Corporate Philanthropy: Gaining popularity in India?

Around 30 crore people in
India go to bed without having proper 3 meal a day. And, strangely
enough, this is the same nation, which expects to become a superpower
by 2020 like the US and China. How? Perhaps, the key lies in the
hands of Indian entrepreneurs. Today, Indian companies have stepped
up social spending at a faster rate than their own profit growth. It
has been estimated that corporate giving in India now totals $1.5 bn,
increasing 5 fold since 2006. This is according to the India
Philanthropy Report 2011, released by a global consulting firm at a
function hosted by the Indian Philanthropy Forum. Recently, out of a
total 48 philanthropists in the list, 4 top givers from India were
named in 'Forbes Heroes of Philanthropy' in Asia. Looking at
corporate contributions in India, experts believe, corporate
philanthropy is not just a mere financial contribution; rather it
speaks volumes about their holistic view of helping the nation.
Corporate houses like Tata, Birla, Infosys, Wipro and others have
been powerful drivers of philanthropic activities. They are entrusted
with in any society and India is no exception. They say, over the
last few years; Corporate Social Responsibility (CSR) has played a
huge role in changing the face of India.

Some of the examples
are-Tata, setting up institutions like the Indian Institute of
Science (IISc) and the Tata Institute for Fundamental Research
(TIFR); Wipro chairman Azim Premji's pledge to donate nearly Rs
10,000 crore for improving school education in the country; and
Infosys committing 1% of its profits every year to social causes
through the Infosys Foundation. Premji said, “Good education is
crucial to building a just, equitable, humane and sustainable
society. All our efforts, including the university that we are
setting up, are focused on the underprivileged and disadvantaged
sections of
our society.” Other biggies like Birla and Mahindra too have been
spending a fraction of their profits on social causes. This inspires
even SMEs to do its bit in the growth of the nation.

INDIAN SPS: GAME
CHANGERS

Corporate Social
Responsibility (CSR) not only plays a major role in helping
underserved hands to get support; it also helps an organization to
build its brand image among the common people. Recently, Premji
announced of giving $2 bn to a charity providing education for
underprivileged children in rural areas across the country. And, the
announcement not only brought smiles on the faces of under privileged
children, who want this kind of gestures by big corporate houses, but
the government too, welcomed the pledge. Union finance minister,
Pranab Mukherjee, welcomed the pledge, saying it
would send out a positive signal. “I welcome it. It is a very good
decision. I congratulate him and his company,” said Mukherjee. And
in the current scenario, the importance of CSR has increased so much
that even solution providers like Computer Supermarket too
understands its need in changing the image of an organization among
people, customer, as well as its own staff.

Commenting on the
importance of philanthropic activities in the current situation,
Rupesh Kedia of Computer Supermarket said, “Once we grow above the
fulfillment of self day-to-day needs, we have our social
responsibilities to let the society also get benefits of our
achievements. I don't think that it should be done just for image
enhancement, but it enhances the self-image as an Indian.” CSR is
coming out of the purview of doing social good and is fast becoming a
business necessity.

The government, on its
part has accepted the proposal of Parliamentary Standing Committee
headed by former finance minister Yashwant Sinha, which makes it
mandatory for companies with a turnover of Rs 1,000 crore or net
profit of Rs 5 crore to allocate 2% of their profit towards CSR. Kedia
explained, “There
are many factors driving CSR. For example 'reactive strategy' for
reviving the status and business by gaining confidence of localities
we operate into. We also try to plant trees in our office campus to
save the environment from pollution; and to give staff and visitors a
completely clean environment. All these things help us to build an
image of the organization among our staff, customers and
society at large.” He went on to say, that it is an opportunity to
do something for the society because of which the companies are
prospering. It indirectly helps the company to build a brand image,
increases employee satisfaction and recruitment, as well as product
marketing. Many CEOs focus on CSR to build the image of the company,
but there are a few leaders, who do it for personal satisfaction too.

