Charity leaders have a geographic bias: Companies fund projects closer to where they are based

By Moin Qazi*
The recent years have seen a growing realisation among countries for evolving a doctrine of social responsibility. Like individual citizens who have moral and social responsibilities, business houses are perceived as corporate citizens. Thus they too have r social responsibilies. Apart from the socialist countries which consider this doctrine as a vital element of their policies and programme, the capitalist countries also feel that industries, banks and business corporations should commit a part of their time, talent and resources for the welfare of the society from which they draw their sustenance.

This idea has now been corporatized under the appellation, ‘Corporate social responsibility’ (CSR It ) is a way of managing a business by considering the impact of activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.
India has a unique law: It’s Companies Act, 2013, and the Corporate Social Responsibility (CSR) Rules, which came into effect from April 1, 2014, make it mandatory for companies having a net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more in a given financial year, to spend 2% of their profits on CSR programmes. 

‘India’s CSR reporting survey 2016’, a report released by well-known consultants KPMG in January 2017, has revealed that in 2016, against the requirement to spend Rs 7233 crore, India Inc. spent Rs 6518 crore (90 per cent), which is higher as compared to previous year, wherein the companies had spent Rs 5115 crore (79 per cent) against the requirement of Rs 6490 crore.
Corporate Social Responsibility is a new business concept but Gandhi’s theory of trusteeship conceived this idea long back .Gandhi’s theory of trusteeship was intended to avoid the evils and combine the benefits of capitalism and communism, to socialise property without nationalizing it, to fill the form of private ownership with socialist content. Gandhi disdained the voracious greed for profits of the fat cat investors. 

Take a man owning an industry. As a trustee he was expected to do the following: 

First, he would himself work like any other employees. Second, he would take no more than what he needed for a moderately comfortable life. Third, he would look upon his employees as members of his family and jointly responsible with him for the management of the industry. Fourth, he would provide healthy working conditions and welfare schemes for the workers and their families. Fifth, they would both regard themselves as trustees of the consumers and take care not to produce shoddy goods or charge exorbitant prices. Sixth, they would aim to make a moderate profit, part of which would be devoted to the welfare of the community and the rest to the improvement of the industry. Seventh, the owner could pass on the industry to his children or whoever he liked only if they agreed to run it in the spirit of trusteeship.
It was way back in 1969 that the great industrialist J.R.D. Tata proposed that private industry look beyond its own borders and adopt villages. “Let some of the time of its managers, its engineers, doctors, and skilled specialists, be spread to help and advise the people of the villages and to supervise new developments undertaken by co-operative effect between them and the company. Assistance in family planning in the village would be particularly valuable from of service.” 

He felt that, “Industrial enterprise, whether in the private or public sector, can and could do much within their means to improve the conditions of life of the surrounding population, relieve distress where it exists, help find work for the unemployed and extend a helping hand to those who need it. Is there a village in our country which does not need some improvement to its scant services and amenities, a school dispensary, a road, a well and pump and above all opportunities for gainful employment.”
According to Friedman, “Social responsibility is a fundamentally subversive doctrine. Few trends could so thoroughly undermine the very foundations of our society as the acceptance by corporate officials of a social responsibility other than that to make as much for their stockholders as possible.” As against the “laissez faire” philosophy, which emphasises maximisation of profit and growth as the sole objective of the corporations, there is a strong school of thought that believes that the role of a business corporation must go much beyond making of profit and should look to the needs of the society. 

They feel that a business corporation functions and is rooted in a social environment, and on account of its constant interaction with the environment it is necessary for it to respond to the demands made by it. The corporation should be able to maintain a proper balance between business objectives and social obligations. With the growth of larger industrial enterprises, the threat of pollution, the increasing economic inequalities, the growing physical suffering for people on account of serious illnesses, together with a changing social climate, there is a growing pressure on business corporations to participate in the task of evolving solutions to social problems. 

It is now being felt that social responsibility has not to become a voluntary option with business corporations. Much more than this, business corporations have to clearly define social objectives and assess performance in this area. Social audit has to be introduced to evaluate the performance of business corporations and, if necessary, legislative enactments be made to ensure participation in this task.
But, as is their wont, many businesses are using these opportunities for brand promotion and in the process expanding their business markets. These CSR works are now the fulcrum of aggressive brand building exercises and every social intervention is leveraged to the hilt with publicity blitzkriegs.
CSR represents a powerful opportunity for business to participate in this mission. CSR is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders
But there are marked class differences in the CSR agenda which need a course correction. Charity leaders have a geographic bias with companies funding projects closer to where they are based. Consequently, more industrialized states are winning over poorer, more remote regions where development aid is acutely needed. Politics can skew priorities too, with some companies looking to gain goodwill by backing government-led projects rather than independent initiatives.
Despite all the hyperbole, CSR has been peripheral in most organisations and is not woven into the fabric of the business. It's not always transparent and there may be strings attached. Sometimes it's driven by a need to buy profile and even worse, CSR is used as a type of moral counterbalance to practices that have had direct negative impacts on the poor.
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*Contact: moinqazi123@gmail.com