ECCE CSR Landscape in India and it’s Potential for Impact

ECCE CSR Landscape in India and it’s Potential for Impact

Background

Early Childhood Care and Education (ECCE), encompassing the inseparable elements of care, health, nutrition, play and early learning within a protective and enabling environment has long been underfunded by CSR programmes, owing to a lack of awareness on its importance in child development. The Draft National Education Policy (NEP) 2019, which defines the early learning needs in the age group 0 to 3, and the age group 3 to 8 as a single learning continuum called the “foundational phase”, has added to this with a lack of clarity on the modality of achieving the infrastructural and institutional changes required by the policy.

‘ECCE CSR Landscape in India and Potential for Impact’ is a study by Sattva and DHFL Changing Lives Foundation aimed at raising awareness on Early Childhood Care and Education (ECCE) in India and developing a guide to CSR funders to consider ECCE in their portfolio.

The study plots the current landscape of funding and solutions for ECCE enabled by CSR, explores trends and evolution of CSR in ECCE funding over the last three years and maps the solution landscape of ECCE interventions enabled by CSR funding to plot areas of interest, types of funding, gaps and challenges.

Key Findings

ECCE Needs and Trends in India:
1. Nutrition, health and early childhood education are deeply interlinked. A child’s development potential cannot be fully realised unless these interlinkages are incorporated in intervention design.
2. About one fourth of children in the age group 3 to 6 do not attend any form of pre-school in India. Amongst those who attend some form of preschool, almost 50% are not ready for formal schooling.

Policy Landscape:
1. The Draft National Education Policy (NEP) 2019 defines the early learning needs in the age group 0 to 3; and the age group 3 to 8 as a single learning continuum called the “foundational phase”. However, there is a lack of clarity on the modality of achieving the infrastructural and institutional changes required by the policy.
2. The Indian government spends about 0.3% of GDP on ECCE, which is much lesser than the OECD countries’ average of 0.8%.

Interventions by ECCE implementers:
1. ECCE implementers have been instrumental in executing innovative ECCE interventions through contextual approaches on the ground. However, these innovations remain largely localised, with very few translating to systemic change.
2. The implementer landscape has certain white spaces like early stimulation, responsive care, parental capacity building, children with disabilities. There is also a felt need by implementers to increase the focus on the 0 to 3 age group.

CSR funding for ECCE:
1. Despite education and health being top funded areas for CSR funders, only 17% of top education funders and 22% of top healthcare funders make some contribution to interventions related to ECCE.
2. There is little data available on CSR expenditure towards ECCE due to lack of standardised reporting practices. However, aligning schedule VII of the Companies Act to SDGs has the potential to change this
3. Interventions pertaining to health and nutrition are better represented than other components of ECCE in CSR funding.

Opportunities to unlock capital and promote collaboration:
1. Investing in ECCE has far reaching impacts ranging from improved economic growth, creating responsible citizenry, to low crime rates.
2. To enhance their ECCE impact, CSR funders can facilitate collaboration at three levels:

  • a. Collaborate with government authorities/institutions to complement the efforts
  • b. Collaborate with multiple non-profits towards comprehensive ECCE outcomes
  • c. Collaborate with other funders working on addressing ECCE or non-ECCE outcomes

 

The full report can be accessed below.

ECCE CSR Landscape in India and Potential for Impact – Full report

A factsheet for the report can be accessed below.

ECCE CSR Landscape in India and Potential for Impact – Factsheet

This is a first attempt at mapping the landscape of funding and solutions in ECCE in India. We deeply appreciate your feedback, comments, and suggestions. Write in to research.advisory@sattva.co.in.

Social Stock Exchange – a primer for Indian SPOs

Social Stock Exchange – a primer for Indian SPOs

– by Arpitha Rao

Background
In her budget speech in July 2019, the Indian Finance Minister Nirmala Sitharaman proposed a Social Stock Exchange (SSE) for social enterprises and voluntary organisations working for social welfare to help them raise capital through debt, equity and mutual funds. The proposed exchange will be under the regulation of Securities and Board Exchange of India (SEBI), will allow the listing of social enterprises and voluntary organisations and will function as an electronic fundraising platform. In September 2019, the SEBI constituted a working group to hone this further under chairman Ishaat Hussain, Director, SBI Foundation.

This news is indicative of a larger shift towards increased mobilisation of domestic capital for social purposes, and reducing India’s dependence on foreign aid. At Sattva, we studied the concept and implications of the SSE, especially in the context of flow of capital for Social Purpose Organisations (SPOs include for-profit social enterprises and non-profit organisations).

We are sharing our early learnings here as an SSE primer and we will follow up with additional insights as the topic evolves.

Current state of India’s social sector
Although India’s social economy is one of the most active in Asia, Indian SPOs continue to suffer from a low volume of deals and small viable pipelines for social enterprises, as well as consistent, long-term fundraising for non-profits. Indian SPOs face obstacles in raising capital to deliver social solutions due to a variety of factors including monitoring and evaluation challenges, lack of standardised methodologies for evaluating organisations, nascent impact investing environment, restricted / reduced funds for organisational growth and so on.

