In the past few years, corporate social responsibility spending has seen a steady year on year increase. In its latest newsletter, the Ministry of Corporate Affairs (MCA) has stated that India has witnessed an 80% increase in CSR spending from FY16 to FY21. However, the MCA report also stated that the impact of these initiatives has not been as significant as anticipated with spending largely restricted to a few sectors such as healthcare, rural development, and education. The Indian CSR Outlook report (for projects above 1 CR) published by CSR Box states that SDG 3 (Good Health and Wellbeing), SDG 4 (Quality Education), and SDG1 (No Poverty) account for 65% of the overall CSR funds received in 2021-2022. Moreover, it also states that only 2.4% of the overall spending was received by the northeast region with Goa, Jammu & Kashmir, and Ladakh receiving 0.29%, 0.27%, and 0.28% respectively.
While it is encouraging to see that CSR spending is increasing on a yearly basis, the disparity in spending across states and sectors is a cause for concern. It is also worth noting that while education and skill development has taken priority in recent years, with over 2000 projects worth over 1 CR (CSR Box Report) having been implemented in FY 21-22, the projects are not evenly distributed across the country.
The Need for a Strategic, Long-Term Approach
In the newsletter, the Ministry of Corporate Affairs emphasized the “importance of striking the right balance between capital investments and operational expenses to ensure effective utilization of CSR funds.” In essence, conducting CSR programs with a long-term and strategic approach will be the key to sustainability. Organizations must look beyond compliance and use CSR initiatives to expand their skill base and solve societal problems. While identifying prospective CSR projects, organizations must look at both local and national interests, partner with relevant stakeholders, and align initiatives with their business objectives as well. Moreover, in this context, impact assessment takes on heightened significance as well.
The Importance of Impact Assessment
The primary purpose of impact assessment is to ensure that organizations are effectively deploying their CSR funds and ensure that social impact is effective. However, impact assessment must be considered beyond just individual projects and looked at from a holistic perspective. For example, impact assessment can be used to align state and national interests with organizational goals. While the Companies Act of 2013 encourages organizations to deploy funds in areas close to their operations, it is not a mandatory requirement.
The disparity in CSR spending is evident with 10 states receiving 44% of the CSR funds while the northeast receives approximately 0.91%. Organizations can effectively use impact assessments to optimize their spending based on national and state wise societal requirements. With technological advancements happening at a rapid rate, deploying CSR funds across the country has effectively become cheaper and increasingly less complex. In such a scenario, organizations should look beyond their own regions and aim to serve the nation as a whole.
The Need for Enhanced Skill Developed Initiatives
According to the United Nations World Population Report 2023, India has the largest youth population in the world with 254 million people ranging between the ages of 15 to 24. However, while India’s youth hold tremendous potential, the skill gap remains significant. In this scenario, CSR initiatives in education and skill development will become crucial in the next few years as India aims to become a global knowledge leader by leveraging its demographic dividend and move toward becoming the skill capital of the world.
Conclusion
To ensure that CSR programs are sustainable beyond just the implementation phase, organizations must build their CSR strategy around their core competencies, ensure employee participation and feedback, recognize issues that are important to customers and other stakeholders, and be prepared to meet force majeure challenges in an adaptive manner. By creating a CSR strategy that is holistic, immersed in technology, adaptive and sustainable, organizations can ensure that their programs continue to serve the communities long after their completion. Furthermore, to ensure long-term effectiveness, companies should ensure that risk management frameworks are implemented effectively and help create an equitable society and achieve the desired social impact on a national scale.
Views of the author are personal and do not necessarily represent the website’s views.
Neeti Sharma is the Co-Founder & President of TeamLease EdTech. She is also the Management Representative for TeamLease Skills University, India’s 1st Skills University. A proven business leader with 30+ years of rich and diverse experience in the Corporate sector, bodies of government and educational institutions pan India. Neeti is a member of the Skills Council of CII, Southern Region, is on the board of many education institutes and has been part of the Karnataka Skills Task Force as a Member Secretary under the Karnataka Knowledge Commission.
Neeti Sharma is the Co-Founder & President of TeamLease EdTech. She is also the Management Representative for TeamLease Skills University, India’s 1st Skills University. A proven business leader with 30+ years of rich and diverse experience in the Corporate sector, bodies of government and educational institutions pan India. Neeti is a member of the Skills Council of CII, Southern Region, is on the board of many education institutes and has been part of the Karnataka Skills Task Force as a Member Secretary under the Karnataka Knowledge Commission.
