The 'Giving' Conundrum

India Inc.'s CSR spending has grown 13% in last five years but it is yet to make the desired impact.

- AJITA SHASHIDHAR

A MID-CAP MINING company in east India had to tighten purse strings after suffering losses in FY22. The axe first fell on an NGO it was supporting on skilling women as part of corporate social responsibility (CSR). The NGO, which had no alternative funding, had to shut shop. The episode shows the pitfalls of government-mandated CSR spending despite its significant achievements. India's CSR laws, in their 10th year, mandate companies with net worth of more than ₹500 crore or turnover of ₹1,000 crore or profit of more than ₹5 crore to spend at least 2% profits on philanthropy.

CSR spending has grown 13% over last five years, reaching $3.3 billion (₹27,000 crore) in FY22, according to Dasra and Bain & Company's India Philanthropy Report. Due to Covid disruptions, domestic private giving (which includes CSR and family philanthropy) remained flat at ₹1.05 lakh crore in FY22. While family philanthropy dipped, CSR grew 5% because of the mandate, though several businesses shied away from CSR commitments as they slipped into the red. According to the report, India Inc. contributed 30% to domestic private giving in FY22. It was 25% in FY17. This is significantly higher than U.S. where corporate donations make up less than 5% of all charitable giving. In fact, BSE 200 companies contributed ₹1,200 crore over the mandated 2% in FY22. Historically, 50% CSR contribution used to come from BSE 200 companies. But this reduced to 47% in FY21 with more companies coming under CSR laws.