The SSE could improve this situation for Indian SPOs
Some potential scenarios where such an exchange can be leveraged to benefit SPOs include:

  • – Functioning as a search directory listing credible and vetted Social Purpose Organisations
  • – Enabling equity investments for Social Enterprises (institutional/ retail) across all stages of the capital value chain (SMEs to larger organisations)
  • – Enabling issuance of financial instruments like bonds and notes for SPOs
  • – Potential to create a common language around impact assessment and measurement and popularise this with donor ecosystem – both institutional and retail
  • – Potential to increase unrestricted funds for Indian non-profit organisations.

 

Key considerations for the India SSE model:

As the idea is still nascent, with limited clarity on the overall structure of SSE, it is difficult to understand the impact of such a stock exchange on SPOs at this point. However, an SSE model with clarity in the following areas will greatly benefit the players in the ecosystem:

  • – Clear, consistent definition of the terms ‘social enterprise’ and ‘voluntary organisation’: Given the ambiguity around the terms, a critical task for SSE would be to provide standard definitions to determine whether the model will predominantly provide space for non-profits or for-profit organisations. e.g. The inclusion of Section 8 companies in the SSE’s definition of ‘social enterprise’ could lead to well-funded entities also benefiting from this new initiative.
  • – Measurement models that balance financial and social performance to assess SSE listed members: Ms Sitharaman has reiterated that the new SSE will use a rating mechanism which acknowledges the diversity of players in the social space. The rating tool will need to balance multiple indicators to measure and evaluate the performance of SPOs on this new platform. For instance, the appropriate financial performance measures (revenues for Social Enterprises, Operating budgets for NGOs) in the rating process would need to be balanced with social outcomes attributable to the organisations, to assess them on a level scale.
  • – Clarity on how this initiative will interact with the Companies Act: Among other things, Section 135 of the Indian Companies Act mandates companies with revenue of more than INR 50 million to spend 2% of their profits on Corporate Social Responsibility (CSR) each year. It will be important to have clear guidelines on how CSR funds can be deployed via SSE.
  • – Incentives for participants to drive engagement: Fostering widespread engagement among investors will be vital if NGOs are to raise adequate capital to fund their projects and expand their operations. Some incentives will be important for both market participants willing to invest and SPOs willing to get listed. For example, Investors may need some risk protection mechanisms (through policy and regulatory reforms)

 

What can SPOs do to prepare for SSE
At this early stage of its evolution, it will be important for SPOs to closely follow the developments related to SSE. Some research and thinking on the following areas would be beneficial:

  • – Understand the global frameworks used to assess the impact of organisations; this may give insight into how SEBI could structure the valuation mechanism for the new platform. It is important to understand the mechanisms used by global SSEs such as the Impact Reporting and Investment Standards (IRIS), the Global Impact Investing Rating System (GIIRS) and The B Impact Assessment (BIA).
  • – Explore the feasibility and design of a baseline measurement model to highlight social return on investments, based on a set of quantitative and qualitative indicators. Thinking along these lines for their own organisation’s work, irrespective of the final measurement framework used by the SSE, will be a helpful strategy exercise for SPOs.

 

Next steps
At Sattva, we will be closely following all news related to the SSE, given its enormous potential to impact the Indian social sector. Today, most of the focus in all conversations around SSE and similar exchanges in other countries seem more focussed towards social enterprises. We also see a need to engage with non-profits on this topic to understand their perspective and needs. We hope this article and our other forums of engagement will drive a rich, ongoing dialogue with all ecosystem actors on this critical topic.

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Arpitha Rao is part of our Transformation Advisory team and is based in our Bangalore office. Her current work focuses on large-scale transformations in public education. Before Sattva, Arpitha has worked with Teach for India, the India Literacy Project, and Greatest Common Factor. She followed up her Engineering degree with a Masters from TISS and an MBA from ISB.

Sattva has been working with various non-profits and social organisations as well as corporate clients to help them define their social impact goals. Our focus is to solve critical problems and find scalable solutions. We assist organisations in formulating their long-term social impact strategy by strategically aligning with business to provide meaningful solutions to social issues.

● We’d love to hear your thoughts and feedback on this topic. Do write to us: impact@sattva.co.in

The Hierarchy of Impact

The Hierarchy of Impact

Creating meaningful change requires valuing different levels of impact.

– by Rathish Balakrishnan

One of the questions I am often asked when I tell people that I work with companies on their CSR strategy and implementation is, “Do these companies really care about impact?”. At Sattva, the organisation I lead, our employees ask the same question about every customer we engage with, and every person we hire: “Are they truly committed to social impact?”. The answer is rarely black or white. Over the years, I have come to realise that it is not about whether you are committed or not but about your relationship with impact. And when it comes to impact, I have in my experience, seen three key anchors.

1. The self.
There are those of us who approach impact from an entirely personal lens. We are looking for meaning and gratification through experiences that allow us to directly engage with issues of, for instance, poverty and climate change. We engage with them in our own neighbourhood and social context, such as volunteering for social initiatives, advising organisations that are in our network, or even starting a small nonprofit on an issue of personal interest.

We are well-intentioned and find simple and effective ways to make a difference in someone’s life. We value these experiences and often translate them into stories that we tell ourselves and those around us. We don’t have a particular urgency around solving a problem for good, as long each of our actions make others’ lives better. Over time however, we might ask ourselves whether our efforts truly make any difference to those whose stories we tell.

