April marks the third anniversary of India’s corporate social responsibility law, which requires that corporations above a defined level of financials spend 2% of their profits on CSR programmes.
While charity has traditionally been an integral part of the Indian ethos, strategic philanthropy is still a field under formation, Jeri Eckhart-Queenan and Pritha Venkatachalam, partners with The Bridgespan group at its development practice, say in an interview. Sports, art and culture receive relatively limited funding vis-a-vis their needs, while more could be done to promote women’s empowerment and gender, they feel.
Q: What are the trends in philanthropy globally? Does India follow the global trends?
Jeri: Bridgespan’s research reveals a new wave of high-net-worth individual (HWNI) philanthropy, growing rapidly in emerging economies and gaining importance. This includes India, sub-Saharan Africa, China and Hong Kong, Brazil and Gulf states. While the growth is encouraging, we see further opportunity to shift to strategic giving that achieve outcomes that matter. Both peer influence and corporate philanthropy that focus on outcomes could drive this growth.
Q: Education corners the majority of CSR spends in India. Do you see new sectors coming up going forward?
Pritha: Health, education, and water and sanitation receive the largest CSR funding. In addition, there has been an upward trend in spends on rural livelihoods. However, even within these sectors, CSR funding has much greater potential to be more strategic and collaborative. Sports, art and culture receive relatively limited funding vis-a-vis their needs. Within the ‘eligible sectors’ that the CSR law prescribes for spending, more could be done to promote women’s empowerment and gender as well as other forms of equality. Nutrition is another area that needs larger and more focussed investments to move the needle on indicators such as stunting, wasting, underweight children and women with anaemia.
Q: Despite having a large proportion of the global wealth/ HNIs, India lags behind in philanthropy. What could be the reasons? And how can more people be involved in giving?
Pritha: Whilst charity has traditionally been an integral part of the Indian ethos, strategic philanthropy is still a field under formation. It is heartening that the number of individual donors in India as well as the time and money they devote to philanthropy have been on the rise. However, both in terms of philanthropy as a percentage of wealth created and philanthropy vis-a-vis the development funding deficit, India can still go a long way. The Indian diaspora is also an under-leveraged asset.
Overall, there remain ‘islands’ of giving in India, with a dearth of information and analysis on philanthropic effectiveness and impact. Further, several philanthropists are early in their life cycle and concentrated in the tier 1/ metropolitan cities. On the other side of the spectrum, capacities of the NGO sector (beyond the top few) are constrained, and there is limited evidence of scale up and sustainability. Several aspiring philanthropists are unsure of how to give, who to give to, and how to measure impact. There is a need for greater collaboration and trust building in the ecosystem, and an open platform to exchange lessons learnt on what works well, what does not, and what are the results achieved. Sharing of personal stories of philanthropy and practical insights on the opportunities and challenges for social impact can galvanize greater and more meaningful giving.
Q: Do you feel that the mandatory cap of 2% is yielding results? Is it mandatory in other countries?
Pritha: CSR is voluntary and a moral obligation globally, where it is well-understood that businesses need to be responsible citizens and give back to society in order to succeed. Some countries such as France, Denmark and South Africa have a mandatory reporting obligation on the amount spent on CSR activities. In 2014, India became the first country to mandate CSR by law. However, many corporates in India, especially the ‘traditional’ industries, gave generously to society well before the law came into effect. The jury is still out on the extent to which the law has resulted in ‘additional or new’ CSR funding. However, the mandate has put a spotlight on corporate philanthropy and encouraged company boards and leadership teams to invest more time and money towards social causes, and report on them. It is debatable whether a social or moral conscience can be mandated by law. To truly yield developmental dividends, CSR funding needs to be more cause- and impact-oriented than purely compliance-led.
This article was taken from here.