Amid the coronavirus pandemic, Prime Minister announced the creation of the PM CARES Fund on 28 March but it turned out to be a challenge and damaging the many organizations that rely on CSR as half of the CSR fundings goes to PM-CARES fund and others COVID relief funds.
Amid the coronavirus pandemic, Prime Minister announced the creation of the PM CARES Fund on 28 March but it turned out to be a challenge and damaging the many organizations that rely on CSR as half of the CSR fundings goes to PM-CARES fund and others COVID relief funds.
Both public and private sectors are struggling to cope up with the economic fallout as their CSR funding has reduced. For NPOs, the CSR funders’ focus has changed and shifted for the Covid-19 relief work such as contribution towards PM-CARES Fund. This has left a long term impact on the Non-profit.
PM care fund has received over one-third of India’s Annual Rs.15000 crore CSR budget. The fund is widespread with the issues related to its transparency and accountability, lack of clarity about its control, and its usage.
CSR Activities are Reducing
NGOs are witnessing a steady drop in the donations and then the donation to the PM CARES fund has driven a huge chunk of contributions away from those NGOs.
The NGOs receive contributions as part of CSR activities by organizations and according to the Business line report, contributions which are received by NGOs as part of CSR activities have drastically reduced after the government allowed the donations by the organizations to the PM care fund as part of their mandatory 2% CSR contribution under Companies Act.
Whether small or large all donations have gone to PM CARES fund also because of the advantages provided to donators like 100 % tax exemptions allowed for the donations. While those donating to the NGOs stand eligible only for 50% of tax deduction. Hence raising concerns for Non-profit organizations.
CSR Funding towards PM CARE Fund
In India, the annual average of the CSR budget is approx. INR 15,000 crore and of which the top 300 companies contribute 2/3 – INR 10,000 crore.
As per the announcements made by these companies for CSRs it can be seen that more than half the annual CSR budget-Rs 7,863 crore-has been allocated towards Covid 19 relief measures. A large proportion of it has been allocated towards the PM Cares fund- Rs 5,324 crore.
The private sector units that collectively have an annual average CSR budget of Rs 3,000 crore have donated Rs. 2,507 crore and private companies that have an average annual CSR budget of Rs 12,000 crore have donated around Rs 2,817 crore to PM cares fund.
In a shorter span of time, The PM Cares Fund has received 25 times more amount than the PM National Relief Fund, which had received Rs.200 crore annually through CSR contributions.
How the CSR money is Routed?
About 50% of CSR spends or around Rs, 7500 crores are deployed through implementation agencies- trusts, nonprofits, societies, or through those created by companies itself. But due to the Covid crisis only around Rs.3500-4000 crore remained available for their regular CSR projects as they contributed their majority of CSR to various Covid-19 relief funds.
Source: Sattva’s COVID-19 CSR Outlook for 2020-21
And geographically the central and eastern part of India received less than 10% of CSR spends than the western and southern region of India from their key CSR contributors.
Hence, it can be seen that those nonprofit organizations that rely on CSR funding are in a difficult situation
Article Credit: thepolicytimes