To me, these are the people that are anchored to the self.

2. The poor
There are those of us that want to go beyond our comfort zone and work in the areas of greatest need. We feel strongly about the inequality around us and act with urgency to solve these problems. We have a strong bias for action and often want to find quick solutions that will address a specific problem and demonstrate immediate outcomes. Through a combination of data and stories from the ground, we measure whether our efforts are truly creating meaningful impact. And over time, we might become frustrated because the impact that we seek to achieve is either short-lived or distant.

Such people in my view are anchored to the poor.

3. The system
Then there are those among us who are anchored to the system. We recognise that poverty is a systemic issue and quick-fix solutions often have limited impact. We seek to shift the focus to the larger systemic challenges like improving the ability of the government to deliver better long-term outcomes, establishing ecosystem level initiatives that will move the needle across organisations, or creating a community-led model of change that is participative and sustainable.

We engage with government, aim to influence policy, and drive ecosystem level investments because we believe these efforts will create enduring change. We replace urgency for impact with indicators of progress. We are fine with the uncertainty and risk that is inherent to systems level work. However, we continue to be plagued with the question: how does it all add up in the long run?

Nowhere has this difference been more evident to me than at a strategy session I was once a part of. One of our nonprofit partners had received a mandate to work across 10 states on education, and we were discussing what its strategy should be. There were those in the room who used this opportunity to share their own personal aspirations on what they would like to work on and the districts where they would like to be. I strongly argued that this was a once in a lifetime opportunity and we should do everything in our power to improve student learning outcomes, even if some of our initiatives would be short-term. The CEO argued that he was fine not having any impact on learning outcomes for five years. He would rather go all out to demonstrate a strengthened government machinery to deliver education, which he believed would provide dramatic improvement on learning outcomes over a 10 year horizon.

Neither of us was less committed to impact than the other but we held very different positions on what we thought was the right thing to do. Since then, I have seen this play out in every discussion on a wide range of topics. I have seen it among funders trying to solve deep rooted problems with limited funding, and among nonprofit leaders on what they think is the right thing to do.

Is one anchor ‘better’ than the other?
I notice the judgements that those anchored on the poor or the system have towards those anchored on the self. I also observe the increasing shift among strategic funders towards anchoring impact conversations around the system (of course, there can be no absolutes here; just propensities that people might have when weighing choices around impact).

The most effective philanthropists and practitioners I have worked with, recognise these anchors in themselves and those they work with; and they switch between these anchors based on the problem at hand, rather than maintaining a constant disposition towards any one anchor.

I have always believed that social problems are complex and we need as many hands and resources on the deck as possible. Collaboration is hard, and I strongly believe it is because we come at the problem from such different places. So, I have been mindful to watch out for my own biases—imandari ka ghamand, to borrow from the film, Newton—when I engage with those that come with the intent to create impact. I also observe that the stakeholders with different anchors use different vocabularies to discuss social issues and solutions. I have now learnt to adapt my vocabulary when interacting with stakeholders with different anchors.

Our anchors and those of our stakeholders have a fundamental impact on whom we engage with and how we collaborate. Therefore, it might be useful to consider them when making decisions about, for instance, pursuing funding opportunities or hiring.

If you are a nonprofit, you might ask yourself: what type of funder am I looking for and do I have the right opportunities for donors who have different anchors?

If you are a funder, you might question whether your biases are clearly stated to your team and grantees. Are you looking to create a balanced portfolio or anchor yourself strongly on one?

If you are organisation looking to hire, what type of person are you looking for? Are you for instance open to hiring a person strongly anchored on self but with the relevant skills? And, as an organisations looking to collaborate, are you looking for partners that have the same anchors as you? Or are you looking to complement your focus with those that might have different anchors?

To end with the question we posed at the beginning: do companies really care about impact? In our experience, a large number of companies (and high net-worth individuals) are distributed between the anchor to the self and to the poor, with few being anchored to the system. But we are also excited to see companies consciously making early efforts to shift across these three anchors. For instance, one of our CSR customers is shifting from writing a cheque to relief funds to establishing a portfolio across water, livelihoods and disability, over the next two years. They recently signed an MoU with a reputed academic institution to setup an incubator focused on helping scale innovative solutions on women empowerment.

I would wager that in the next 10 years, some of the most strategic funders in our ecosystem will be companies’ CSR departments. To accelerate this shift, we need partners—not naysayers or cynics—who can keep their judgements aside and work with diverse stakeholders. The choice, as always, is ours.

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Rathish Balakrishnan is the Co-founder and Managing Partner at Sattva. Rathish has extensive experience in conceptualising and implementing strategic large-scale solutions in social impact sector. He has contributed significantly at governmental policy level in education and skill development. Rathish has also spent a decade working at SAP across their engineering, product management and corporate strategy divisions. He is a graduate from BITS Pilani.

This article was originally published in IDR Online.

Sattva has been working with various nonprofits and social organisations as well as corporate clients to help them define their social impact goals. Our focus is to solve critical problems and find scalable solutions. We assist organisations in formulating their long-term social impact strategy by strategically aligning with business to provide meaningful solutions to social issues.

