In a event organised by Schwab Foundation FM Arun Jaitley mentioned that corporate sector are going to pump in as much as 14000 CR in CSR in India. He defines corporate involvement as a turning point in the social sector in India as the corporates are obsessed about doing good and are committed to the cause. He came up with the figure based on 2% of profit rule that has come up in the new companies act.
I feel getting CSR money into the social sector is a good thing. But just allocation will not help. My guess is that bulk of the money will end up either not spend at all or find its way to the usual suspects.
The first on my list are Government programs. For instance the current NDA Government has opened ” Swachh Bharat Abhiyan” and ” Clean Ganga fund” as legitimate CSR spends by the companies. I will not be surprised if large amounts of funds find their way into these two Government campaigns. Tax by another name ?
Another place where CSR money will find its place is Corporate foundations. These foundations will then end up spending money to open chain of schools or hospitals. These are things that the Government should be doing and not expecting companies to foot the bill.
I feel these massive amounts of money should be spend in building capacity and capabilities of India and Indians. It should work to solve some really big problems. For instance a consortium of companies can work together to solve public health issues in the country. Other can work to see how people can have timely justice through Indian courts. Most of the graduates coming out of our education systems are un employable. May be CSR money to can do something there. Another area that can be of interest is in promoting entrepreneurship both business and social. I feel there are many options to solve some really big hairy and scary problems with CSR money.
In the end only time will tell how effective was 2% CSR spend. At the moment I meet too many NGOs who are facing massive challenges in raising money as most of the grant making organisations have shrinking budgets and everyone points them towards CSR for funding needs. And when it comes to CSR NGOs have no clue how to go about raising money. Will they ever be successful is a different story. But one thing is for sure. In this CSR gold rush a lot of self acclaimed CSR experts will make a killing. Is their a way around this , I don’t know.