Social Impact Bonds as Tool to Finance Public Sector Reform

Social Impact Bonds as Tool to Finance Public Sector Reform
– By Aashir Sutar, Kisslay Anand, Aditya Kumar and Darshan Kumar

Sattva Consulting, National Institute of Urban Affairs, Sarjan Foundation, and Tata Trusts

Abstract
Social Impact Bonds (SIBs) act as financial assets for attracting investors for funding social programmes by providing incentives if the predefined outcomes and targets of the programmes is achieved by the implementing agency. This paper helps in understanding more about SIBs and their working models with a case study on an education programme implemented in the country to achieve Public Sector Reform.
Sattva_Insights_SIBs
Introduction
Public Sector Reforms is a programme for financial and management reforms aimed at bringing about long-term productivity improvements in the public sector and better service to the community. The programme is applicable across various sectors like poverty alleviation, healthcare, livelihoods, skill development, and education. Social Impact Bonds have emerged as a new financing tool and has enthusiastically been welcomed as social innovation for funding social impact projects. Social Impact Bonds (SIBs) and Development Impact Bonds (DIBs) can be defined as “Partnership between governments or donors to improve the social outcomes for a specific group of citizens or “beneficiaries” and providing the investors incentives if the project meets its predefined targets.” SIBs represent a financial mechanism aimed to fund interventions relying on an outcome-based contract. They are hybrid instruments with elements of both equity and debt. (Bolton & Savell, 2010; Liebman, 2011)

The idea behind an SIB is that private investors can be attracted to invest in social service interventions that have a positive payoff. SIBs integrate philanthropy, venture capitalism, performance management, and social programme finance into an innovative new mix. It extends and emulates the philosophy and framework of collective impact.
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– Aashir Sutar is part of our Consulting Services team and is based in Mumbai.

This is an excerpt of a paper presented at the Biennial Conference on Entrepreneurship at EDII. To read the entire paper, click on the DOWNLOAD link on the left of this page.

More than Money

Elderly self-help groups in rural areas provide more than just financial security.

National Bank for Agriculture and Rural Development (NABARD) in India defines Self Help Groups (SHGs) as “small economical homogenous affinity groups of rural poor, voluntarily formed to save and mutually contribute to a common fund to be lent to its members as per group decision.” The loans that the rural poor can avail of is utilized in a number of ways, including generation of income through entrepreneurial pursuits.

Earning a living, however, is not the sole reserve of under-60-year olds. Given their vulnerabilities, elderly people in villages need it just as much. In the last two decades, HelpAge India has pioneered the creation of Elder Self-Help Groups or ESHGs in rural India to provide livelihood support to the elderly. The success of this model has led to its adoption by the Ministry of Rural Development for the National Rural Livelihoods Mission in India, for 5,543 ESHGs, impacting 67,014 elders across 12 states in India. The ESHG members may save as low as an amount as INR 30 (USD 0.42) per month per person, and then pool their resources to inter-lend within their group of 10-20 people, eventually moving on to larger loans through financial linkages with banks. They may then individually or collectively engage in income generating activities, such as taking on the project of cooking the midday meal for children in the village school.

While ESHGs have potent financial impact on the lives of the aged, there are also some lesserknown social aspects that are harder to quantify and may often be empirical in nature. However, there is no denying the positive impact they have on the personal psyche and relationships of seniors.

Sattva_Insights_MoreThanMoney_AditiChatterjee

Increased inter-generational bonding
Travels into rural West Bengal brought us in touch with 10 such ESHGs, including a few 80-year-olds who walked into the ESHG meeting bent over crude walking sticks. They were too old to earn the INR 1 (less than 2 US cents) a day that they had to contribute to the collective savings fund. They proudly announced though, that their grandchildren gave them INR 1 a day from their own daily “pocket-money” of INR 5 so that the grandparents could be a part of the ESHGs. Though anecdotal in this instance, ESHGs have been known to increase intergenerational bonding within the family due to similar circumstances.

