Corporate Social Responsibility

Corporate Social Responsibility

Corporate Social Responsibility in India:

In 2013, Section 135 of the Indian Companies Act prescribed a mandatory CSR spend of 2% of the profits to NGOs or on social causes to benefit the underprivileged society in various areas such as Health, Education, Food Security and a few other areas. The areas of spend is below mentioned in detail.

The criteria of mandatory CSR spend is 2% of the profit in case of companies falling in the below criteria.

  1. The company net worth should be Rupees five hundred crores
  2. The company’s turnover should exceed Rupees thousand crores
  3. Or a net profit of Rupees five crores.

Ways in which the Corporate Social Responsibility programs have been implemented vary from companies’ CSR objectives. Largely there are three major models for the CSR spend.

  1. Companies have their own Implementation and Execution plans for the minimum CSR spend in India. These companies have an NGO division completely separated from the management of the companies’ business operations. These companies choose three to four areas to contribute and betterment of the society t in the selected areas.
    The areas of focus could be Health, Food Security, Education, Environment, Child and women welfare development, Disabled and Elderly Population.
  2. The second model of engagement is an NGO Partnering with CSR division of the companies to jointly achieve the objectives of both the NGO and the company. The unique advantage of this model is that the NGO brings experience and expertise in few areas and the company that partners with the NGO contributes with manpower and required money to the charity.
  3. The third model is that the NGOs are given grants from the companies based on the vision of the NGO. The model becomes successful based on the credibility of the NGO and the past performance in working and achieving the objective defined by the NGO.

Having understood the models of NGO Engagement with the companies, let us understand what impact it has made on the society and the scale of operations due to this policy move by the Government of India.

In the Year 2015-2016, about Rupees 8000 Crores were spent by a total of 1250 companies, which is about 25% more than spend of Rupees 6,400 Crores in Financial Year 2015. Though there is a concern and need for scrutiny as to on what CSR activities the amount is spent on and which locations it is spent at and not measurement of the impact. In 2017 the CSR donations reached Rupees seventy thousand crores.

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