The introduction of mandatory corporate social responsibility (CSR) spending under the Companies Act, 2013, has unleashed a wave of spending on social sector programmes: around Rs 6,300 crore in 2014-15.
This has been a game-changer for Indian philanthropy.
But while the quantity of largesse is impressive, can the same be said for its quality? It is less clear if CSR spending is creating the impact it seeks as many companies do not base their decisions on rigorous evidence. By definition, companies affected by the CSR rules are healthy and profitable.
In such successful companies, business decisions are based on hard data and return on investment calculations. CSR decisions need to be subject to the same rigour as other business decisions. Is there compelling evidence that the programme works? Will it work in different contexts?
Before launching new products, successful companies conduct due diligence: exploring the market and understanding competition. This iterative, rigorous approach is equally critical to CSR investments.
Growing evidence from impact evaluations can guide companies towards implementing solutions with proven impact, and allow them to steer clear of well-intentioned, but ultimately ineffective, ideas.
For instance, a substantial amount of CSR spending in India — around 23 per cent of total CSR spending in 2014-15 — has been directed towards education, an understandable cause given that nearly half of Class 5 children cannot read a Class 2 textbook, according to the Annual Status of Education Report (Aser) 2014.
Yet, several rigorous evaluations have shown that many of the traditional investments in educational inputs (like more textbooks or computers) have had little impact on learning outcomes.
But there can be challenges to integrating research into CSR decisions, chiefly that there are many areas in the social sector where little evidence exists. In situations like this, where there is uncertainty, companies design and test new products for their mainstream business operations.
India’s largest companies spend significantly on R&D because they understand the importance of dedicating resources towards generating innovative solutions. This philosophy should extend to the social sector.
It is important for programmes to be piloted and evaluated. An evaluation can provide real-time feedback on implementation issues and, crucially, an assessment of programme impact. Beyond informing internal programme decisions, rigorous evaluations can also serve as a public good by answering critical policy questions.
As an example, Tata Trusts is partly funding arigorous randomised evaluation of a programme to reduce anaemia by introducing fortified rice in Tamil Nadu’s public distribution system.
After developing a successful product, companies know it cannot be taken to scale without ensuring what sells in market A can also sell in market B.
Similarly, in the social sector, a health programme that works in Tamil Nadu may not necessarily work in Punjab.
A programme should demonstrate results in multiple contexts before significant resources are spent scaling it up. For companies, identifying programmes that work across contexts may be beyond their ambit.
But there are policy research organisations doing this.
One set of interventions proven to have worked in multiple contexts is the ‘Targeting the Ultra Poor’ programme.
Developed in Bangladesh by the developmental organisation Brac, the programme seeks to lift ultra-poor women out of poverty by providing them with aproductive asset, intensive coaching, access to savings and a short-term consumption stipend.
Multiple rigorous evaluations have found that the programme leads to large and lasting improvements in consumption, food security, asset holdings and savings. Driven by these powerful results, many Indian companies such as ITC, IndiGo and Axis Bank have already invested in the scale-up of this programme in partnership with the NGO, Bandhan Konnagar.
Since the introduction of the CSR rules, much of the debate has revolved around whether companies are meeting their minimum spending requirements. An equally important focus ought to be in whether these investments can be made more impactful.
Doing this should come easily to companies: they should simply adopt the same approach they use to make important business decisions — understanding what works, what can be scaled and what still needs to be tested — to their CSR portfolio.
With so many CSR programmes seeking to make a difference to the lives of the poor, the stakes cannot be higher.
A double bottom-line will allow companies to reshape the trajectory of India’s development: an evidence-informed approach can bring them closer to achieving this.
This article was taken from here.