Tuesday
September 30
2014

Satyam Darmora

High Impact Philanthropy Demands Investing, Not Spending: India’s CSR Act is an opportunity for reframing

India’s new Corporate Social Responsibilities (CSR) Act will make an additional 15,000 to 20,000 crores (US $2.4 to $3.2 billion) available to the development sector as per the estimates the Indian Institute of Corporate Affairs. As great as the need is in our country, I believe the opportunity is even larger — if it is maximized. In a previous blog I addressed the need to shift the language from CSR spends to CSR investments.

CSR investments are long-term. They take a solution-centric, strategic approach compared to shorter-term, input based CSR spends. In lieu of the new CSR requirements, some companies have recently explored ways to monetize employee volunteering efforts. This is an interesting concept, since the development sector requires high-quality talent to solve complex problems. Corporate employees can leverage their problem-solving abilities and solution-centric approach to help address issues.

However, I have three suggestions to ensure that such efforts lead to CSR investments that will yield long-term benefits:

  • A significant part (at least 25 percent) of volunteering efforts claimed by any organization should lead to creation of assets, rather than used extensively toward operating activities. The skills of corporate employees can be applied to create long-terms assets or intellectual property that can benefit non-profits for long-term future growth. Creation of management information systems, technology platforms, designing processes, products, pedagogy etc. are few examples. The additional benefit of this approach is financial transparency. Non-profits will be able to capitalize these efforts on their balance sheets. This can be used to monitor corporate claims of pro-bono work. Additionally, this approach will bring better financial discipline and practices to the non-profit organizations since businesses will insist (and hopefully help) partner organizations to monetize such asset creation.
  • A minimum of 25 percent of volunteer hours should be dedicated to a single, longer-term commitment by employees. Short-term, single-day volunteer outings can be helpful. However, there’s a limit to what one can accomplish in a single day, and for the philanthropic organization, adding ad-hoc volunteers can be disruptive for structured, continuing programs. If volunteers make lengthier, recurring commitments, they will better understand the organization’s real needs and contribute more toward its long term success. Based on the foundation’s experience, we believe that volunteering efforts yield more significant results when recurring over a minimum of four weeks’ time. It’s more proof that the more we invest, the more others gain.
  • While the current norms do not mandate evaluations for CSR programs, businesses can help non-profits instill the crucial discipline of outcome based measurement. Perhaps businesses could be incentivized by allowing monetization of 10 percent more volunteer activities in cases where outcome measurement was used to demonstrate program improvement? Measurement efforts would also help businesses that are serious about CSR investments direct their employees’ efforts toward volunteerism with greater social returns.

High impact philanthropy demands investing, not spending. I challenge businesses to lead by example, and invest their most precious capital—human capital—to solve social challenges. Social responsibility is serious responsibility.

When we invest today, we’re seeding positive outcomes for the future.

Satyam Darmora manages the Michael & Susan Dell Foundation’s Family Economic Stability portfolio.

Categories
Entrepreneurship
Tags
corporate social responsibility, impact investing, nonprofit