembly Elections: AAP releases first list of 11 candidates for 2025 polls
Adani Group's FIRST REACTION after US indicts Gautam Adani in alleged bribery case
Instagram introduces new feature, know how to reset app's algorithm, change your feed
No mention of Aaradhya Bachchan in Amitabh Bachchan's post on birthdays, it happened recently
Oppo Find X8 and X8 Pro launched in India, check specifications, price, other details
Charges against Gautam Adani: BJP's scathing attack on Congress, questions timing of development
Jasprit Bumrah's BIG statement on taking up Perth test captaincy, says, 'tactically better...'
Blackout on breaks: Company imposes no-sick-leave policy until 2025
Drug-laden terrorists on India's western, northern frontiers
Mohammad Shami trolls Sanjay Manjrekar over IPL auction bid prediction, says, 'Baba ki...'
IND vs AUS Test: When and where to watch 1st match of Border-Gavaskar trophy, know details here
CAQM amends Grap Stages III, IV, enforces stricter measures in Delhi-NCR amid air pollution woes
Malayalam actor Meghanathan passes away at 60 after suffering from...
Adani Green Energy's FIRST reaction after US indicts Gautam Adani in alleged bribery case
'Keep me out of...': Pakistani Instagram star Mathira on MMS leak controversy
Delhi Air Pollution: AQI marginally improves from 'severe' to 'very poor' category
Meet actress who worked with Alia Bhatt, was asked to 'compromise', connected to Aishwarya Rai by..
Aishwarya Rai’s remark on Amitabh Bachchan’s ‘habits’ goes viral amid divorce rumours with Abhishek
Rekha's BOLD statement about Amitabh Bachchan goes viral, 'why hurt...'
Meet man, IITian who built Rs 5493 crore firm, has this Mukesh Ambani connection, he is from...
Shillong Teer Results TODAY November 21, 2024 Live Updates: Check winning numbers here
‘I didn’t have time to…’: When AR Rahman revealed having ‘agreement’ before marriage to Saira Banu
Amitabh Bachchan praises Abhishek Bachchan's new film, netizens ask 'kash ye Aishwarya...'
Viral video: Woman's sizzling belly dance to 'Namak' impresses internet, watch
Hardik Pandya banned, Mumbai Indians captain to miss first match of IPL 2025 due to...
Meet man who studied at IIM, IIT, then built Rs 1160000000 company, got inspired by…
Meet woman, who quit as dentist for UPSC exam, became IAS officer with AIR...