Indian cos’ compliance of CSR mandate improves with passing year: Report

The Doing Good Index highlights the effects of the law on Indian philanthropy. Ruth Shapiro shares her views on ways to make the mandatory CSR law in India more effective.

The Free Press Journal

India and Myanmar had introduced laws mandating corporations to allocate funding to Corporate Social Responsibility (CSR) purposes. While India has actively implemented it, Myanmar is still struggling to do so, stated a survey conducted by The Centre for Asian Philanthropy and Society (CAPS).

The report pointed out that CSR spending of 92 out of the top 100 listed Indian companies has jumped by 10 percent, from Rs 62 billion (USD 960 million) in 2016 to Rs 74 billion (USD 1.15 billion) in 2017. “Education and vocational skills; hunger, poverty, and health care; and rural development are the top three areas that have attracted the most resources consecutively in both 2016 and 2017,” the survey suggested. The CSR law in India was enacted in April 2014 which made it mandatory for businesses with revenue of more than Rs 10 billion (USD 155 million) to donate a minimum 2 percent of their net profit to activities that fall under the purview of CSR activities. Ruth Shapiro, Chief Executive, CAPS said, “I suggest that the Ministry of Corporate Affairs incentivize companies to encourage employees to provide technical assistance as a volunteer, or a board member, for those nonprofits, also receiving grant support. Employee time should be included in a company’s 2 percent commitment. A combination of both financial and technical resources will enhance the impact of a company’s donations.” The survey also cited international consulting firm KPMG which reported that 44 of India’s largest 100 companies failed to comply with the 2 percent law in 2016 but that compliance had improved from 2015.

Shapiro said that while the CSR mandate is good, but these funds might not reach small-sized or young ‘social delivery organization’ (SDO).  The survey tries to promote the term ‘social delivery organization’ (SDO) rather than the known term ‘non-governmental organization (NGO)’. The survey suggested, “Nonprofit is not as useful because many organizations include a for-profit or social enterprise income stream. A non-governmental organization (NGO) is not quite right in Asia, where many such organizations are affiliated with the government. Lastly, ‘SDO’ is a useful term as it allows us to differentiate from pure advocacy organizations that take on a different role within the Asian context.”

Further, the ‘Doing Good Index’ (DGI) survey has listed India under the cluster of ‘doing okay’ alongside China and Pakistan in supporting philanthropic sector.

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