Section 135 of the Companies Act, 2013 along with the Companies CSR Rules, 2014 makes it mandatory for certain companies who fulfill the criteria as mentioned under Sub Section 1 of Section 135 to comply with and these are:
• Companies with net worth of Rs 500 crores or more;
• Companies with turnover of Rs 1000 crores or more;
• Companies with Net Profit of Rs 5 crore or more during any financial year.
These companies shall be required to constitute a CSR committee of the Board. They shall ensure that at least 2% of the average net profit of three immediately preceding financial years would be spent on CSR activities every year.
Activities allowed under CSR:
• Promotion of education
• Eradication of extreme hunger and poverty
• Gender equity and women empowerment
• Reducing child mortality and improving maternal health
• Combating disease
• Environmental sustainability
• Social business projects
• Contribution to Prime Minister’s Relief Fund and other such State and Central funds
• Employment enhancing vocational skills
• Contribution to technology incubators located within approved academic institutions
• Rural development projects.
These are similar to the 17 sustainable goals of the UN and the ‘triple bottom line,’ which takes into account profit for the society and environment apart from profit to the company.
Anu Oza: How did Boomika Trust respond to Covid?
Aruna: Floods and earthquakes are very frequent in India. The NGOs are the first responders in a disaster. We can split our action into three phases, which we call the 3Rs—Rescue phase, Relief phase and Rehabilitation phase. The rescue phase is best left to experts. Civil society has rescued people during Gujarat earthquake, Kerala floods and Chennai floods. As an NGO, we manage rescue by helpline, geo tagging people and connecting them with the government.
All disasters are characterized by the need for food security. NGOs have a constraint as they receive project-denominated funds and they are not free to use them for disaster relief. Because of their DNA to reach out, they cannot stay away from a disaster either. So NGOs take donations from civil society for natural disasters; some are able to get corporate donations. In the rehabilitation phase, only the government and some of the larger NGOs play a role while the others are not involved in this phase.
Over the last few years, the response of non-profit organisations to crises has been exemplary. They have been able to identify the needs and ensure last-mile connectivity.
Regarding Covid-19, we were only reading about it and not seriously bothered. Only when our Prime Minister declared a lockdown on the night of March 24, we realised the magnitude of this crisis and disaster. It was difficult to hit the ground running because of the fear of infections.
Normally disasters are geography-specific and time specific, unlike Covid. We had to move straight to the relief mode. We initiated a helpline for senior citizens and this was supported by remote volunteers. The larger crisis broke out when the daily wage earners did not get paid and soon the migrant labour crisis followed.
We created a project called, ‘Food First’ which included delivery of cooked food and rations. Even NGOs who were not tuned to do these activities stepped in, generating local funds. Over the last few years, the response of non-profit organisations to crises has been exemplary. They have been able to identify the needs and ensure last-mile connectivity. In essence, though we didn’t understand the pandemic, our first response was in ensuring food security for the people and in supporting the Tamil Nadu government which did a great job by opening up the rations. Those who didn’t have ration cards were helped by the civil society and NGOs like us.
Anu: So, in a crisis, we need to see under which phase it falls into and respond. In any crisis, people need funds and food. Therefore NGOs need to be embedded in communities and they also need to partner with the government to see that people don’t go hungry. Can you give us some idea, from a corporate angle, how Covid funding and CSR funding are managed and share some of the key learnings?
Shyam: Many companies distributed PPEs, sanitizers, ventilators, ICU beds, medical equipment and dry rations for migrant labour. Many reached out to migrant labour through food cooked in their company canteens. There were three broad approaches to funding by the companies:
a) Provisions available in the company’s 2019-2020 budget were used.
b) Some of the companies created a special fund over and above the CSR funds for Covid.
c) Others utilised the funds from the current year’s CSR budget.
Many companies also contributed to the Prime Minister’s Relief fund—PM Cares. As per reports, Rs 15,000 crore is the annual CSR spend with 3,000 crore coming from PSUs and 12,000 crore from the private sector. Of this, about 5000 to 6000 crores went to PM Cares. The rest were marked for the company’s CSR activities. With 25 to 30% CSR funds of companies going to Covid relief, how do companies plan for other CSR activities during this year?
1) The flagship CSR activities of companies are not significantly reduced.
2) New projects and those that do not align with the companies’ vision for CSR will be under scrutiny. These will be either delayed or withdrawn.
Anu: What is the reach of government and NGOs? How can we improve collaboration between the government and NGOs?
Vivek: A government is a system, and like a rudder, it controls the movement of its various constituents. The government and non-governmental organisations form a dichotomy. It doesn’t need a crisis for them to come together and collaborate. NGOs have a higher trust quotient compared to some of the government organisations. I was commissioner-in-charge of Tsunami relief in Nagapattinam in 2004 after Tsunami struck on Dec 26 of that year. 6000 people died in the area where I worked.