Improved status within the family
Old age is sometimes associated with familial neglect. However, ESHG members often enjoy improved status within their families. One of the reasons for this is that they are able to contribute to the family income through their own earnings via the ESHG. Even in the absence of such earnings, the elderly nominate family members who will be the recipient of their ESHG savings and the interest it accrues upon their demise. Having an inheritance to leave behind therefore also contributes to their improved social standing within the family.

Antidote to loneliness
Even with improved social status in the family, loneliness is a real concern for the aged. Amidst their own work and household chores, family members may have little time to spare to engage with the elderly folks in the house.

However, village elders who had become ESHG members said that they had organized outings to picnic spots and religious sites as a group – something they had never tried before. Others mentioned that when ill-health hampered their mobility, the whole group congregated close to their house for the weekly meetings so that they could be a part of it. Interestingly, the elderly having their own social circle led to decreased stress for the care-givers in the family too, and therefore often resulted in more harmonious family relationships.

Broadened horizons and collective action
Among the most remarkable effects of the ESHGs however, is the impact of exchange tours to other ESHGs. Not only does this expose members to wonders they had never experienced in their own lives (like travelling by train for the first time, or seeing running water flowing out of a tap), it also gets them acquainted with best practices of other groups. There have been reports of groups who almost doubled their contribution to the savings fund to provide small stipends for more destitute members. Dolon Mukherjee, a Ph.D. scholar in gerontology and a HelpAge India veteran, commented that ESHGs who had met such groups came back to their own villages and started to save INR 2 instead of INR 1 per month. The reason? To set up a parallel avenue of pensions for members of their ESHGs who did not have access to state pensions and social security benefits.

Elder Self-Help Groups have, therefore, not just helped the elderly financially, but also given them a new lease on their social and personal lives in their twilight years.
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This article was originally published in Impact Magazine 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

Innovation for Impact

In our everyday lives, we often come across products that seem to “get” our needs and work perfectly. While many such innovations are built by for-profit companies, that certainly does not need to be the norm. For example, in technology, while Google is the clear innovator in the internet search domain, Wikipedia, a non-profit, has created an entire ecosystem of community curated content on nearly every topic under the sun.

The social sector, which is looking to solve the gnarliest problems at a global scale, from clean water to education to financial inclusion, deserves our most transformative ideas and innovations. Our problems require a fresh approach from an innovation lens, rather than a scarcity mindset. As social sector innovators, we should thus feel enabled, even obligated, to create joyful, transformative products, interactions and experiences that build the same the feeling of “where have you been all my life” in our beneficiaries, partners, customers, clients. With our unbridled access to information, tools and resources today, this is very possible.

How do we go about creating these innovative solutions? How do we move diverse organisations and teams towards this common vision? How do we motivate our own selves to not settle for good enough? There are many, potentially interrelated frameworks (human centric design, lean startup approach and so on) which help us address these questions around excellence in innovation. One of the prominent ones is called the Design Thinking philosophy.

What is Design thinking, how does it look in action?:
The idea and adoption of Design Thinking initially came from the software industry, but over the last decade, has gained traction across other domains. Among other organisations, the Stanford University’s d.school is a very prominent thought leader in this space.

There are multiple approaches to describe the Design Thinking process. Stanford d.school’s framework has 5 stages – Empathy, Definition, Ideation, Prototype and Testing. At a cursory level, these phases sound fairly intuitive. What’s critical to understand in Design Thinking, however, is the non-sequential nature of these five stages – they are dynamic, potentially overlapping phases, NOT a linear process.