Rajiv Sethi, CEO of
Liberty Automation Systems said, “My philanthropic work gives me
happiness, enhances my stature in the society and makes me more
successful. It is because of this that I am held in high regard by my
team, my customers and my family. The 12 camps in the colleges of
Mumbai that we supported between July 1, 2010 and March 31, 2011
resulted in 2040 units of blood being collected and 3390 Thalassemia
Minor Screenings. This means that many lives were saved by making
blood available and prevention of thalassemia disease.”

According to Atul Hemani,
CEO and MD, href="http://www.dqweek.com/Omnitech-acquires-Avensus-Netherland">Omnitech
InfoSolutions, a strong CSR program is an
essential element in achieving good business practices and effective
leadership. Companies have determined that their impact on the
economic, social and environmental landscape directly affects their
relationships with stakeholders, in particular investors, employees,
customers, business partners, governments and communities. “We are
involved in different social activities with the help of NGOs like
Rhidaysparsh Welfare Association and Handmaids of the Blessed Trinity
(orphanage for healthcare) and have provided financial aid in the
past, but our focus for 2011-12 shall be on education, healthcare
and espousing social causes including disaster relief. We shall be
having a tie-up with an NGO in this financial year,” explained
Hemani. Also, Kolkata-based KL Lalani, CEO, Lalani Infotech, is doing
a lot of rural computer education programs in the name of 'Compact'
for rural educational development by Lalani Computer Academy (LCA),
which is the company's sister concern. He said, “We have also
opened up a small franchisee center in rural areas for the betterment
of the rural students. The prime objective of 'Compact' is to
provide computer education to students in rural areas at affordable
prices. We also provide monthly installment options for students.
This program is 'no profit—no loss' for Lalani Computer
Academy.” Lalani is running the program in eastern India, West
Bengal, Odisha, Chhattisgarh, Bihar, Jharkhand, Assam and the
northeastern states.

According to Reeta Budhay,
director, finance, Business Algorithm, philanthropy is less about
financial numbers and more about intent, execution and outcome. An
individual donation may not always come in the shape of a financial
contribution. It can also be devotion of personal time and effort.
“We have donated Rs 1,44,000 towards food for 2 months for the old
age home inmates in Matoshree Vruddhashram about 30 km from Nagpur,”
emphasized Budhay. Similarly, for an entrepreneur, developing a
lowcost product or service and distributing it efficiently across
remote areas to deliver life-transforming possibilities, despite
running on thin bottom lines could mean as much commitment to
social welfare as a big direct contribution.

TREND: MORE FROM IT AND
GOVERNMENT

Undoubtedly, IT is one of
the most growing sectors in India. And, it makes solution providers a
huge ambassador of spreading corporate social responsibility method.
But the question is: Is enough being done by the solution
providers for the society?

Speaking on this, G
Krishnaswamy of Chennai-based Three Dot Solutions said, “CSR is an
opportunity to give back to society, but one can say how much one
needs to do, one must contribute whatever one can, for the benefit of
the society at large. And, as far as we are concerned, we try to help
the society in whatever way it is possible.” Commenting on the
same, Sethi of Liberty Automation said, “While CSR becomes a part
of planning and budgeting in large organizations, in smaller set-ups,
CSR activities are led by or represented by activities in which head
of that organization gets involved in, be it charity or otherwise. In
that sense CSR is an activity that anyone can participate in.” Many
experts do talk about the size of companies to follow the CSR rule.
But, most of the solution
providers believe that size of the company hardly matters in this
case. He also added that CSR is not about organization size or scale
but rather willingness on the part of the individual and the
organization to contribute for a cause. Size and number of people or
the financials do not make a
big difference if willingness is there.

However, Precision
Infomatics believes that a company's size does not matter much in
CSR. V Murali, CEO, Precision Infomatics, said, “CSR is a social
obligation for most corporates, especially the big players, which
smaller organizations can learn to embrace. At the end of the day,
the objective is to contribute to the society and bring a humane
aspect to our business.” But besides solution providers, there are
few associations too, who go beyond their limit to help the society.