● Talk to us: impact@sattva.co.in

Water Solutions: Leveraging Impact Through Smart Philanthropy

A Report on Water Solutions: Leveraging Impact Through Smart Philanthropy

Background

Organised by Rohini Nilekani Philanthropies and curated by Arghyam, ‘Water Solutions: Leveraging Impact Through Smart Philanthropy’ was a day-long ecosystem convening held on September 21, 2019 in Mumbai, in order to bring together like-minded philanthropists and practitioners to deep-dive into solutions and opportunities for action at scale in water.

Designed as a follow-on to an India Philanthropy Initiative (IPI) Thematic on water challenges held earlier this year, the event kept in mind a strong solutions focus; with information and interactions that forged a positive bias for action in supporting scalable pathways to the water crisis. It highlighted the work of innovative water solutions, working on the themes of Community and Technology, and Governance and Policy, through three distinct lenses of access, quantity and quality of water.

Event

24 water innovators and practitioners were shortlisted from a long list of water innovations in India based on key parameters such as theme relevance, credibility, innovation, collaboration and impact potential. Of these, 12 presented their organisation’s solutions at the event through a crisp showcase followed by audience Q&A.

Keynote speakers at the event included Rohini Nilekani, Founder-Chairperson, Arghyam, Dr. Mihir Shah, Distinguished Professor, Shiv Nadar University and former Member, Planning Commission of India, and Parameswaran Iyer, Secretary, Department of Drinking Water and Sanitation, Ministry of Jal Shakti, Government of India.

Ahead of the event, Rohini Nilekani Philanthropies, Arghyam and Sattva curated a report that focuses on water solutions, and the role philanthropy can play in their acceleration. The report features solutions that focus on community empowerment, technology-enablement and effective governance, which are critical levers for achieving scale and sustainability in improved water access, safety and security. It also profiles the 24 water innovators and practitioners.

The full report can be accessed below.

A Report on Water Solutions: Leveraging Impact Through Smart Philanthropy – Full Report

Click here to access videos and presentations of the water innovators.

Would you like to partner with us to further the conversation around philanthropy and corporate social responsibility? Write in to research.advisory@sattva.co.in.

CSR Amendments – a step forward for CSR-Nonprofit relationships

CSR Amendments – A step forward for CSR-Nonprofit relationships

– by Nishkarsh Swarnkar

The Indian parliament recently passed a slew of changes with the Companies (Amendment) Act 2019, including its section 135 which is typically known as the “CSR law”. There has been a lot written about the direct implication of these changes on CSR. For a quick reference, you may want to read my colleague Mohana Rajan’s article. In this piece, we will talk about something that has not been discussed as much – the implications of these changes on nonprofits. And the news is not just good, it’s great! The changes to CSR law bring about a number of unique opportunities for nonprofits that have not been possible earlier.

We see three important trends that CSRs are likely to exhibit post the change:

1. Optimise spends – The law has now made CSR spending mandatory for all qualifying companies. This means not only will there be a greater pool of CSR money flowing into the ecosystem, but also that there will be a greater sense of urgency in utilising the funds. Any funds that remain unspent and are not related to an ongoing CSR programme will essentially be lost from a strategic investment perspective. CSRs, thus, will be looking for full utilisation in avenues that fulfill their key social objectives or align with their broader strategic interests. Nonprofit leaders can capitalise on this in the following ways:

○ Create sound projections and spending schedules, minimising underutilisation
○ Understand and align with core focus areas of the corporate’s social interests and investments
○ Keep alternate spending options ready in case underutilisation of funds becomes a challenge, especially towards the end of the financial year

2. Leverage longer-term partnerships – The typical relationship between a nonprofit and a CSR has often been short-term and transactional. However, with the introduction of the 3-year spending horizon in the law, this is now set to change. The CSR funds can now be used to finance long-term projects that aim to achieve large-scale outcomes. The longer spending horizon allows corporates to formally plan and use provisions for multi-year engagements with nonprofits, thus working towards interventions on engendering systemic change. At their end, nonprofits can take the following measures:

○ Establish shared value proposition with corporates by aligning with their social and environmental sustainability goals
○ Shift perspective from ‘donor management’ to ‘strategic relationship management’, and build a team that is equally adept at discussing financials and social impact
○ Think about flagship programmes aiming for highest impact, and create a multi-year plan and robust M&E
○ Include an ongoing dialogue on impact created on the ground, including walking CSRs through the outcomes of the social change

3. Focus on research and innovation – The government has now broadened the scope of CSR activities to include grants to incubators, thus supporting start-ups and initiatives working towards the SDGs. This is a new opportunity for nonprofits that are looking to conduct scientific research, innovate on solutions or test product prototypes. Nonprofits can now set-up their own R&D labs or product development units under government-sponsored incubators, or tie-up with universities, research institutes and existing start-ups. To the incubatees, the ability of nonprofits to bring their topical knowledge, field experience and on-ground insights to the table can prove a great value-add. This tie-up opportunity across varied actors is in itself a rare phenomenon, and has the potential of bringing a multiplier effect to the outcomes of the ecosystem – proliferating platforms akin to ‘Tech for Impact’ across diverse sectors.

To conclude, the changes to the CSR law open several new opportunities for nonprofits to engage in long-term, strategic partnerships with corporates built on shared value. An increase in the pool of available resources will favour nonprofits who fully utilise their grants and track outcomes. And last but not the least, the grounds are most fertile for nonprofits aiming for large-scale, systemic impact through long-term projects, research and innovation.

