Giving with responsibility

With the new company law ushering in fresh rules for corporate social responsibility (CSR), there is considerable excitement in the non-governmental organisation (NGO) sector.

Seen as the third pillar of development alongside government and the corporate sector, NGOs have done excellent work and are acknowledged change-makers, although some are viewed with scepticism. Over the years there has been a slow drying up of funds for grassroots changes, even as income tax rules as well as the FCRA (Foreign Contributions Regulation Act) have become more stringent.

Now, companies with net profit of Rs 5 crore or more have to spend at least 2 per cent of the average net profit of the preceding three years on CSR.

So, will the new company law open up the coffers for philanthropy and spur development innovations? The National Foundation for India’s study, ‘Emerging source of philanthropy in India: Analysis of gaps and recommended initiatives’, points out that the private sector has greater flexibility to highlight issues and support innovation, which can then be scaled up. In comparison, government spending achieves less-than-desired development outcomes for the poor.

Corporate Affairs Minister Sachin Pilot estimates an annual CSR spend of Rs 15,000-20,000 crore if every qualifying company does its bit. The companies can choose from a range of CSR activities.

Building Capacities

PRIA (Participatory Research in Asia) has experience in building capacities of panchayats and municipalities. It offers to help companies develop a CSR policy, and identify projects as well as partners for implementation, says its president, Rajesh Tandon. Its network of more than 3,000 NGOs has, for 32 years, worked on development projects involving the participation of beneficiaries.

The trust deficit between private business and NGOs is a double-edged sword that can be overcome through joint programmes to understand mutual value additions and the creation of small forums for face-to-face dialogues, he says.

Role of Civil Society

Amitabh Behar, executive director of NFI, is worried that certain aspects of the Act could push back the development discourse by a few decades. For instance, “the inclusion of relief funds created by the government (PM, CM, flood and so on), which are crucial in times of crises but leave unanswered a large set of questions around accountability, political patronage, corruption.”

In Chhattisgarh, the government has already announced that the mandatory CSR spending should go to the CM’s Community Development Fund.

There is greater recognition today that poverty and exclusion are largely structural in nature and could be reversed by empowering disadvantaged sections such as dalits and women, says Behar. Civil society has a “transformational role” and not a limited one of “service delivery”, he adds.

Voluntary Agencies

Mathew Cherian, chief executive officer of HelpAge India and a founding member of Credibility Alliance (comprising 280 certified NGOs), refers to a PRIA-John Hopkins 2001 study showing there were over 1.2 million voluntary agencies in the country. Their numbers have probably grown since, and the Income Tax Department and the Home Ministry are constantly trying to regulate them. Welcoming the Companies Act, he however calls for comprehensive rules.

History of merchant giving

“India has an impressive history of merchant philanthropy as experienced in the setting up of dharamshalas on the silk route, the creation of Birla institutes and Tata trusts, which set up the Indian Institute of Science and the Tata Institute of Social Sciences. The textile magnates of Ahmedabad, led by the venerable Kasturbhai Lalbhai, set up the Indian Institute of Management. There was anonymity about their act of giving, unlike today where billionaires shout from the rooftops on every single dole given to charity,” he says. He calls for more philanthropy to ease the burden of the poor and remove inequities in society — a job, he sees, cut out for civil society.

“The new Act should make people at the bottom of the pyramid - irrespective of caste, creed or religion - not only more employable, but also more capable and more enterprising, so that they are encouraged to set up self-sustaining ventures.”

He is disappointed at the absence of specific provisions for the elderly and disabled. A staggering 51 million elderly live below the poverty line with no pension or health services, and 21 million elderly widows do not qualify. There are close to 70 million disabled children, women and elderly for whom provisions need to be made.

BIMARU states

Harsh Jaitli, chief executive officer of VANI (Voluntary Action Network of India), is worried that more money will be pumped into the already rich service delivery projects, with little demand for accountability or efficiency. There may be more schools, private hospitals and plantations instead of innovative interventions for long-term solutions, he says.

Moreover, the new Act urges companies to run CSR projects in their neighbourhoods, which means that industrialised States such as Maharashtra and Karnataka would get more resources than the North-east or BIMARU States, he says, adding that incentives should be given to companies that spend in backward regions.

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