It has been quite an eventful year in the corporate social responsibility domain. So active was this field that a High Level Committee on CSR 2018 has been re-constituted under the chairmanship of Injeti Srinivas, Secretary, MCA to review the existing framework and guide and formulate the roadmap for a coherent policy on CSR.
The scope of the committee includes reviewing existing CSR framework as per Act, Rules and Circulars issued from time to time, recommending guidelines for enforcement of CSR provisions, suggesting measures for adequate monitoring and evaluation of CSR by companies, examining and recommending audit (financial, social and performance) for CSR, etc. Corporations can expect major upheavals once the report is out in early 2019.
In the meanwhile, have you considered what the future holds? Here are our projections for the years to come.
PSUs to focus on aspirational districts
Public sector units (PSUs) will now identify central themes for corporate social responsibility activities every year, with 60% of their CSR expenditure dedicated to the thematic programmes, as per new guidelines issued by Department of Public Enterprises.
The norms call for aspirational districts to be accorded preference by central public sector enterprises (CPSE) for their CSR activities. The Niti Aayog has identified 112 aspirational districts. For the current year 2018-19, school education and healthcare may be taken up as the theme for focused intervention, the guidelines said.
The CPSE undertaking CSR activity in aspirational districts would designate a senior level functionary as nodal officer to liaise closely with the district administration of concerned aspirational district.
CSR funds to cross 50,000 crores
If we look at the overall CSR ecosystem in India, the total CSR fund investment by companies in India would cross INR 50,000 crores by March 31, 2019 since the applicability of the mandatory CSR, according to a report on CSR in India by NGOBox and CSRBox. A large chunk of this is towards education and skills development projects, followed by healthcare and sanitation initiatives, both of which are top priorities for the central government as well.
With the prescribed CSR spend of companies totalling over 50,000 crores for the first five years of the compliance, the future of corporate philanthropy in India is going to be defined by how well we’ve used the fund in past four years and how we plan to use it in future for problem solving. This will also be a test of board-room decision-makers for setting up priorities by juxtaposing immediate gains of sheer philanthropy and long-term benefits of sustainability-oriented projects.
Top recipient: Education
Education is the most preferred intervention area for companies, especially companies with medium CSR budget, and this is expected to remain the most preferred theme for years to come. Three-fourth’s of the top 100 companies are supporting at least one program in education. Here’s what the interventions will be focusing on:
- App-based learning modules both for teachers and students
- Scholarships and fellowships for students
- Career counselling and mentoring of students
- Beyond-classroom activities
- Supporting tech-based enterprises in edtech space
- Teacher-training and capacity building
- Setting up science labs
Annual CSR compliance will increase
CSR compliance in-line with the prescribed CSR per year is going to increase and would reach in the range of 97%-99% by FY 2019-20. Detailed disclosures in the annual reports will be a common practice.
The Ministry of Corporate Affairs had in April, 2018 established the Centralised Scrutiny and Prosecution Mechanism (CSPM) for enforcement of CSR provisions on a pilot basis. Acting on its inputs, the Ministry has issued preliminary notices to nearly 300 companies for not complying with the corporate social responsibility (CSR) spending requirement under the Companies Act, 2013 for the year 2015-16. The companies have been asked to provide reason for non-compliance with the CSR provisions. This practice is likely to get more stringent.
Government collaboration for large scale partnerships
More companies will align their CSR programs with government programs, schemes and priorities with special focus on Ayushman Bharat, Aspirational District Programme, Skill India Mission and National Nutrition Mission. Business to business (B2B) collaboration and joint design and implementation of projects is gradually getting space in board-rooms and we will see more collaborative projects on the ground in the near future.
No carry forward of unspent fund
Companies will not be allowed to carry forward the unspent CSR fund to next financial year. The fund needs to be deposited in one of three funds of the central government; PM Relief Fund, Swachh Bharat Kosh and Clean Ganga Fund.
No corpus fund
Corpus fund transfer and deposit in any fund other than the Central Government fund will not be accounted in CSR. In other words, any corpus transfer to an NGO or CSR fund would not be an eligible CSR activity if there is no on-ground implementation.