Rethinking CSR: It’s time to impact real change
Widely perceived to be key features of India’s new narrative of growth and development, the NGOs and Corporate have the potential to influence people at large in a big way. But for a few, it seems giving back to society is steadily turning a path to play smart and serve profitable means than ‘a noble cause,’ writes Choudhary Sandeep for The Bridge India India. As millions of people in rural India or living on the last-mile in the country are yet to cherish the real joy of development, there is a vital role that a prospering industry can perform through non-governmental organisations (NGOs).
To play a key role as enablers or facilitators for people of different sections of society, who need a helping hand to survive or improve life, the industry has been mandated to support them under Companies Social Responsibility (CSR) provision.
A Reality Check
At times it seems not everyone is playing a fair game. Sometimes some companies along with NGOs or Trust are going a bit too far to actually tinker with this CSR provision to their favourable condition.
The Dark Side
Away from the public perception of many, there are some companies who are at times reportedly found indulging in malpractices; using on-hire charitable trusts to fabricate CSR spending.
Even as India holds the distinction of being the prime mover when it comes to statutorily mandating the CSR for a section of companies, the law of the land too looks riddled with various loopholes allowing a lot of elbow room for exploiting this social responsibility of the corporate.
It is so because unlike other expenditure, CSR spends disclosed by companies need not be vetted by statutory auditors. Besides, financials of charitable trusts also invite hardly much of statutory scrutiny. These two things have left the new CSR norms wide open for abuse.
Modus Operandi and Lacunae
A company is obligated to spend, i.e. Rs 14 crore on CSR, it issues a cheque favouring a trust operating in health, education or climate related issues or any activity specified by the government. Such a trust after deducting its commission, returns the rest in cash to the officials or promoters. It instantly turns the principal amount of Rs 14 crore of white money into black, the leading daily quoted a person familiar with the modus operandi as saying.
By the year-end, the trust gives a report to the company which it duly incorporates in its CSR reporting form called AOC-4. “Though the financials are part of the directors’ report, audited by external auditors, the AOC-4 itself is not subject to external audit. It is a lacuna,” a media report quoted Bhaskar Chatterjee, director general and CEO, Indian Institute of Corporate Affairs (IICA) to have said it once.
Foreign NGOs and India’s Strict Rules
India has one of the largest NGO networks in the world. And, there is a well-established legal framework for NGOs to operate in the country, according to Government of India. Thus, when a donor organisation is put under ‘prior permission category’, it cannot fund any Indian NGO without the government’s approval.In one such instance of last December, when a US-based donor organisation (name withheld) was feeling compelled to shut down its local operation in India, the US Government intervened and demanded a “transparent process for foreign NGOs”. While admitting countries and governments certainly have “their own reasons for the laws they pass”, a US State Department official, said: “NGOs do valuable work overseas …” and “we believe it should be transparent and clear why they are shutting down these organizations”. Expressing concern over the Christian charity closing down its operations and the challenges faced by the foreign NGOs to continue operations in India, the official said US would take up the matter with the Indian government Meanwhile, New Delhi, categorically said a foreign NGO in any country worldwide is bound by local laws. “There is a well-established legal framework for NGOs to conduct their operations in India. India has one of the largest NGO networks in the world,” a Ministry of External Affairs spokesperson stated. The Ministry of Home Affairs said it was unlikely to reconsider its decision banning the US-based donor from funding Indian NGOs despite consistent appeals by the US authorities. The Christian charity was put under the ‘prior permission category’ previously.
The Ray of Hope
Although some companies are contributing in their distinct manner to the foundation of CSR in India and addressing national concerns, the efforts remain to be well-coordinated. A national- level policy framework with the involvement of all stakeholders can perhaps lead to the efforts of companies, individuals, organisations, and the government to synergise on the expected lines.
In brief, considering the kind of endeavour the Government of India is making to develop a new India, a much more constructive role is expected of companies and the NGOs. They are supposed to be ‘Good News’ factor in India’s growth story. They are looked upon for innovative models of delivering a better and easy experience of life in any field of their choosing i.e. health, education or skill development, etc. Let’s not deviate from the noble spirit. Let’s build India.