As both the public and private sectors struggle to cope with the economic fallout from Covid-19, one thing is clear: The Corporate Social Responsibility pie is shrinking. With more than half of CSR spends being directed towards the PM-CARES Fund and other Covid-19 relief efforts, it also appears that CSR is unlikely to fund new grantees in FY 2020-’21.
What does this mean for nonprofits, who are also in crisis mode post-Covid-19 and rely heavily on CSR funding? To help answer this question and get a better sense of CSR priorities, Sattva’s India Data Insights report on CSR’s Covid-19 Response and Outlook for FY 2020-’21 lays out CSR spends by industry, geography, and modes of implementation. Here are their findings:
Slices of the pie
The annual average CSR budget in India is roughly Rs 15,000 crore, of which the top 300 companies contribute two-thirds – Rs 10,000 crore. From the CSR announcements made by these companies, in addition to collaborative contributions, it can be seen that more than half the annual CSR budget – Rs 7,863 crore – has been allocated towards Covid-19 relief measures. A large proportion of this amount has been allocated towards the PM-Cares Fund, specifically, Rs 5,324 crore.
Public sector units that collectively have an average annual CSR budget of Rs 3,000 crore have donated Rs 2,507 crore to PM-Cares, and private companies that typically have an average annual CSR budget of rs 12,000 crore have donated around Rs 2,817 crore to PM-Cares.
Historically, the PM National Relief Fund has received Rs 200 crore annually though CSR contributions. The PM-Cares Fund has managed to garner more than 25 times this amount in a much shorter time frame.
The fund is rife with issues pertaining to transparency and accountability, along with a general lack of clarity over the control and use of money donated to it. After a law student from Bangalore filed a Right To Information application seeking details about the fund, its trust deed, and government orders related to its creation and functioning, the Prime Minister announced that the fund is not a “public authority” and does not fall under the ambit of the RTI Act, and proceeded to appoint an “independent auditor” to monitor the fund.
So, while CSR funds that can be channelled towards nonprofits do remain, PM-Cares has funnelled away a large amount of capital away from nonprofits.
A look at the financiers
Private industrial conglomerates have committed the largest amount of money to Covid-19 relief, with Rs 1,830 crore donated to PM-Cares and Rs 1,300 crore committed to other relief measures.
The oil, gas, petroleum, and energy sectors (largely dominated by PSUs) come next, having donated Rs 1,600 crore to PM-Cares and committed Rs 18 crore to other Covid-19 provisions. The banking (largely private) and mining (largely public) sectors have near identical contributions of around Rs 530 crore to PM-Cares and Rs 100 crore to other relief measures respectively.
It can be seen that while the energy, banking, mining, manufacturing, telecom, real estate, and other sectors are very heavily skewed towards contributing more to PM-Cares, the automobile, IT, FMCG, and pharmaceutical sectors have committed more towards other relief efforts.
Where is the money going?
Geographically, the central and eastern parts of India receive less than 10% of CSR spending, combined. Their biggest contributors are public sector units in the mining, energy, oil, and gas industries. Since these companies have allocated the majority of their CSR spending towards Covid-19 relief, their regular CSR activities are at risk.
These regions receive significantly less than the Western and Southern regions of India, and with their key CSR contributors having committed funds elsewhere, development work in these chronically under-funded regions stands to receive even less than usual.
Within these geographies, the largest amount of CSR funding traditionally goes towards education, followed by rural development projects. In the central region of India, healthcare comes third after education and rural development projects, and fourth in the eastern region, with poverty, hunger, and nutrition projects coming third.
How the money is channelled
Usually, about 50% of CSR spends, or around Rs 7,500 crore, is deployed through implementation agencies – independent nonprofits, trusts, societies, or those created by the company itself.
Due to the crisis caused by the pandemic, only an estimated Rs 3,500-Rs 4,000 crore may remain available for regular CSR projects, as compared to the Rs 7,500 crore previously. Nonprofits that rely on CSR funding for sustenance are in a difficult situation, and will need to adapt to this changing CSR landscape.
This article first appeared on India Development Review.