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2015-02-21

No more a charity case! CSR emerges as a strategic tool to achieve business goals

Companies should dedicate time, money and energy to foster a new culture of innovative building blocks for CSR.

No one can deny that India, like most countries, has its fair share of issues in multiple sectors – health, poverty, education, and so forth. Despite these challenges, there exist many examples of successes and transformative moments across these sectors.

Underlying these positive contributions are common approaches typical of successful endeavors, which are critical to empowering humanity and helping to solve, what I call, challenges of concern:

1) Capacity building
2) Partnerships, alliances, and coalitions, and
3) Innovation and entrepreneurship for social impact

By creatively combining these tools through leadership, more companies, startups, and private sector entities than ever before are engaging in corporate social responsibility (CSR) initiatives. In fact, a review of the top 100 Indian companies (based on net sales in 2012) shows funding for CSR efforts from those businesses alone to be over Rs 1,700 crore.

By now, most of India knows about the 2013 Companies Act, which stimulates investment in CSR programmes and provides broad domains for where those funds may be spent.

Only time will tell what will be the impact of this regulation on the challenges of concern for India. The point of this article is not to explain the 2103 Act’s purpose, the legal footing, or the needed governance structures. There are plenty of experts who are already doing that in India. My objective is to move businesses into the next level and provide valuable information for the invigoration of innovative CSR portfolios with measurable, long-term human impact. 

Redesign CSR investments

CSR programmes should move away from the pull at your heartstrings mode of charitable and philanthropic giving.  There is nothing wrong with helping people from the heart and being passionate about social change because it can lead to positive outcomes.

Think of a child, who does not have a meal each day, and suddenly a company funds school meals because the chairperson is moved by the issue. This is wonderful! However, this type of giving falls short because it has limited impact.

Instead, the act provides companies an opportunity to redefine and redesign CSR investments. A performance-based model will lead to more effective, efficient, and equitable corporate social responsibility programmes, addressing the challenges of concern.

Private sector businesses continuously monitor product performance and quality, and make needed adjustments and improvements in an ongoing effort to raise the bottom line and secure a profit margin. Likewise, companies should apply this business model to tracking the outcomes of CSR initiatives above and beyond processes.

Using strategic information in this manner allows key company decision makers and stakeholders to re-innovate, pilot, and adjust their strategies, leading to greater impact in the communities, with which they are socially connected. 

CSR leads innovation

Just like a company’s products go through innovation cycles directed by data collection, CSR programmes should also evolve and push the envelope of innovation.  Allowing data to drive decision-making, a practice known as evidence-based decision-making (EBDM), results in greater social impact in areas such as health, poverty, or education. 

Why would the CEO and the company’s shareholders not want to know the social rate of return on investments in a comprehensive way to make changes to its CRS programmes and link them to the corporate’s bottom line?

This can be marketed and reported to investors, government officials, non-governmental organisations (NGOs), and the community at large in meaningful ways. EBDM of corporate social responsibility builds the brand of the company, makes people like and trust the business, builds loyalty, and leads to stronger social programs.

Ultimately, EBDM of CSR can help drive and support business goals. Corporate social responsibility programme designers must be willing to take risks, innovate, and be entrepreneurial in nature. 

New approaches to CSR

I am asked all the time if there are new approaches to CSR.  My immediate answer is YES! YES! YES! If an entity is open to innovation, then let us work together to visualise CSR efforts to be more than charitable endeavors. 

Some questions that quickly jump to mind are – How can we use private sector approaches to have impact on social issues? What a typical alliance need to be forged? Can CSR programmes be set-up to generate income? What can the civil society teach us about how to implement strategic CSR initiatives? Does my company need to work on an issue in a locality, where there are already 20 other programs underway tackling the same challenge? How can I integrate a social mission into my company?  There are many other questions as well.

Formulating and articulating a long term CSR strategy involve, two commonly forgotten notions – Language and Capacity building.

Too many companies view CSR efforts as ‘projects’. By definition, the word project is limited and inherently implies a defined timeframe with a start, beginning and end. Donors, investors, and philanthropists tend to think of CSR activities as projects. 

The pitfall in this thinking is that CSR initiatives are short-lived, fragmented and not sustained, leaving little room for innovation and greater social impact. A more strategic approach that includes language such as initiatives, program and efforts would be sustainable. CSR ideas that operate under this rubric are shown to be long-term, futuristic and visionary.

The way ahead

Corporations are often misguided in their belief that they do not need external assistance to (re)design, improve and elevate their CRS efforts. There is nothing improper about needing help or receiving assistance to build internal capacity for the scope of corporate social responsibility.

Time, money and energy should be dedicated to helping companies build the needed knowledge, skills and confidence to foster a new culture of innovative building blocks for CSR.

As I mention ‘capacity building’ as one of the three approaches above that are correlated with successful moments in India.  Why not with CSR also?

Martin Luther King, Jr., a civil rights leader in the United States who fashioned much of his work from the brilliant Mahatma Gandhi, stated “Everybody can be great because anybody can serve. You don’t have to have a college degree to serve. You don’t have to make your subject and verb agree to serve. You only need a heart full of grace, a soul generated by love.” 

His statement is absolutely true. We can all serve as entrepreneurs, CEOs, decision-makers, and stakeholders.  At the same time, let us connect our hearts and souls with our minds to rethink the building blocks for CSR initiatives in the future.  This will increase India’s social impact and its greatness. 

The writer of this article is by Dr Dhaval Patel, Co-Director, Center for Social and Development Communication, MICA, India. He also serves as the Co-Founder and CEO of iMPOWER Humanity, US. Dr Patel is a senior international advisor, strategist, award-winning speaker, social innovator and entrepreneur. As a professor, he has spent last 20 years traveling to 70 countries in the pursuit of his passion for human impact, social responsibility and positive change.

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