Sattva Consulting
If you have unspent money from your CSR budget, stop. Don’t spend it yet.
If you have unspent money from your CSR budget, stop. Don’t spend it yet.
DOWNLOAD

We have 5 suggestions for you to make your CSR richer and cause greater impact next year.

March is always marked by frenetic action in companies – year end closure of projects, financial accounting closures and the whole race to the end of the financial year.

This year, there is an additional topic that is consuming significant mindshare in corporate boardrooms in India – CSR or Corporate Social Responsibility. It has been just over 2 years since the Section 135 of the Indian Companies Act (ICA) laid down the mandates for companies to spend 2% of their net profits on CSR, and a year since implementation of the law has started on the ground.

As company CSR boards review their 2015-2016 performance, we are seeing a few patterns emerge – one, where the company has planned for its 2%, identified programs and partners, deployed projects on the ground and is now taking stock on the effectiveness of budget utilization, efficacy of implementation, and results of work on the ground. The other, where the intent may not have successfully converted to action due to various reasons – bringing much worry about un-utilized budgets, unspent advances for projects, non-compliance to Schedule VII and in a few rare cases, absolutely no money spent!

At Sattva, we have an unlikely recommendation –don’t spend it NOW. Here are 5 ways you can still make the money travel further in impact than spending right away:

1. Plan for the money

A report by KPMG on the top 100 companies and their CSR spending , indicates that over 52% of them have not spent the prescribed 2% this year and atleast 25% of them, mainly PSUs, would like to carry this forward to the next financial year. (Carrying forward of unspent budget is at the discretion of the company CSR board (refer here on MCA CS FAQs, Q.17, although it would be over and above the 2% budget basis the net profits for the next year.)

If you haven’t been able to spend your CSR money, you could utilize these 3 months to put together a rigorous plan for the next year which includes the project focus areas, outputs that you would like to achieve, the outcomes, short-term and long-term, that you would like to see happen in the project area and the core strengths you would like to leverage as a company.

Invest some of that unspent money in performing an in-depth internal stakeholder survey or baseline need assessment survey in the regions you are working in to determine where you want to head this year.

If you haven’t already, kickstart the due diligence process for prospective partners you would like to work with in the next year – we have seen that on-boarding CSR implementation partners tends to take much longer than planned or accounted for by companies.

2. Spend on laying the foundation for your upcoming projects

If you have partners and programs already identified for the next year, this time could provide a good window to support infrastructure and other foundation work for your direct projects or partner programs like building curriculum, deploying technology solutions, creating awareness materials and so on.

Invest time and effort in putting together a clear CSR strategy and set up payment structures for your partners such that the first tranche will be out before the end of the financial year. The implementing partners will benefit from the initial investment, relationships will deepen and the value of the funding is long-term.

3. Invest in building capacity

In Sattva’s experience of working on the ground with both corporations and social organizations, one of the gaps most experienced in implementation of CSR programs is capacity – both of the internal team and the Implementation Agencies. The time period from now till end of March could serve very well to kickstart capacity building through trainings, workshops, exposure visits and so on. Implementation can proceed at a much faster pace next year and capacity building allows you to frontload some of your CSR budgets as an investment towards CSR next year.

4. Take the time to develop partnerships and collaborations with the Govt. and other companies

Partnerships with the government are essential and critical for the sustainability of any CSR program. An important part of putting together the CSR strategy for next year could be key partnerships with ongoing Government programs and schemes. The close of the financial year could be a good time to develop familiarity with Government programs and upcoming infrastructure projects in your CSR focus areas and how you could partner with these programs.

5. And if you still have to spend, do it responsibly!

An NGO leader we spoke to narrated this harrowing episode of ‘pushy-year-end–time-corporates’ who turned up at their doorstep last year, forcing them to mobilize hundreds of volunteers and on-ground workforce within two weeks to carry out disproportionate number of ‘swacch Bharat’ cleanups. Some have even given large sums of money in return for photo shoots of activity (from children being mentored to scholarships that are backdated). You don’t want to do any of that!

1.Find a trustworthy non-profit that has experience in working with corporates and is running programs that align strongly with your areas of interest. Support their activities over the next 3 months –it gives you a chance to witness their work on the ground up close and continue the partnership over next year.

2.Look up credible national level awardees from awards like the World Bank Development Marketplace, the Resource Alliance India NGO award, the Digital Empowerment Foundation’s mobile/tech awards or the Jubilant Bhartia Social Enterprises award and support the ongoing programs.

3.Support causes that rarely gain prominence or popularity within CSR – like disaster relief programs of the Government/non-profits, affordable housing development programs, treatment of rare diseases or mental health programs.

A November 2015 analysis of the reported CSR expenditure of top 50 NIFTY companies shows spends amounting to INR 4600 crores against an outlay of INR 5731 crores in 2014-2015. If all 16,237 companies in India that are eligible for the 2% mandate spend on CSR as per the norms, we are looking at a growth in CSR spend over the next few years INR 15,000 Crores. This amounts to under 3% of the Government’s total social spending budget.

The intent of the law is not just about opening up of another avenue for funding, but to provide a framework and the requisite space to develop innovative social impact models and effective partnerships between the private sector and civil society for inclusive development of the country. And that’s where companies should look at investing.

Thank you for your interest in Sattva.

Do share your contact details with us and you will receive a copy directly to your mailbox!