A Guide to CSR Implementation in India

From 1st April 2014, every private limited and public limited Company in India with a net worth of 500 crores or a turnover of 1000 crore or net profit of 5 crore needs to spend at least 2% of its average net profit on Corporate Social Responsibility (CSR) Activities.

While using these large funds, it is extremely important to have a framework and strategy in place along with the proper process and governance. Let's see some basic steps for CSR implementation in India.

Key Principles:
• An Outcome-based View: An Outcome-based execution model is essential to the success of any CSR Project. Once the need is known, the Outcome need to be defined, and that should get tracked like a corporate goal.

• Partnership with Civil Society Organisations: These partnerships are expected by the law and are most important to use the resources, skills, knowledge and experience of both corporate employees and residents. Everyone should be aware of the available resources and distribution mechanism to make sure the funds and other resources get efficiently utilized.

• Rigour of Monitoring: Defining the project indicators is an important task during the planning phase. They become the objective measure of the progress. The participating organisation should define a quantity and quality related data collection approach based on the monitoring framework.

• Long Term View: The Company is not going to be part of any CSR implementation project for an endless time, and everyone should be on the same page about this fact. Once the Company achieves its decided outcome, it will exit from that particular CSR, but the impact should remain. The activities should become a part of the life of the community to make sure there is no reversal to the old stage.
Building the CSR implementation Model:

• Need Assessment: This is a structured approach to understanding the exact needs of a community. It should align with Section 135 of Companies Act as well as the need for the local community. It ensures that the community gets involved in the CSR from the planning stage. Health, water, sanitation, and micro finance are common needs assessed as they have a major impact on the development of the community. Need assessment has further steps like defining the assessment framework, data collection, and synthesis.

• Solution Design: This phase identifies potential partners and uses Logical Framework Analysis (LFA) methodologies to understand the impact of social programs. The Outputs, Outcome, and Impact are the key parameters to be considered in the Project design. While designing the solutions, it is important to check whether the proposed solution is right for a particular community, current conditions, and location. Something like tree plantation of specific trees will not work in all climates and all conditions. As CSR implementation budgets are pre-approved, the proposed solutions must fit in those budgets, or there should be an assurance from Government or any other authority to provide the additional funds if required.

• Partner Selection: Once the solution is designed, selection of right partners depend on partner's credibility, expertise, and relevance. Credibility includes legal and Income tax compliance along with any recognition and awards obtained by partner organisations. The expertise should be related to the decided territory as well as related to the CSR subject. The knowledge and experience in solving particular problems are a plus. It is important to check whether the partner organisations have processes in place aligned with the outcome expected. The partner should also be involving the Company employees in the activities if it is important for the Company.

• Monitoring and Evaluation: Like in any other project, continuous monitoring and evaluation are very important in CSR implementation in India. It is extremely important to understand and assess the current level of the society related to the CSR activities. It is known as a baseline assessment, which is a one-time activity. Once the project work starts, there should be a monthly or quarterly reporting mechanism in place to make sure any constraints or bottlenecks are immediately known to all the stakeholders. Apart from that, an annual social audit is also required. The audit ensures that the project is progressing as expected and is providing the expected outcomes to the Society. Apart from baseline assessment, all other assessments are recurring. With every new assessment, the baseline is changing with the success of CSR Implementation.

• Impact Assessment: The Impact assessment is critical as it makes you understand the exact impact of the project.

The evaluation or impact assessment has four key parameters:
• Relevance to pressing social needs is most important, and the benefits should reach to the correct beneficiaries.It is an important aspect as once the benefits are visible; there may be people who would like to be part of this initiative just to get the benefits without having any involvement in the project or those who are not involved in the targeted community.

• Effectiveness related to a strong outcome focus and ensuring achievement of outcomes. There should be a clear improvement in the quality of life of community members.The success needs regular measurements against the targeted outcome. The committee members are part of the implementation, and CSR board oversees the project and takes regular updates. The CSR Board and CSR Committee along with partner organisation are key to CSR implementation in India.

• A strong efficiency in utilising the available resources is critical as the resources are not unlimited and the timeframe is also well-defined. The number of beneficiaries may be limited at the start of the project but should go on increasing to cover everyone intended to be part of the CSR initiative planning.

• Self-sustainability impact assessment is related to verifying after the project, whether the impact is still there. This kind of audits is there after completion of the project. For example, a sanitation system implemented during a CSR activity for a home where it was not there. Once the CSR implementation is over, the community should adapt to the habit of having sanitation system in place for every new home built in that locality in future.

Following this step by step approach will make the CSR implementation in India a success.

CSR Consulting Firm | #Sattva



 By Bruce Thomsan



Article Source:  A Guide to CSR Implementation in India