Sattva_Insights_DesignForImpact

Let us now dive into a detailed exploration of the Design Thinking phases:

1. Empathy – This phase, when introduced, proved to be a key differentiator between the traditional, bounded design processes and the Design Thinking approach. In the past, Designers / creators would observe their end users to evaluate their needs around a problem area – despite best intentions, this could be reduced to a clinical, detached exercise that created functional products without transformative, joyful customer experiences. But empathising with their circumstances, ecosystems and workflows takes the caliber of designing and solutioning to a whole new level. There are beautiful examples of empathy dynamically impacting innovation in the social sector. Consider the Gandhi Fellowship program run by Kaivalya Education Foundation. Gandhi Fellows begin their journey with a community immersion phase – this is not about observation, it’s about walking in the shoes of children, whose school experiences the Fellows are looking to transform over the next 2 years. Starting with this level of empathy gives us an unparalleled lens into the domain. We grasp all aspects of the problem with clarity, from a space of positivity, rather than judgement, drastically elevating the quality of our solutions.

2. Definition is where we internalise everything we’ve learnt in Empathy about the problem space and probe and poke at the underlying questions to shine a light on the ones that truly matter. For example – how do we introduce online courses in a community without reliable electricity? This could be the core question in a traditional design approach and the resultant ideation phase may come up with ideas such as solar powered batteries for laptops. But with Design Thinking, we start to explore the dynamics of learning and teaching in such schools. How do they function? How do the students learn? What would online courses do for these learners? Thus, rather than purely looking at the problem from a technical standpoint, we’d be able to understand the entire ecosystem in such communities and explore deeper issues around learning, not just the surface question of technology delivery constraints.

3. Ideation – This phase is far more than someone “creative” putting down ideas on the back of a cafe napkin. Instead, it requires unbridled creativity and in order to be effective, should truly be about co-creation in a safe space, without judgement. Once the critical questions have been prioritised in Definition, what are ALL the ideas on the table from participants to solve them? Multiple approaches (such as worst solution, quick draw etc.) could be used to frame the process of collecting ideas from the entire team. The broader the viewpoints, the more innovative the ideas that come to the table. In the prior example, thinking through adaptations the community has made to compensate for lack of electricity would be a critical perspective to bring into ideation process.

4 & 5. Experimentation – Prototyping and Testing: In these two phases, all the creative ideas are converted to prototypes and tested with real users to capture feedback. Most of the ideas will fail – being aware of that, while keeping the momentum for the next round of prototyping requires intense grit and resilience. One also needs to develop the intuition to be able to see what aspect of the prototypes failed and what requires additional testing in future iterations. An example of a fearless experimenter is Arunachalam Muruganantham, who took on the challenge of inventing a low cost sanitary napkin for women in his family and community. Going out of his way to live in the shoes of menstruating family members for several years of his life and his intense experimentation with source materials took his product design to levels that a dispassionate team at a pharmaceutical company never could.

What are key success criteria for enabling Design Thinking in an organisation:
In order for the theory of Design Thinking to work, some very specific organizational routines need to be in place:

1. Enable the entire organisation to think as designers in the creative process: You, yes YOU are a designer. How often have you said – “this is so great, I wish I was creative enough to come up with this visual or story or work product” Or – “I’m not creative at all, my inputs to this discussion won’t add value”? In order for an organisation to produce game changing products, everyone involved in the problem ecosystem must be encouraged and enabled to think of themselves as an equal and valued designer and creator. This could be an organisational or personal barrier that team members may need to overcome, but it is a critical first step to enable an organization towards transformative innovation.

2. Leverage the power of the tribe: Design Thinking only works when diverse voices and perspectives are brought into core phases such as Ideation and (co) Creation. It is critical that each of these voices is brought in and truly heard. The more perspectives we bring in to examine the problem statement in the beginning, the deeper we are able to understand and co create solutions with high chance of adoption. For example, if we are looking at the problem of affordable urban play spaces in India – voices as varied as care givers, children, architects, urban planners, sports practitioners, teachers, school administrators, even waste recyclers all could have huge value and perspective in understanding the core questions and then, what potential solutions will actually gain traction with children while keeping costs, accessibility, maintenance and other diverse issues in mind.