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Nishkarsh Swarnkar is part of our Transformation Advisory team and based in our Bangalore office. His current work focuses on large-scale transformations in public education. Before Sattva, Nishkarsh has worked with ZS Associates as a management consultant in the healthcare industry. He is a graduate of National Institute of Technology Karnataka, Surathkal.

Sattva has been working with various nonprofits and social organisations as well as corporate clients to help them define their social impact goals. Our focus is to solve critical problems and find scalable solutions. We assist organisations in formulating their long-term social impact strategy by strategically aligning with business to provide meaningful solutions to social issues.

● Talk to us: impact@sattva.co.in

Female Work and Labour Force Participation in India – a Meta Study

Female Work and Labour Force Participation in India – a Meta Study

Background

The Indian government has actively pursued labour market policies to increase the female Labour/Workforce participation rate (LWFPR) in India for several decades. The policy-based approach has evolved from educational scholarships, reservations/quotas, to self-employment through self-help groups, and more recently to capacity building through skill training programmes. Challenges in effective implementation coupled with deep-rooted social norms have constrained the impact of these policies on female LWFPR which continues to dwindle. There have been numerous research projects and writings in the academic and public domain analysing the various factors affecting female labour-force participation in India. However, there has been little by way of meta studies to take stock of these public programmes, data, and research across disciplines to motivate further policy development.

This study undertakes a meta-analysis by methodically and comprehensively scanning, documenting and analysing datasets and national policies as well as theoretical and empirical literature surrounding female workforce participation relevant to the national context. In total 13 national level databases, 58 research papers and 53 national level policies were reviewed, documented and analysed to derive policy implications.

Key Insights

1. Basic quantitative labour market indicators are well measured in existing datasets, but indicators related to the quality of the labour market such as terms of employment, job search methods and so on, are rarely documented. Metrics related to gender inclusion and workplace conditions such as access to transport, toilets, childcare and others are equally rare. Another important aspect missing from national databases are behavioural and perception-based data such as career aspirations and expectations from course/job.

2. There is an increasing trade-off between education and employment choices today. The trade-off is primarily driven by a lack of employment for the moderately educated and by non-alignment of job opportunities with the aspirations of women. This is coupled with weak secondary sector performance in job creation for women, and challenges in migration for work for women.

3. Across the landscape of empirical literature, the efficacy of the self-help group (SHG) movement and peer effects have been duly highlighted for their potential to further the cause of women empowerment. Productive asset transfer and ownership has also been documented to have a positive impact of women’s economic participation. Vocational training has been noticed to improve women’s non-cognitive abilities, agency and bargaining power.

4. Competing outcomes of the household and labour market have resulted in women forgoing their employment. Further, deep-rooted social norms, lack of agency and gendering of occupations often leads to women having little choice in their employment and work decisions including care and domestic work.

5. While several policies exist to enable financial support, training, placements and other quantifiable outcomes, few national polices focus on providing support services, such as lodging, safe and convenient travel, migration support and childcare, that enable women to access skilling programmes or be part of the workforce. Budgetary focus on such programmes is comparatively low.

6. Studies are favourable towards the potential of gender quotas and reservations while discussing the need to prevent tokenism and enable inclusion actively through policy design. Of the total policies analysed, 35 percent of the schemes seek to achieve inclusion by setting targets on the total beneficiary composition, 18 percent by ear-marking funds, and 29 percent by “encouraging” inclusiveness as a policy mandate, but without actively designing policy components to bring about change. While 56 percent of the policies analysed are exclusive to women, these policies do not dive further to identify more disadvantaged groups of women.

The full report can be accessed below.

Female Work and Labour Force Participation in India – a Meta Study

Would you like to partner with us to further the conversation around inclusive labour market indicators and policiest? Write in to solutions@sattva.co.in.

Amendments in the CSR Law: What it means for you

Amendments in the CSR Law: What it means for you

22 August 2019
There is a lot of buzz around The Companies Act, 2013 and the recent amendments proposed in July 2019. These amendments also comprise changes in CSR directives. These proposed CSR amendments have not yet been notified by the Central Government and the earlier CSR law in India remains the same as on date.

But, what are the CSR directive amendments that have been proposed? What does it imply for you if you are a part of the CSR team of a company? Are there any ramifications or is it much ado about nothing?

There are four key changes that one needs to bear in mind:

1. If you’re a compliant company (have been spending your allocated CSR funds annually) – you have nothing to worry about.

However, what happens to the unspent amounts from your allocated CSR budget?

Any unspent CSR amount at the end of every financial year that is not related to an ongoing project that is undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the Company within a period of six months of the expiry of the financial year to any of the Funds** specified in Schedule VII of the Act.

Any unspent CSR amount at the end of every financial year that relates to an ongoing project that is undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the Company within a period of 30 (Thirty) days from the end of the financial year, to a new bank account to be called as the “Unspent Corporate Social Responsibility Account”.

The amount from this “Unspent Corporate Social Responsibility Account” shall be utilised by the company in pursuance of its Corporate Social Responsibility Policy within a period of 3 (Three) financial years from the date of such transfer, failing which the company shall transfer the same to any of the Funds** specified in Schedule VII of the Act within a period of 30 (Thirty) days from the date of completion of the third financial year.

