In early October, Vibha, a not-for profit body that works on behalf of some 30 other NGOs dedicated to solving problems of underprivileged children, brought together representatives from a host of companies to discuss the new corporate social responsibility (CSR ) mandate .
The three-day event in Bangalore saw each of the NGOs putup little stalls where they showcased their work , and the participation of over 25companies, including big names like ACC, Aditya Birla Nuvo, Cognizant, HCL, IBM, Infosys, Reliance ADA, Target , Volvo and Walmart.
"Our idea was to create a platform for NGOs and corporates to work together," says Zankhana Patel, director of Vibha India. Such platforms, if they exist, are rare now
"With the CSR mandate, it has become necessary for the corporate sector to understand the development sector, and the biggest challenge is matchmaking — helping corporates identify the kind of NGOs they are looking for. So joint platforms have become vital," she says.
Across India, a number of such initiatives are in the works, following the adoption in August of the new Companies Act which mandates that qualifying companies need to spend a minimum 2%of their average net profit for the past three years on CSR activity , a move by the government to accelerate efforts to overcome the country's acute social challenges.
The Confederation of Indian Industry (CII) Pune organized a workshop for companies and NGOs on October 29 with the theme of 'bridging the corporate-NGO divide.' The Institute for Integrated Rural Development (IIRD), Shimla, organized a similar conference in Delhi on November 27.
Vishal Talreja, an Ashoka Fellow and cofounder and executive director of Dream a Dream, an organization that has built a network of volunteers to empower disadvantaged children, says companies that don't have the bandwidth to run their own philanthropic foundations may find it easier to identify social organizations that they want to support.
For now, that looks to be the route most will adopt, given also the need to fulfil the mandate from the next financial year, which is less than six months away. "Our members generally are keen to work through NGOs," says A M Muralidharan, head of the CSR initiative in CII Karnataka who is currently busy helping member companies interact with NGOs, and identify projects to fund. "Many projects have already been frozen ," he says .
Some companies, such as those in the Aditya Birla Group and the Tata Group, and others such as Infosys and Wipro, may already be meeting the 2% requirement or are close. The Aditya Birla Group's India businesses had a net profit of about Rs 7,000 crore last fiscal, and its total CSR spend was Rs 150 crore, more than 2%.
Sumit Mitra, head of group HR & corporate services in the Godrej Group, says the company has done an analysis based on the draft CSR rules and "are confident we will meet the 2% requirement."
But most companies are nowhere close to the limit, and have work to do. That work is now happening at a feverish pace, though the final guidelines on what qualifies as CSR spend is yet to be notified by the government.
CII Karnataka's Muralidharan says at least half of its members have already established the mandatory board-level CSR committee, and was confident that the others would do so by the end of the year. The largest chunk of the fresh funds is likely to go into the education space. "Health, livelihood, environment, and forest development are other areas in which we are getting a lot of enquiries. There's also interest in improving nutrition levels of children and mothers," says Muralidharan .
CHECK BEFORE CHEQUE
Rita Soni , CEO of the Nasscom Foundation, says most Nasscom companies are not keen to simply write cheques . "They want to be actively involved in the projects so that CSR becomes a win-win for both companies and NGOs," she says.
Partly for this reason, employee volunteering is expected to become huge. Companies can monetize such volunteering during work hours and count that in their CSR expenditure. Subhash Dhar, a former senior executive at Infosys, is currently busy building a web-based application that will allow a CSR manager in a company to instantly start campaigns for employee volunteering and donations, and at the same time provide for employer matching of these contributions. "Employer matching is almost absent in Indian origin companies now, but it happens a lot in global companies. With the CSR mandate, I expect this to really catch on in India," he says.
CLEAN UP ACT FOR NGOs
But to benefit from all of this, many NGOs may have to become more professionally managed. Corporates will generally be careful about who they fund. Mumbai-based philanthropist Ramesh Kacholia, who runs Caring Friends, an organization that acts as a bridge between NGOs and donors , says that in order to be funded, NGOs would have to maintain proper balance sheets, get them audited, and declare their annual reports . "Many NGOs do not maintain accounts meticulously now. They tend to be a little casual," he says.
Some foresee a flowering of fresh NGOs, given the new funds coming in. With this will come the risk of relatives of company CSR managers establishing NGOs. Corporates will have to monitor this.
* The Companies Act requires that companies that have a net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more must conform to the prescribed CSR spends
* This will bring about 8,000 companies within the ambit
* The annual CSR funding by them is expected to be between Rs 15,000 crore and Rs 20,000 crore