3. Don’t settle for mediocrity, don’t wait for “perfection”: Design Thinking is a living, evolving philosophy that helps us gain a deep perspective into a complex problem space. With a more static, linear approach, we would try and understand all aspects and underlying questions before attempting to ideate and create comprehensive solutions. However, there is a high chance that the foundational circumstances could have shifted by the time we have a fully baked and functional solution. Design Thinking instead promotes deep exploration of the circumstances of our end users, with sincere empathy. This then lets us rapidly ideate, create, prototype and test different solutions – solutions that don’t resonate with users get discarded and we re-examine their problem statements again, having learnt from both the successes and failures of the previous iteration.

The road ahead:
Make no mistake – constantly staying focused on innovation is hard, changing organizational mindset and routines to drive innovation is even harder. And frameworks, including Design Thinking, can help pave our way of working towards this ambitious goal. There will be moments where we feel like our disruptive ideas are getting no traction in the ecosystem. But these are minor setbacks compared to our end game of solving the world’s most pressing problems. We must refuse to settle for anything less than transformative, joyful product / solution experiences for our end beneficiaries – only then can we co-create big, impactful social innovations.

Additional sources for reference re Design Thinking: Please explore the resources on Stanford d.school’s websites (including their YouTube channels) for richer content including case studies related to Design Thinking.

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Originally published here: http://piramalfoundation.net/category/articles/

Read about Sattva’s work in partnering with Design:Impact Awards to promote visionary and transformative product design for social impact: https://www.sattva.co.in/insight/video-design-for-social-impact/

Parvathy Ramanathan is a Principal in the Transformative Advisory team, working in our Bangalore office. She has a background is in launching technology products, with a focus on data and analytics. She has worked in several sectors in startups (Poplicus, Appature) and larger companies (Amazon, IMS Health, McGraw Hill etc). She is an Engineer from RAIT, Mumbai University and has an MBA from the Kellogg School of Management.

IT spent Rs 5,091 crore on CSR between 2014 & ’17

Education is the most favoured choice of Indian IT cos, followed by central govt schemes that get about 14% of CSR money.

IT firms have spent over Rs 5,091 crore in corporate social spending between 2014 and 2017, said Sattva, a startup that looks at data to measure social impact by companies. Tata Consultancy Services led the spending with over Rs 1,091 crore in the period.

The government mandates that firms should spend at least 2% of their average net profits made in the preceding three years on CSR. The trend, in terms of geography of spend by IT services firms, differs from the overall trend.

After pan-India projects, which is the highest in every category (in case of IT firms accounts for half their CSR), overall CSR spend by corporates is concentrated in the Western region.

In case of IT firms it’s concentrated in the South (1/3rd of their CSR). Education is the most favoured choice of Indian IT companies, followed by central government schemes that get about 14% of CSR money.

In the category of ‘startups’ (tech/innovation, etc), Sattva found only Chennai-headquartered Zoho Corporation contributing any significant sum to CSR. Zoho has reported CSR spend of Rs 25.5 crore on Zoho University.

(This article was originally published in Economic Times. All pictures and images, courtesy the publication.)

How we halved open defecation in a New Delhi slum in a year

With 1.1 billion people relieving themselves in the open, India accounts for more than 59%, of open defecation worldwide (source: WHO). Open defecation is the leading cause of diarrhea and worm infections, which result in more than half a million children in our country dying annually. Even of those who survive, many are physically and cognitively stunted for the rest of their lives (source: WHO). According to World Bank, India loses 2.4 Trillion Rupees each year due to poor and inadequate sanitation conditions (Source: World Bank) While over 1.2 million of Delhi’s slum population is dependent on community toilets, only 55% of this infrastructure is usable (Source: Action Aid), leaving half a million people defecating in the open.