** Funds as on July 31, 2019 include:

(a) Swachh Bharat Kosh;
(b) Prime Minister’s National Relief Fund; or
(c) Clean Ganga Fund.

How can the ‘Unspent Corporate Social Responsibility Account’ be advantageous?

This can be used to fund multi-year projects to achieve large scale outcomes. Allows corporates to formally plan and use provisions for multi-year engagements with non-profits, thus allowing corporates to support interventions working on engendering systemic change.

2. If you’re a new company, and meet all the financial requirements for CSR, you’ll have to allocate CSR funds.

Previously, only companies that:

(a) fulfilled the financial threshold specified in Section 135 (1) of the Act; AND
(b) which had completed a period of 3 (Three) financial years since its incorporation,

were required to spend 2% of the average net profits towards CSR activities.

By virtue of this amendment of Section 135 (5), even if a company has not finished 3 (Three) financial years since its incorporation, as long as the company meets the threshold specified in Section 135 (1), i.e., (i) Company having a net worth of INR 500 Crore or more; (ii) a turnover of INR 1000 Crore or more; or (iii) a net profit of INR 5 Crore or more, during the immediately preceding financial year, such company is required to spend 2% of its net profits towards CSR activities.

3. The penalty for non-compliance may become more stringent

This signals government interest to closely monitor and control CSR expenditure and may be a precursor for more stringent auditing of CSR spends by corporates.

Going forward, in the event a company fails to:

(a) Comply with Section 135 (5), i.e., does not spend 2% of the average net profits towards CSR while being required to do so under Section 135 (1) or does not transfer any unspent CSR Amount (not allocated for any ongoing project) to a fund mentioned in Schedule VII; and/or
(b) Comply with Section 135 (6) i.e., unspent CSR Amount of ongoing project to “Unspent Corporate Social Responsibility Account”,

such company will be liable to pay a fine ranging from INR 50,000 (Rupees Fifty Thousand Only) to INR 25,00,000/- (Rupees Twenty-Five Lakhs Only).

Additionally, every officer of the company that is in default shall be punished with imprisonment for a maximum period of 3 (Three) years OR with a fine ranging from INR 50,000/- (Rupees Fifty Thousand Only) to INR 5,00,000/- (Rupees Five Lakhs Only)

The Bottom line:
New companies may be brought into the CSR fray due to removal of the criterion on years of existence. The proposed provisions allow for multi-year projects up to 3 years and propose criminal penalisation for non-compliance.

These amendments have not yet been notified by the Central Government and have drawn significant flak from corporates. There is also eager anticipation for the Government’s decision on the recommendations of the High Level Committee on Corporate Social Responsibility headed by the MCA Secretary, Mr. Injeti Srinivas, published on 7 August 2019.

NOTE: The CSR landscape is poised to undergo changes with the recent set of proposed amendments to the Companies Act. While the discussion and debate is on, the right interpretation of the implications is critical.

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Sattva has been working with various corporate clients to help them define their social impact goals and maximise the return on social investment. Our focus is to solve critical problems and find scalable solutions. We assist companies in formulating their long-term CSR strategy by strategically aligning with business to provide meaningful solutions to social issues.

● You can read more about our work with CSR, here.
● Talk to us: impact@sattva.co.in

India’s Private Giving: Unpacking Domestic Philanthropy and Corporate Social Responsibility

India’s Private Giving: Unpacking Domestic Philanthropy and Corporate Social Responsibility

Background

Since private philanthropic funding is not regularly identified and no data is being collected by States or the federal government, there is an absence of data on domestic philanthropy in India.

In order to shed light on how private domestic organisations provide financing to development in India, to examine how these private resources are allocated, and to identify the issues and geographical areas that are being targeted, OECD Development Centre undertook ‘India’s Private Giving: Unpacking Domestic Philanthropy and Corporate Social Responsibility’, a study that identifies the scope and scale of domestic philanthropy in order to assess how to unleash the potential of further partnerships in support of the Sustainable Development Goals (SDGs).

As survey partners, Sattva helped in designing and contextualising the study for the Indian philanthropic ecosystem and carried out secondary research, data collection, interviews and data validation for the report.

The study sampled 50 private organisations in India comprising of CSR, corporate and family foundations.

Key Findings

  • While the OECD invited 178 of the largest CSR and philanthropic organisations in India to be part of a survey to map India’s domestic giving sector, family foundations and corporate foundations were reluctant to share financial data, so domestic funding has been partially identified for only 50 large organisations by type of funder, target sector and the Indian States and Territories in which it is carried out.
  • Domestic philanthropic funding has at least matched international philanthropic funding in recent years, with close to USD 1.8 billion in domestic spending between 2013 and 2017.
  • An analysis based on comparable data covering domestic philanthropy, international philanthropy and ODA in India shows health and education as two main priority areas for philanthropy and CSR in India. There is scope for more coalitions and to explore how to achieve impact at scale when it comes to these areas.
  • Sattva-Research-OECDSector spending

  • Education, health and rural development attracted the largest funding. Other areas, like gender equality, receive very limited funding.
  • For water supply and basic sanitation, there are important overlaps in funding amongst ODA, international and domestic philanthropy, as well as CSR and public spending. This suggests potential for more large scale partnerships between ODA donors, private donors and the public sector.
  • Sattva-OECD_table

  • Domestic philanthropic giving is highly concentrated in the States of Maharashtra, Karnataka and Andhra Pradesh. Comparing funding from private giving with poverty rates reveals that domestic philanthropic giving in India focuses rather on populated areas than those with high poverty incidence.
  • Increasing domestic philanthropic flows pose a new challenge for the non-profit sector. Additional resources from mandatory CSR and larger voluntary donations from individuals and foundations are becoming available, so it is urgent to strengthen the ability of the non-profit sector to further absorb those resources and transform them into positive development outcomes.
  • The full report can be accessed below.

