Dec 2020

The Need for a Support Ecosystem Platform

The social impact and philanthropy sectors in India are growing in scale and ambition, to sustain the dynamism fuelling this growth, support services in key areas of organization building and sector development are critical in order to plug gaps in internal capacities, as well as to facilitate access to cutting-edge resources and newer technologies. Technology, a fast emerging critical domain in the social impact and philanthropy sectors, is found useful by 33%of NGOs and 22% of foundations. There is a high belief in the usefulness of support services like Capacity Building, Fundraising, Advisory, Grant/Program Management, Monitoring and Evaluation & Information and Knowledge. Low adoption of these services hence underlines other impediments at play: Lack of Awareness on value add, Geographic Availability, and Accessibility in terms of fitment, price points and time. A ‘support ecosystem’ consists of organisations and individuals that provide critical, core services to the social impact and philanthropy sectors.

Stakeholders of the Support Ecosystem

Corporate Social Responsibility (CSR)
European Commission (2001) defined “CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on the voluntary basis”. CSR has broadened the domain of corporate sector from stockholders to stakeholder by assigning responsibility towards all those institutions which are affected by the company.

CSR is a potent tool in achieving the social and environmental goals of a nation by collaborating partnership with corporations in combating developmental challenges in emerging economies. Emerging economies like India have to collaborate with corporates to upgrade their socio-economic parameters and environmental indicators to transform into a progressive and developed nation. CSR is an overall contribution of business to inclusive and sustainable development. The policymakers in middle-and-low income countries have directly sought to involve business and corporations in meeting social challenges. India, the biggest democracy and second largest populated country which is inflicted with many social challenges and dilemmas, has issued guidelines for its public sector to spend stipulated amount on CSR and make necessary disclosures.

India is the first economy across the globe to lay Corporate Social Responsibility into law for certain companies who fulfil the criteria of the law (Sec 135 of Indian Companies Act 2013).

Potential Role of government in CSR Agenda

The government, in developing countries, is the authority and agency to identify social gaps and environmental compliances; formulate social programmes and objectives to fill such gaps; understand the role of companies in facilitating execution and awareness; communication of objectives to government agencies and companies to define their role in such government developmental goals. In India, social gaps as for the availability of basic services is huge in the contrast of class, region, rural-urban divide and economic factors. Much debate was built around the obligation of corporates and socio-economic and environmental impact of the business activity and how voluntary CSR effort of the organizations to operate in a sustainable manner can bridge such social gaps. Due to compelling reasons and challenges, the Indian government has approved the India centric agenda for CSR to address the problems like poverty alleviation, gender equality, education, environmental conservation, livelihood etc. India stands out as the only country in the world to have championed the idea of a compulsorily fixed percentage of annual CSR spend with the addition of section135 and schedule VII in The Companies Act 2013. Section 135 of the act says any company that has a net worth of 100 million US $ or a net profit of 1 million US $ during any financial year shall constitute a CSR committee of the Board consisting of three or more directors out of which one director shall be independent. India has clearly mandated the corporate to form the committee for policy-making and planning the execution, take up the CSR plan in programme and project mode with clear measurable outcomes, making a CSR corpus of at least 2% of PBT* and make provision for reporting of such spent in the public domain. It is indicated that any project or plan that is in pursuance of its normal course of business shall not be constituted as CSR activity. The partnership of corporate and implementing agencies for the proper execution of CSR projects can go a long way in bringing desired changes in the social indicators for better tomorrow.

A survey by TERI Europe and ORG-MARG (2001) in several cities in India exhibit that more than 60% of the surveyed people felt that the business houses should take the responsibility of bridging the existing gap between rich and poor, reducing human rights abuses, looking into social problems and enhancing economic stabilities. Similarly a survey by Partners In Change (PIC) named "Corporate involvement in social development in India" and joint survey by the British Council, UNDP, Confederation of Indian Industries and Price Water house Coopers "Corporate Social Responsibility Survey, 2002, India" have also highlighted the emerging corporate participation in the CSR process. The findings of these surveys emphasized companies across India reveal that philanthropy is the most significant driver of CSR, followed by image building, employee morale, and ethics respectively. Moon (2002) argues that Business Responsibility is a non-profit community involved exercise which calls for a voluntary contribution of finance, goods, and services to the community or a governmental cause. (Moon, 2002) This is often in the form of social partnerships with nonprofit and for-profit organizations.

In 2003, Molly Attenborough and James Shyne conducted a study named CSR, public policy and the Oil Industry in Angola on ten major oil companies currently operating in Angola. The study explored the role of the public sector in strengthening CSR. It prompted a detailed analysis of CSR investment as a business value and its impact upon targeted beneficiaries. It was found that the representatives often oil companies were familiar with the issues of CSR and they were ready to recognize the importance of the ethical and practical imperative of CSR for their companies to operate in a socially responsible and environmentally sustainable manner. McGaw (2005), cites the development of leaders for a global society based on sustainability as a major challenge in the implementation of CSR and it is the responsibility of corporates to enhance the leadership capabilities of individuals for real change to see the business responsibility index (Alessia D'Amato,2009). According to this author, the task and challenge will be to develop leaders for a sustainable global society by encouraging imagination and the accomplishment of a positive change.

Harish Kumar (2012) in his research article entitled Lawania & Kapoor | Leveraging Corporate Social Responsibility for the Advancement of Development Goals “CSR Revisited” has thrown lights on four different approaches of companies towards CSR viz; Good Governance, Ruinous CSR, Discretionary CSR, and Illusion CSR. He also tried to highlight the argument against the CSR as well as the CSR driver. The researcher also found eight factors that drive CSR initiatives. They are Philanthropic Attitude, Governmental Actions, Environmental Concern, Ethical Consumerism, Crises and Calamities, Globalization and Market force, Social Awareness and Education, and Social Expectation. The study focused on exploring the role of Private companies and PSUs in understanding the social gaps and participating in government intent to change society.

This research has identified four important issues for the contribution of corporates in development projects

  • Stakeholders' identification and their involvement in the implementation
  • CSR contribution for development fund
  • Utilization of corporates' strength under CSR umbrella
  • A robust mechanism for monitoring and evaluation for greater impact

Current trends in CSR spending in India

The Indian companies in the last two years have invested majorly in education & skill development, healthcare & sanitation, rural development projects and environment after being mandated to allocate a portion of their profits towards community development.