Giving has been a part of the Indian ethos. Rapid urbanisation, limited resources and inadequate social infrastructure have led to acute disparities and fragmentation of communities. The governments at the Centre and in the states made gallant attempts to reach the bottom of the pyramid. However, our delivery channels and limited resources stymied any meaningful and sustained community impact.
The country’s institutional infrastructure has not kept pace with evolving social dynamics, resulting in increased needs for the economically and socially disadvantaged. Non-profit organisations are attempting to address this issue in the development sector, but the sector remains massively underfunded, under-supported and often challenged by the enormity of the interventions required. Non-profit organisations are now looking to the corporate sector to help bridge the growing gap and supplement the highly constrained efforts of the state.
The Indian Companies Act of 2013 ushers in a paradigm shift for the corporate sector. CSR and community investment will no longer be optional for some since companies above a certain revenue threshold will be required to invest two per cent of their profits towards CSR activities. This is intended to support poverty alleviation, health care, education and social business ventures. Some provisions of the Act were extensively debated by different stakeholders. Apprehensions were expressed on “directed giving” in a democracy and the possible misuse of these new policy directions. Some concerns raised by business chambers and companies were genuine and required clarity, while others were a smokescreen with a desire to push back. Like all well-intentioned new regulations, success lies in effective implementation. If implemented properly, and with integrity, the changes could truly be transformational in building a better India.
Over the last decade, we have witnessed a greater need for transparency and responsible growth in the corporate sector. A growing number of stakeholders are expecting higher levels of accountability and creation of shared values. The new Companies Act provides an opportunity for companies to pursue their goals of maximising profitability, while concurrently developing a competitive advantage by investing in vibrant and sustainable communities around them. There are companies that have demonstrated exemplary leadership in developing strong values and delivering consistent growth. Integrating CSR with these values systems will go a long way in building a larger pool of companies that institutionalise creating shared value with sustainable growth.
As with any transformational change, the new Act brings its own set of challenges. There is no doubt that companies have to take care of profit maximisation for its shareholders and continued investments to bolster growth. However, it is obvious that sustained profitability of companies is possible if there is an equally strong creation of shared value for all its stakeholders. Organisations that have developed these values and discharged these obligations have benefitted from higher market- and brand-equity premium. There are some corporate houses that are obvious beneficiaries of the market premium and there are other noticeable names, which do not enjoy similar brand equity. This brand equity of building sustainable communities cannot be acquired. It can only be earned.
There needs to be a radical change in mindsets on giving and sharing with responsibility. It is encouraging to see a new generation of younger corporate leaders, and in some cases COOs (children of owners), who genuinely understand and believe in creating shared values. They recognise that the competitiveness of their companies and the health of the communities around them are intertwined. It is imperative for companies to build their CSR infrastructure or partner with credible non-profit organisations to help facilitate and create a sustainable community impact.
Non-profit organisations will play a critical role in providing domain expertise to companies. They will be the catalysts for delivering social change. At the same time, this would lead to capacity building for the non-profit sector. Partnering with non-profit organisations will enable companies to maximise the opportunity to foster employee engagement and benefit from their contributions and efforts in supporting local communities, by institutionalising CSR as an integral part of their business processes.
For the successful implementation of CSR, we must take advantage of our demographics. With 65 per cent of our population below the age of 35, we have potential advantage of the world’s largest pool of doers. This is a valued resource and a game-changer in fostering social transformation, if we can harness their energies constructively. The National Service Scheme is a pioneering initiative by the government to channel our youth power. However, its reach is currently limited. The corporate sector can play a vital role in enhancing the scale of this pan-India programme. One such initiative is the United Way of India’s Student United Way programme, which seeks to engage youth and provide them with virtual platforms through social media in building communities across geographies without any barriers.
Moreover, it is very important for companies to utilise their employees’ skill and leadership talent for community development. Through corporate grants, employee-giving campaigns and several other partnership programmes, companies can engage themselves in meaningful social-responsibility structures, bringing about a positive and lasting change in their communities, all with active employee engagement. Companies that have fostered employee engagement in creating shared values and local community development, have far higher employee satisfaction and morale. Today, employees have become more discerning in choosing employers who have truly institutionalised these values.
I see a great opportunity for India’s corporate sector to demonstrate its ability to make a difference. It only requires the will. The government’s ability to build and re-engineer our existing social infrastructure is limited. After all, good philanthropy and giving is all about sharing the three T’s — time, talent and treasure, which the corporate sector has in abundance. It now needs the resolve.
The writer is Chairman of United Way of India and Chairman & MD of SPM Capital Advisers Pvt Ltd. He is also the former Country Head of AIG in India.
These views are personal
These views are personal