As CSR provisions in the new companies Act are put to implementation on ground, debate on where and how CSR money should be spent seems to be gathering momentum. When the CSR provisions in the new act were conceived, it was estimated that quantum of CSR money would stand close to Rs 20,000 crores in a year. Central and state governments put together spend more than Rs 6,00,000 crores in the social sector. Compared to the money government spends, the CSR money is at best marginal. If Rs 6,00,000 crores fail to address the challenges on hand, will adding an additional 20,000 crores to the same kitty help significantly move the needle? Perhaps not. How then can CSR money play a ‘needle moving’ role?
Ministry of Corporate Affairs circulated a set of FAQs on 12th Jan 2016 for facilitating effective implementation of CSR. The FAQ no 20 brings out the philosophy behind CSR and its spending. It reads “The objective of this provision is indeed to involve the corporate firms in discharging their social responsibility with their innovative ideas and management skills and with greater efficiency and better outcomes. Therefore, CSR should not be interpreted as source of financing the resource gaps in the government schemes. Use of corporate innovations and management skills in delivery of public goods is at the core of CSR implementation by the companies. In-principle, CSR funds of companies should not be used as a source of funding government schemes. CSR projects should have a multiplier effect than that under the Government schemes.”
The lawmakers got it right! Corporates, with their problem solving skills, can perhaps bring greater efficiency and effectiveness in the social space. Businesses are good at identifying a problem that needs to be solved, putting resources, managing talent and innovations to find solutions and finally delivering solutions sustainably to the customers. Their skills of problem solving can be made use of in resolving some of the key social challenges. CSR funds when married with these problem solving skills and intent expressed by our law makers can create magic! And perhaps move the needle!
An illustration may be of help here. When we look at malnutrition, one quickly realises is that it is more an awareness problem that anything else. No mother on this earth would like her child to be malnourished- thanks to emotions that nature has instilled in her. Most often she is least trained to be a mother when she becomes one. Most are not aware of what diets she and her child needs, what the importance of breast-feeding is and what she can cook from the ingredients easily available at home etc. It primarily is an awareness problem – easily solvable by communication and capacity building. Same can be said about sanitation – which is essentially an awareness and habitual problem. Similarly, poor learning outcomes in primary and secondary education is largely an issue centring on content design & delivery, motivation, measurement and monitoring of inputs and outcomes. Content that does not excite learners or teachers, system that does not accommodate motivation and is not amenable to monitoring plays havoc with planned outcomes.
Businesses have demonstrated good success in challenges involving awareness generation, communication, capacity building, and motivational challenges. Businesses have evolved their monitoring mechanisms for intractable problems. Healthy eating and healthy living is case in point. Innovative products and innovative communication tools have helped popularise health oils for cooking, habit of brushing teeth or earlier wearing shoes and slippers. Essentially a business looks at a challenge as a problem to solve and puts its problem solving skills and resources to it to find a workable and suitable solution. If businesses were to put these skills and innovate in the arena of malnutrition with a deliberate intent to crack the issue, they can come out with innovative answers.
So CSR money would be well spent and would serve the needs of our society better if a business was to look at existing social problem and put its resources and talent to devise and deliver a solution to the problem. No amount of financing the gaps in government resources would bring that creativity out!
Solutions that would emerge are likely to fall under two categories. One- solutions those are amenable to commercialisation. These solutions would be so offered and priced that service charge levied would be able to recur not only costs of delivery but also leave a small surplus for scale up of operations. Such solutions can be scaled up with a for-profit approach as resources do not become a constraint. Thus for example, if a CSR project is able to crack issue of soil testing for farmers in a sustainable way, scale would demand setting up a for-profit entity to drive this. This would also involve strengthening eco-system in which this and other such entities can compete and innovate.
The other type of solution would need subsidisation of delivery costs – either in part or full. Primary health care delivery solutions usually seem to fall in this space. Here the approach to scale up would drastically vary. The solution is successfully delivered at some scale, the game changes. Instead of continuing to deliver more and more of the same solution, a CSR entity should look at how the solution can be transferred to natural custodian of the solution– in most cases governments. For example, once a corporate finds a solution for malnutrition and demonstrates it at some scale, it needs to look at how the state can adopt the solution. Thus it needs to study how administration currently looks at this problem, where are the gaps in perspectives, skills, technology and monitoring. Business should thereafter focus on transferring the know-how of delivering solutions to the government. Time and resources need to be spent on capacity building of government functionaries to deliver those solutions. From an implementer, CSR function of a business needs to shift gear and become a technical supporter to government.
Our lawmakers conceived of a strategic role for CSR in growth and development of our country. India is the first country to mandate a spend on CSR. As the western world watches how CSR law takes shape, let us keep ourselves reminded of intent of this law. Let CSR money play a strategic role. Let business and government bring in their complementary skills to ensure that India achieves its full potential!
Jitendra Kalra heads the Reliance Foundation as the Chief Operating Officer since 2015. An Ex-Civil Servant, Kalra comes with more than 24 years of rich experience in the Development sector and Indian Civil Services. He also held the position of ‘National Expert’ at UNIDO and was responsible for the development of various poverty intensive clusters in the state of Andhra Pradesh, Karnataka, Tamilnadu and Maharashtra.
Views of the author are personal and do not necessarily represent the website’s views.
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The CSR Journal Team