Not only the IT solution
providers, but also several IT associations are active drivers of
corporate philanthropy. B Hari, president of the Computer Association
of Eastern India (COMPASS), provides computer training for the
benefit of unemployed youth and students from the less privileged
sections of the society with a nominal course fee. COMPASS provides
total hardware and software support and also helps students get jobs
after the completion of the training. Similarly, Vidarbha Computer
&
Media Dealers' Welfare Association ( href="http://www.dqweek.com/Orange-city-welcomes-COMP-EX-2011">VCMDWA)
has been helping the
society in a different way. It organizes Swaranandwan Orchestra, an
orchestra by inmates of Maharogi Seva Samiti (an organization founded
by Baba Amte for leprosy patients). It also conducts annual blood
donation camps for the members, their family members and staff. Also,
it conducts Cyber Security
Rally, which makes people aware about cyber security.

According to a study
undertaken by an industry body in June 2009, which studied the CSR
activities of 300 corporate houses, corporate India has spread its
CSR activities across 20 states and union territories, with
Maharashtra gaining the most from them. About 36% of the CSR
activities are concentrated in the state, followed by about 12% in
Gujarat, 10% in Delhi and 9% in Tamil Nadu. The companies had on an
aggregate, identified 26 different themes for their CSR initiatives.
Of these, community welfare tops the list, followed by education,
environment, healthcare, as well as rural development. Not
surprisingly, the survey revealed, that corporates targeted most of
their activities around the areas they operate in. This trend is
likely to continue.

But the flip side is that,
it is generally the more developed states that have been the
beneficiaries of CSRs, rather than the ones languishing at the
bottom, whose developmental needs are more central. The government
is now working on a framework for quantifying the CSR initiatives of
companies to promote them further. Efforts are also on to develop a
system of CSR credits, similar to the system of carbon credits which
are given to companies for green initiatives.

LEARN FROM 'THE WEST'

Premji's donation of $2
bn might be huge, but corporate honchos like Bill Gates and Warren
Buffett, believe that the Asian ultra-wealthy should give more, and
said they would hold a philanthropy drive in India similar to a
recent exercise in China. According to a recent report by Bain, a
global consulting firm, around $7.8 bn were given in India in 2009,
amounting to 0.6% of India's GDP. Though this compares favorably
with other developing nations such as Brazil and China, it lags far
behind in the developed world. Another survey, which ranked Indian
companies' CSR activities on a scale
of 0-5, showed that none of the Indian companies got placed in the
highest level. Only 16% of the 500 companies surveyed had well
defined CSR activities. The concept was yet to catch up with the
remaining 84% of the companies. Recent major donors include Nandan
Nilekani, co-founder of the hugely successful software company
Infosys, who gave $5.6 mn to the Yale University India initiative and
Narayana Murthy who gave $5.1 mn to Harvard University and its
publishing arm for a series on Indian literary heritage. Noted CSR
expert Prof Leo Burke of the Notre Dame University, USA said, “India
needs to adopt 'national-local' approach. National in the sense
that there will be a need for nationwide alliances and databases in
order to quickly learn best practices, share
innovations, and 'scaleup' pilot programs. Local in the sense; it
will require organizations to efficiently implement programs at the
grassroots level, as well as mobilize volunteers to serve their local
communities.”

“Successful global
businesses have the power to make a real difference. Economic
performance and social responsibility can go hand in hand, when there
is a genuine consideration of our impact on the communities and the
environment in which we live and work. True global companies must
foster good relations with customers, communities in which they
operate, nation, and bear the responsibility of the impact their
activities have on environment and society,” emphasized Hemani.

It is not only big
corporate honchos; small companies too have to come in a big way to
help the society grow. Seeing the current Indian scenario, it has
almost become the need of the hour.