Sattva_Insights_India-slum

To truly understand the problem at its core, my team in Enactus – an international student-led social entrepreneurship body – studied the demand and supply factors of public sanitation. We learnt that:

1) People in slums avoid using toilets, given their filthy state. This, along with age old misconceptions, leads to rampant open defecation. Lack of ownership towards community toilets provokes vandalism, rendering them defunct.
2) Currently, the community toilets are developed by the government and then the operationalisation of these toilets is handled by maintenance firms who file a tender for it. The toilet maintenance firms face shortages of trained staff resulting in substandard operations.
3) Despite efforts by the govt to expand infrastructure, funds end up being utilised for reconstruction of defunct complexes.

Seeing an opportunity to work on systemic failures, four colleagues and I created Project Raahat in 2016.

Raahat has a twofold mission – to eradicate open defecation and provide safe sanitation to urban slum communities by innovating in management of community toilet complexes and sensitising people on good sanitary practices

We took our model and pitched it to different Urban Local Bodies and Delhi Urban Shelter Improvement Board (DUSIB) who finally gave us a pilot site in Sultanpuri, a slum cluster in North Delhi. Our intervention comprised the following:

Entrepreneurial Model: To overcome the problem of substandard maintenance our team developed an entrepreneurial model. We selected two unemployed yet aspiring individuals from the community as caretakers. Through extensive and continuous training, we equipped them with the knowledge of plumbing and cleaning practices, interpersonal skills and bookkeeping.

Revenue Model: Further, as mandated by the Government, a nominal fee is charged from the toilet users which forms the income of the entrepreneur after allowing for maintenance expenses and reserves.

Customised Sensitisation: We customised sensitisation activities to suit different demographics. For example, we gamified the topic with hopscotch and relay races to educate children on proper use of toilets. We created a own fictional character called Raahi, who became a mascot for propagating sanitation amongst slum children. Our campaigns for women covered topics such as healthy pregnancy and menstrual hygiene. Aesthetic modifications were made using wall art based on popular Bollywood and cartoon themes to encourage people to use toilets.

Payment Alternatives: Pay and use toilets are characterised by long waiting lines and the compulsion of having to pay each time, deterring people from using them. To resolve this, we introduced the Raahat Suvidha ticket. These tickets can be purchased in bundles at a discount and offer user convenience and flexibility.

Security: By employing nightguards and installing surveillance mechanisms, the toilet facility was operational 24/7. Women no longer have to relieve themselves in the open in the darkness of night.
Data Analysis: To effectively monitor usage levels of the toilet complex, we installed a people counter which measures footfall and segregating the population according to demographics. When usage statistics decline, remedial action is taken by the entrepreneurs in the form of targeted sensitisation to ensure continued usage.

Exit Strategy: We defined benchmarks in terms of number of users and rate of open defecation. Once these were surpassed, all responsibilities of complex management were transferred to the entrepreneurs.

With a baseline and endline done by DUSIB, Sultanpuri showcased a reduction in open defecation from 70% to 35% in a year, a first-time achievement in any slum cluster of Delhi. We were also lauded by Delhi’s deputy chief minister, Mr. Manish Sisodia.

We developed a Standard Operating Procedure with DUSIB for all maintenance firms of Delhi. We have been consulting these firms on such maintenance practices too. Rs 9.8 million worth medical expenditures have been avoided through our intervention.

Key Takeaways

1) Giving ownership of sanitation to the community itself by including a community member for maintenance and care taking
2) Developing the area as a community space to shatter the image of a “dingy dirty place” to a place where you can visit without any fear or discomfort
3) Helping sustained usage of the facility by reducing the per usage cost and using data analytics to solve area specific problems

3 years later, Raahat has come a long way. We are 40 members strong, running 15 community toilet complexes in Delhi. We are now working with the Andhra Pradesh government to run our programme through government volunteers.

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For data on households in India that have access to a toilet, look at our data here.

Predatory Lending: Is it worth your interest?

Predatory Lending: Is it worth your interest?