    India’s Private Giving: Unpacking Domestic Philanthropy and Corporate Social Responsibility- Full Report

    Event

    OECD launched ‘India’s Private Giving: Unpacking Domestic Philanthropy and Corporate Social Responsibility’, a study on the scope and scale of domestic philanthropy and CSR in New Delhi on 9th August.

    The event featured a presentation of the report followed by a panel discussion on the key findings. ‘Private financing for development in India: New ways to achieve Agenda 2030?’ examined the role of private philanthropy, Corporate Social Responsibility and corporate philanthropy in contributing to the economic and social development of the country.

    Would you like to partner with us to further the conversation around philanthropy and corporate social responsibility? Write in to knowledge@sattva.co.in.

    Breaking Breastfeeding Barriers for Working Women

    Breaking Breastfeeding Barriers for Working Women

    India needs stronger legislation, better maternity policies and quality childcare, to enable women employees in the formal and informal sectors to achieve positive breastfeeding outcomes

    India has set a target for an exclusive breastfeeding rate of 69 percent by 2025. A big part of this puzzle will be to enable working women to breastfeed.

    Overall, India ranks 78 in the World Breastfeeding Trends initiative (WBTi), of 97 countries that participated. Only 48 percent of children initiate breastfeeding within the hour and only 55 percent follow exclusive breastfeeding for six months.

    The target can be met only if we address barriers that working women face through legislation. Essentially, this means creating mother-baby proximity for the first six months to allow for exclusive breastfeeding without wage loss and facilities to pump, store and feed expressed milk once work is resumed by the mother.

    Sattva_Insights_Lakshmi-BFWeek

    While there are some big wins for women in the formal workforce, the legislation can be further strengthened.

    In India, the revised maternity bill accounts for six months of paid maternity leave for up to two children. However, the burden of wage payment during this time lies solely with the employer; experts say that this could be counterproductive and discourage organisations from employing women. In 2017-18 alone, about 11-18 lakh jobs were lost because of this. In addition, enforcement of legislation for contract workers need to be strengthened.

    Here’s how the legislation can be strengthened:

    – Provide incentives to employers such as underwriting part of the wage payment, tax breaks, or even introduce employee taxes to encourage employers to continue to hire more women • Create appropriate paternity leave provisions to ensure spouse support that is especially critical in establishing breastfeeding

    – Sharpen guidelines on workplace enablement to include providing appropriate pumping equipment and having a designated pumping spaces in addition to providing nursing breaks

    Workplaces need to sensitise all employees such that they can encourage breastfeeding mothers. They must also create mechanisms for mothers to seek out the right information and support through connecting peer groups and breastfeeding support organisations.

    Large corporate governance must ensure that this applies to workers across across their value chain, including contract workers across SMEs and MSMEs .

    The maternity act does not apply to the informal sector, which is estimated to be over 80 percent of the women workforce. Informal workers are also forced to return to work early because of poor economic conditions. A recent study on childcare practices of mothers working in the informal sector by Indian Institute for Human Settlements (IIHS) showed how close to 50 percent of the women surveyed returned to work within three months of birth, and only 21 percent of the total women continued to exclusively breastfeed.

    Informal workers require convergence across maternity schemes and better childcare facilities to enable positive breastfeeding outcomes.

    A critical need for informal women workers is wage protection. Today, schemes that support maternity benefits for informal workers at both a central and state level are inadequate:

    – Informal workers are entitled to only Rs 5,000 as a fixed benefit from the government for their first child under the scheme PMMVY (Pradhan Mantri Matru Vandana Yojna).
    – There are also some state schemes (such as in Tamil Nadu and Odisha) that provide financial incentives that are higher; however, they are few and far in between.
    – Nowhere are these financial benefits linked to wages.

    Secondly, implementation is weak: only about 3.2 million women have benefited under PMMVY till August 2018, in spite of over 25 million births in that time as found by an RTI request.

    Thirdly, as women in the informal sector are forced to return to work—in many cases before six months—there is a need for effective childcare. Childcare legislation in India is very limited. Recently, the funding from the central government on the National Creche Scheme has been drastically reduced, in a blow for informal workers.

    Going forward

    There needs to be a strong focus in bringing convergence around maternity schemes for informal workers addressing key current gaps, such as linking financial benefits to wages and allowing for the fluidity of informal work (no fixed employer, multiple job changes, etc) and ensuring that the schemes complement each other. This also means ensuring adequate childcare through the public health system for women from whenever they resume work (even earlier than six months).

