CSR – Are we choosing the right NGOs?

by Dr. Abhijeeth Chandrasekaran

Corporate Social Responsibility (CSR) refers to societal expectations from businesses and the influence businesses have on the society at large (excluding their core commercial activities). Globally, CSR has evolved from philanthropic activities (donations, charity etc.) to encompass areas such as corporate sustainability, business ethics, business responsibility, environmental concerns, etc. In the Indian context, activities for social well-being have a long history, and have generally been effected through community-specific groups (a description of which is outside the scope of this article). From the (narrow) perspective of social activities through CSR in India, as per the Confederation of Indian Industry, this largely remains within the philanthropic space, but has moved from institution building (educational, research and cultural) to community development. The Companies Act, 2013 has introduced greater transparency to the process of CSR through its disclose-or-explain mandate.

The Companies Act, 2013 has also hugely expanded the scope of companies that qualify for CSR, and many small to medium enterprises (SMEs) are also currently included in the CSR fold. Specifically, the Act states that companies with a “net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more” need to spend “in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years”. Such a huge expansion in the scope of businesses included for CSR has resulted in a tremendous spurt in the money available for social activities.

Businesses (especially SMEs), however, are ill-equipped to identify appropriate outlets for CSR activities (as they have competence only in their own domains). Therefore, they turn to non-governmental organisations (NGOs) for channeling and fulfilling their CSR obligations. This is one of the reasons for the mushrooming of NGOs in India, who are the prime beneficiaries of corporate largesse. India has among the highest number of NGOs as per media reports, about 1 for 600 population; which is larger than even the police:population ratio of 1: 900! NGOs have also mushroomed due to contributions from foreign donors (especially from the developed world).

Despite massive contributions into the coffers of these NGOs, one does not see much development on the ground, or in terms of development indicators (social, health indicators etc.). One of the reasons for this lack of positive change is that a significant number of NGOs are organisations in name only. Under the guise of socio-cultural activity, some NGOs act as fronts for promoting vested interests that are overtly or covertly involved in anti-national, anti-social or anti-dharmic activities. To target NGOs with malafide agendas funded by foreign currency contributions, the central government has tightened regulations through changes to the Foreign Contributions Regulation Act (FCRA). Though laudable, these steps are limited in their effectiveness.  The dangers from these NGOs, inimical to Indian interests and many unwittingly funded by Indian corporates, nevertheless remain.

Current initiatives for identifying the right NGO (e.g. CII-BSE-IICA and a few other businesses) are driven more by the necessity to ensure compliance rather than a passion for engendering favorable socio-cultural changes. These initiatives/businesses provide merely a list of NGOs from amongst which corporates can choose to fund. They do not act as trusted partners that help corporates bring about meaningful and lasting social change.

From the NGO’s perspective, it has been observed that many deserving bonafide NGOs (that do laudable work on the ground) are under-funded. This is partly because of their inability to network and find avenues for funding beyond their immediate ecosystem, and also because they typically do not know how to advertise their work. It is here that we need groups rooted in Indian thought, culture and traditions to guide businesses in contributing their hard-earned wealth into the right channels for social well-being. Though still in its nascency, there are encouraging signs in this regard. One of the foremost organisations doing stellar work in this regard is Daya Foundation for Social Responsibility (DFSR, a group of disciples of Swami Dayananda Saraswati). DFSR seeks to play a pivotal role in guiding corporates to identify the right NGOs and changing the socio-cultural landscape for the better. We need more such organisations in different parts of the country. Hopefully, we should see some more like-minded groups coming up in the near future.

Dr. Abhijeeth Chandrasekaran is a physician-pathologist trained in western medicine. He is actively involved in encouraging social activities that promote traditional Indian thought and culture.

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