– By Aishwarya Heda

What would happen in a world where the interest rate on borrowings is 60% per annum? Indebtedness, daily struggles, failing businesses, anxiety; this is the reality for millions of Indian poor.

Lata works in my house and a few months ago she borrowed a sum of INR 1 lakh for her son’s surgery from a local moneylender, at an interest rate of INR 60,000 per annum. Contrast this with the average lending rate in the formal banking sector which ranges from 11% to 24% per annum. “Life is good otherwise. My husband and I earn enough to support our family. However, this loan gives me anxiety. I have a feeling that I will be paying this interest for the rest of my life.” says Lata.

Sattva_Insights_PredatoryLending

Credit is necessary to ensure the dignity, shared prosperity, financial stability, and secured well-being of people. It provides access to education and healthcare, a means of undertaking business, and fulfils emergency needs. However, predatory lending often inhibits the growth and cash flows of the poor, strangling them with a lifetime of debt. A seven-year-long longitudinal impact study commissioned by SIDBI discovered that the poor – without access to formal sector loans – pay an interest rate of 60% per annum or more to moneylenders on an average (EDA, 2004). In spite of this huge interest payout, nearly 20% of the loans in rural India and 16% of the loans in urban India are sourced from moneylenders alone (IHDS-II). In our country, where finance is seen as the backbone of economic growth and a means of elevating residents out of poverty, it has become imperative to eliminate the widespread influence of informal credit.

This begs the question: why do a majority of the poor still depend on the informal sector? After all, there has been tremendous growth in the microfinance sector and the government has taken multiple steps like the implementation of many credit-linked poverty alleviation programmes and a mandatory system of priority-sector-lending to promote formal sector lending to the poor. The major possible causes of this problem include a combination of people and systemic issues. Lack of education and knowledge, difficulty in accessing formal sources of credit, absence of collateral, and possible inhibition to enter bank buildings could be some of the people or sociological issues. Additionally, it is much easier to obtain loans for purposes such as marriage and litigation from informal sources. Systemic factors of the formal sector include lengthy paperwork, fixed repayment schedule, which does not meet the needs of the poor with irregular income, and unwillingness to extend credit to the poor due to the uncertainty of repayment capacity and lack of data to ascertain their credit ratings. Informal sources, on the other hand, do not require timely repayment, do not have complicated rules governing the granting of loans and are willing to lend freely without collateral. This makes them a preferred source of credit.

In order to affect a transformative change in the credit availability from formal sources to the poor, a multi-layered approach needs to be taken. It should involve changing the mindsets of all the involved stakeholders including the poor, formal sectors banks and microfinance institutions. For instance, a study funded by UK Aid showed that flexibility in microfinance contracts led to higher repayment rates. The widespread use of Aadhar card and linked PAN cards has eased the process of opening of bank accounts, filing ITRs, availing SIM cards and performing e-KYC. These technology-linked systems along with the digital revolution seen in India can be leveraged to collect data to reasonably gauge the risk of non-repayment from every individual. Microfinance institutions can optimise these technologies to make finance readily available without compromising on due diligence. The digital revolution can also be harnessed to educate the masses regarding the benefits of formal finance.

Ultimately, a nation’s advancement is measured by how rapidly its poor advances out of poverty, and this is especially true for a country like India with 364 million poor (2018 MPI). A steady and flexible source of formal credit could be a key to raise the status of the Indian poor. It will provide them with an opportunity to start new enterprising activities and will bring about positive changes in their livelihood patterns by inculcating in them the habit to save, reducing their dependence on predatory lending, and fundamentally improving their standard of living. This could be the story of millions of other poor people like Lata, to whom we as a nation have a responsibility to empower.
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Aishwarya Heda is part of our Transformation Advisory team and works from our Bangalore office. She is a graduate from Shri Ram College of Commerce, Delhi. Before Sattva she has interned at a financing firm in Mumbai followed by a 2-year stint as an Investment Banking Analyst at Goldman Sachs.

