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If the government keeps art and culture out of the notified corporate social responsibility (CSR) activities under the Companies Act, a lot of corporate support that goes into patronising Indian heritage might not come. Other claimants to the kitty see these sectors as a competition.
The ministry of corporate affairs under the draft rules has not included art, culture and sports in CSR. This would bring the norms in direct conflict with the guidelines of the department of public enterprises (DPE) that govern some of the country’s biggest companies such as Coal India and Oil and Natural Gas Corporation (ONGC).
Companies are sponsors of big budget sports and cultural shows though some of them include it in their promotional budget, not CSR. “We consider development work in the social sector as real CSR and art and culture should not be part of it,” said an executive in a private sector energy company, who did not want to be named.
There is no compulsory spending on CSR except for public sector companies, for whom it is mandatory under DPE guidelines. But with section 135 of the Companies Act making it mandatory for companies to spend two per cent of their three-year average of profit before taxes on CSR, at stake would be a kitty of Rs 20,000-25,000 crore. Under schedule VII, there are nine notified activities (see box) counted as CSR though a 10th one of “such other matters as maybe prescribed” also figures in the list.
The government has invited feedback on the draft CSR rules latest by October 7. Public sector undertakings support art and culture activities as part of corporate social responsibility based on the National Voluntary Guidelines and policy of DPE.
According to Laura Donovan, head, Partners in Change, a CSR advocacy group, the government’s reading of CSR is flawed. “Most of the things that figure in the list have nothing to do with CSR.” Donovan said art and culture had a right to be there as part of philanthropy but it had nothing to do with CSR and responsible business.
Non-government institutions that depend on CSR funding for development works in social sector are, however, divided on the issue. Nilesh Nalvaya, coordinator for HelpAge India, said though getting funds for senior citizens was difficult, the kitty was big enough for art, culture and sports to be included. “Less than half of the CSR funds are used. So, I do not see anything wrong in including these in CSR,” he said.
DPE also had its share of doubt on including the arts in CSR. ONGC had raised concerns with DPE, eventually leading to their inclusion in 2010 guidelines. DPE, however, refrained from including sports. “If needed, companies can involve in arts and cultural activities according to DPE guidelines. I believe it is required for the uplift of various art forms in the country,” said Coal India director (personnel) R Mohandas.
The broad nature of the arts , that sees programmes related to festivals such as Ram Lila and Durga Puja, getting huge corporate support, however, opens up scope for misuse. Bina Sheth Lashkari, founder, Doorstep School, said everything gets included in the arts. “Education, by contrast, can not only bring literacy but also deliver a larger vision to children who can decide on their areas of interest — music, art or sports.” Doorstep, working in non-formal schooling for 25 years, depends on sponsors such as BP, HSBC, HDFC and Rabo Bank for 45 per cent of their funding. Lashkari said it was difficult to get funding for pre-school education, not even a government priority.
For Donovan, however, development programmes have to be driven by the government and CSR funding was “just a drop in the bucket”. CSR in social sector development activities are unstructured and not uniform. “These are philanthropic works and there is no track record to show how they have worked. Government support through programmes is more structured.” Since India prides on its rich heritage, corporate support is considered important to keep not just folk art forms but also classical art alive, she said.