It was a shocking sight then in Nagapattinam. When I entered the town, I saw a vegetable vendor carrying three dead children in his vegetable cart. We started with rescue, which was predominantly done by the government. Many of the government staff had also lost their family members in the tragedy. India’s concept of Vasudeva Kudumbam, i.e., ‘The world is one family,’ is something that we should be proud of. A large convoy of trucks came from Punjab and all that they asked for was space. I gave them a school which was not functioning. They had brought everything from Punjab right from cooking utensils and materials for dishes like masala, atta and even salt. Every day, they cooked food for 5000 to 6000 people. That was their way of providing rescue and relief by cooking. Medicines came sans frontiers. IBM offered to come up with software to help people identify the dead, upload their details and perform the last rites. That is the power of partnerships.
The 17th SDG (Sustainable Development Goals) of the UN (United Nations) is about how we develop partnerships for the other 16 SDGs to happen. In the ‘Rescue’ phase, the government has to take the lead.
The Disaster Management (NDM) Act 2005 came into being because of the 2004 Tsunami. The PM heads the Disaster Management Authority. The government provides the structure for various organisations to collaborate and without any of them feeling intimidated. Capacity building is one of the objectives of NDM Act 2005. We lack seriously in capacity and need to focus on this, going forward.
Anu: So, you have to go the extra-mile to be a partner even if you are not necessarily seen as a partner. We need to build capacity working in tandem, right from the beginning rather waiting for a disaster to strike, for everyone to pull together. What kinds of capacities are needed in the short term?
Shyam: Skilling is one area we need to focus on. For instance, healthcare frontline workers are now in great demand. We have to skill people for the right sectors that are needed to tackle the Covid crisis. Because of loss of livelihood, many girl children will be denied the opportunity of getting higher education. The education programs have to be tweaked to support girl children. Healthcare infrastructure and implements like ventilators need attention. Similarly, electric crematoriums are the need of the hour. The existing CSR projects have to be tweaked to factor in the current realities from Covid. Next is the use of digital in fields like education and medicine. Companies can leverage the existing public infrastructure and work together with the government. Some of the existing hospitals have to be made Covid-ready. One project which can combine all the above is addressing child malnutrition. Healthcare workers can be used to measure the weight of children using a weighing scale and track other parameters that reflect the health condition. They can feed the data in an app. Data about the vulnerable population can come from the government.
Aruna: Strategic partnership is very important. Between the government and NGOs, there was a six degree separation. We have closed the gap to three degrees now. I am not sure of the exact reason for this gap, if it is a trust deficit or a threat perception. But that apart, we have had some brilliant experiences in working with the government.
We worked together with the government to reach out to the migrant labour in Thiruvallur district. We created larger ration kits that suited their kind of eating habits. The police have data on the migrants. We approached the district SP. In less than 24 hours, he sent us data of migrant labour in various zones under his control like where the clusters are; and, which industries they were working for.
There were 18,000 of them. Thus we knew the population that we were addressing. The SP also provided space for our team to store and sort the materials. He brought us volunteers from police to support us and help us in packing. The police team made it so seamless for us. They also provided us trucks to deliver the relief materials. They stood shoulder-to-shoulder with our volunteers to see that there was orderliness and that social distance was maintained.
The government has the foundation. NGOs have to step in with their empathy and they bring a different perspective to the game. NGOs do not merely look at numbers of people for distributing materials but they consider in terms of empowering the people.
We were able to pick up the phone and talk to several IAS officers. Again, when the labourers had to be sent home, GCC—Greater Chennai Corporation—provided us the data. We used our tech volunteers in this. We worked together with the police. It was a very happy marriage. NGOs now have to build on the trust gained during this crisis and the government also has to raise it veil. In the last few years, we have not moved in the SDG ranking. Currently, NGO spend is only 6% of the government spend. We have to co-create projects. The corporates must think in terms of creating ‘Impact Funds’ instead of aiming for mere philanthropy. The benefits must be 10X.
Vivek: There is a significant linkage between growth and poverty. Because of growth, poverty has been reduced by half. Rural poverty has come down from 50 to 25% and urban poverty from 31 to 14%. As there is a sharp decline in growth thanks to Covid, naturally it will impact poverty too.
The work, work place, work ethics and work force will play a defining role in the new normal. We need to build capacities for the work that will be important in the new normal. The work place has now changed dramatically with ‘work from home’ (WFH) being adopted widely. What will be the work force like, how much of automation will be there, what will be the work ethics? All these have to be identified. Many things existed even before Covid but we are utilising them now more. For instance, Zoom existed before Covid but we now use it extensively.
Anu: Let me sum up what we have discussed so far. NGOs can use the understanding of the CSR Act and use certain immediate relief provisions; NGOs and Government can proactively take partnership stance right from the beginning. Companies are likely to look at things like skilling in relevant sectors; they now focus on Covid related programs in the short term followed by their flagship programs. There are several examples of Government-NGO partnerships in many disaster situations and there is enormous potential for cooperation. There is scope for the corporates too, to make different choices for CSR activities, depending upon the funds that they have. n