Read about Sattva’s work in demonstrating how financial empowerment through digital financial inclusion can make a social impact here.

Sector-wise CSR Analysis

BACKGROUND – CORPORATE SOCIAL RESPONSIBILITY

In 2014, India became the first country in the world to mandate CSR spend through legislative action. The legal mandate on CSR applies to companies that have:

a.Net worth of INR 500 Crore or more, OR
b.Annual turnover of INR 1000 Crore or more, OR
c.Net profit of INR 5 Crore or more.

Companies thus coming under the CSR mandate, have to spend at least 2% of their average net profits of the preceding three years on social impact programmes in every financial year.

In the first 3 years of implementation of this law, over 29000 companies have come under the CSR ambit. Cumulatively they have spent over INR 41,396 Crore over a period of 3 years.

In this report, we have analysed the cumulative 3-year sector-wise CSR spend by the entire set of companies (total of 29190), using the data made available by the Ministry of Corporate Affairs as of January 2019.

SECTOR-WISE TRENDS

Sattva_Sector-wiseCSRData
Sattva_Sector-wiseCSRData

Education is the most popular choice of sector for CSR projects receiving 25% of the total CSR -more than 10,000 Crore -between 2014-2017. In fact education alone received as much funding as the next 2 sectors –healthcare and rural development –combined!

The top 3 sectors comprising of education, healthcare and rural development together received 50% of the total CSR fund. Remaining 50% is spread over 25 different sectors.

(Please note that the data for FY 2016-17 is not fully updated on MCA portal (as of Jan ‘19). An updated version of this report will be available on www.sattva.co.in and www.IndiaDataInsights.com in June 2019.)

You can find our data on the sector-wise trends here.

Part 1 of our blog, on CSR Compliance, in this series is available here.

Part 2 of our blog, on Region-wise CSR analysis, in this series is available here.

Part 3 of our blog, on Industry-wise CSR analysis, in this series is available here.

To explore the nuances of CSR – compliance, analysis and more – talk to us today at impact@sattva.co.in

Industry-wise CSR Analysis

BACKGROUND – CORPORATE SOCIAL RESPONSIBILITY

In 2014, India became the first country in the world to mandate CSR spend through legislative action. The legal mandate on CSR applies to companies that have:

a.Net worth of INR 500 Crore or more, OR
b.Annual turnover of INR 1000 Crore or more, OR
c.Net profit of INR 5 Crore or more.

Companies thus coming under the CSR mandate, have to spend at least 2% of their average net profits of the preceding three years on social impact programmes in every financial year.

In the first 3 years of implementation of this law, over 29000 companies have come under the CSR ambit. Cumulatively they have spent over INR 41,396 Crore over a period of 3 years.

In this report, we have analysed the cumulative 3-year industry-wise CSR spend by the entire set of companies (total of 29190), using the data made available by the Ministry of Corporate Affairs as of January 2019.

INDUSTRY-WISE TRENDS

So who are the big spenders and in which sectors and which regions?

Two industries – BFSI and IT/ITES – together contributed 30% (INR 12,658 Crore) to corporate India’s total CSR fund in 3 years (2014-17) and education is the most popular sector overall.

On the whole, companies spend the most on CSR projects that are pan-India in scope. The next big recipient of CSR money overall is the Western region.

All figures in the following charts are cumulative spend over 3 years, unless otherwise specified.

Sattva_CSR_Industry-wiseTrends
Sattva_CSR_Industry-wiseTrends

(Please note that the data for FY 2016-17 is not fully updated on MCA portal (as of Jan ‘19). An updated version of this report will be available on www.sattva.co.in and www.IndiaDataInsights.com in June 2019.)

You can find our data on the Industry-wise trends here.

Part 1 of our blog, on CSR Compliance, in this series is available here.

Part 2 of our blog, on Region-wise CSR analysis, in this series is available here.