    For example, anganwadis can be equipped with breast pumps and storage facilities to help mothers express and store breast milk. Finally, Self Help Groups (SHGs), which have successfully organised several million informal workers, should be enabled as vehicles to create solutions and engage and lobby with the government to ensure adequate legislation—a wonderful example is the SEWA Sangini programme that has created a sustainable model of childcare for informal workers and had big wins through engaging and working with the government.

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    This article was originally published in Forbes to mark World Breastfeeding Week.

    Talk to us: impact@sattva.co.in

    5 insights on the potential of e-commerce in growing women entrepreneurship

    5 insights on the potential of e-commerce in growing women entrepreneurship

    A lack of access, skills and business acumen often prevent women and women-owned enterprises from being able to participate in markets or scale their economic participation. The numbers reflect this—46% of women-owned enterprises in India classify their business as stagnant, and only 20% earn more than INR 5000 (~US$71) a month (compared to 73% of men-owned enterprises). Addressing this disparity is essential to improving economic empowerment outcomes for women, and stakeholders across sectors, be it government, private sector or civil society, have a vested interest in solving for the barriers to women entrepreneurship.

    Sattva_Insights_ecommerce women entrepreneurship

    A recent solution that has shown promise in improving the type of work and market opportunities available to women is the advent of e-commerce. Internationally, models such as Taobao (Alibaba) and Grab have shown results in linking women to livelihoods and markets, and in India, nascent platforms such as Amazon Saheli and GoCoop are looking to do the same. Aside from market linkages, these platforms often provide a basket of different enablers in order to allow these small entrepreneurs to participate in online value chains, such as access to digital finance, support with logistical services, and flexible work opportunities.

    The Potential: What can e-commerce bring to the table?

    E-commerce platforms have the potential to improve gender outcomes

    These platforms can potentially increase the revenue share available for women producers by eliminating middlemen and reducing barriers to entry. They can use the data generated on consumer preferences to enable better production choices as well as help women achieve visibility and discoverability for their businesses. For example, the Saheli storefront on the Amazon India website directs traffic to products from their partner women-owned enterprises to provide greater visibility. Finally, they can make the process of procurement and purchasing gender blind, thus addressing any normative barriers associated with women participating in traditional value chains.

    However, digital platforms are not a silver bullet solution

    They may provide market linkages and end to end support, but they cannot guarantee demand for products, or insulate enterprises from global competition. They are also often not able to directly provide credit, inputs or physical infrastructure, but multiple models provide tie-ups and support addressing these issues.

    While competition is a major concern, models based around service provision are better suited to mainstreaming through digital platforms

    E-commerce platforms can create market linkages for niche products (such as handicrafts), but small enterprises producing in the fast-moving consumer goods (FMCG) market with mainstream players will often have issues competing on price, quality etc. On the other hand, enterprises based on service provision are more insulated from global competition as service provision is limited to local geographies, while manufacturing products can be easily replicated in other markets where production and prices may be cheaper, crowding smaller players out.

    Is the ecosystem ready?

    There is a need for money, skills for business, quality and timely production and quality production services to drive efficiency of enterprises and enable them to compete on a global scale

    There is a need for handholding, additional services and solutions such as clustered service centers, common branding across enterprises to create product awareness, and business consulting services to aid first time entrepreneurs survive in mainstream markets. Experiences from companies like Rangsutra and Industree show that in order to achieve the quality and compliance expected on such platforms, technical capacity building and support is often needed, along with some level of guaranteed and predictable revenue for these risk-averse entrepreneurs. Other necessary pre-requisites to work with women entrepreneurs include buy-in from the men in a household, and of course, basic internet access.

    The viability and scalability of e-commerce as a route to women’s economic empowerment needs to be further explored by stakeholders across sectors

    While the potential exists, and some stakeholders are exploring this as a solution; it is important for further research and discussion to explore which types of digital solutions are most relevant in addressing the barriers plaguing women and women-owned enterprises, how feasible these models are, and their potential for scale in different contexts.

    Finally, it is important to keep in mind that while these solutions could solve for barriers faced by enterprises, these entrepreneurs may not have the access or ability to engage with digital solutions. Solving for this will require a tri-sector approach, and stakeholders from civil society, government and the private sector must come together at platforms like AVPN and identify a way forward both in terms of potential and for readying the ecosystem to take up these solutions at scale.

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    REFERENCES:
    [1] Data from the 73rd NSS and 6th EC in India.
    [2] Taobao is a Chinese online shopping website, owned by Alibaba.
    [3] Grab is a transportation, food delivery and online payment provider founded in Malaysia.
    [4] The Saheli store is a dedicated storefront on Amazon India to display women entrepreneurs’ products and facilitate sales.
    [5] GoCoop.com is an online marketplace that enables handloom and handicraft co-operatives and artisans in connecting directly with buyers (both consumers and other businesses).
    [6] Rangsutra is a craft company in India that produces a variety of textile handicrafts, collectively owned by over 2000 artisans.
    [7] Industree works to create ownership based, organised manufacturing ecosystem for artisans and micro-entrepreneurs, and runs 2 producer-owned enterprises that employ over 1400 women.
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    This article was originally published by AVPN and can be accessed here.

    You can find more Insights from Sattva here.

    To talk to us for collaborations or partnerships, you can write to us: impact@sattva.co.in