To explore the nuances of CSR – compliance, analysis and more – talk to us today at impact@sattva.co.in

Region-wise CSR analysis – Feb 2019

CORPORATE SOCIAL RESPONSIBILITY

In 2014, India became the first country in the world to mandate CSR spend through legislative action. The legal mandate on CSR applies to companies that have:

a.Net worth of INR 500 Crore or more, OR
b.Annual turnover of INR 1000 Crore or more, OR
c.Net profit of INR 5 Crore or more.

Companies thus coming under the CSR mandate, have to spend at least 2% of their average net profits of the preceding three years on social impact programmes in every financial year.

In the first 3 years of implementation of this law, over 29000 companies have come under the CSR ambit. Cumulatively they have spent over INR 41,396 Crore over a period of 3 years.

In this report, we have analysed the cumulative 3-year CSR spend by the entire set of companies (total of 29190) on the regional distribution of CSR using the data made available by the Ministry of Corporate Affairs as of January 2019.

Sattva_Region-wiseCSRAnalysis
Sattva_Region-wiseCSRAnalysis

So, where is India’s CSR money going?

As per the the CSR law provision :
“the company needs to give preference to the local area and areas around where it operates, for spending the amount earmarked for Corporate Social Responsibility activities.”

How does it affect the CSR reach into areas that need the development capital the most?

(Please note that the data for FY 2016-17 is not fully updated on MCA portal (as of Jan ‘19). An updated version of this report will be available on www.sattva.co.in and www.IndiaDataInsights.com in June 2019.)

You can find our data on the Region-wise CSR analysis here.

Part 1 of our blog, on CSR Compliance, in this series is available here.

To explore the nuances of CSR – compliance, analysis and more – talk to us today at impact@sattva.co.in

CSR Compliance

CORPORATE SOCIAL RESPONSIBILITY

In 2014, India became the first country in the world to mandate CSR spend through legislative action. The legal mandate on CSR applies to companies that have :

  • Net worth of INR 500 Crore or more, OR
  • Annual turnover of INR 1000 Crore or more, OR
  • Net profit of INR 5 Crore or more.
  • Companies thus coming under the CSR mandate, have to spend at least 2% of their average net profits of the preceding three years on social impact programmes in every financial year.

    The law also expects the companies to :
    a. Have a CSR Policy in place
    b. Spend the prescribed 2% amount
    c. Be transparent in reporting details of CSR – the activities they undertook and where, and their mode of implementation.

    In the first 3 years of implementation of this law, over 29000 companies have come under the CSR ambit.

    CSR budget range being a good indicator of the company size, we are reporting compliance for each budget range (as categorised by MCA) separately. The graphs on the following pages present CSR compliance data year-on-year.

    Sattva_CSRCompliance
    Sattva_CSRCompliance

    In this report, we have analysed the entire set of companies (total of 29190) on their CSR compliance using the data made available by the Ministry of Corporate Affairs as of January 2019. Please note that the data for FY 2016-17 is not fully updated on MCA portal (as of Jan ‘19), and hence the compliance scores for 2016-17 may go up once the data is complete. The updated version of this report will be available on www.sattva.co.in and www.IndiaDataInsights.com in June 2019.

    Following five parameters have been used to assess compliance :
    1. Does the company have a CSR policy?
    2. Did the company spend the prescribed CSR amount?
    3. Did the company report the causes it supported through CSR?
    4. Did the company report where its CSR activities were conducted?
    5. Did the company report the mode of implementation of its CSR projects?

    On CSR compliance, would you like to know how your company is doing?

    Here is a tool to calculate the CSR Compliance Score for your company :

    CSR Compliance Score Card

    All graphs in this report are available for free download and reuse (with attribution) here :

    CSR Compliance Report (2014-17)

    To achieve 100% on not just compliance, but also on effectiveness of your programmes and real impact, talk to us today at impact@sattva.co.in