Are CSR funds in education being used smartly?
The cause of education received the highest amount of CSR funding but all the money is not being used for academics and training
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New Delhi: The latest Annual Status of Education Report (ASER) published on Wednesday highlights the “pretty disappointing” overall learning levels in schools across India. Yet, the funds coming to education, especially from corporate social responsibility (CSR) budgets, are on the rise.
In FY16, education received the highest amount of CSR funding among all social development activities allowed under CSR Rules. According to Prime Database, a capital market data provider, 920 National Stock Exchange-listed companies together spent Rs2,042 crore on education, up from Rs 1,570 crore in FY15.
CSR Rules require companies with a net worth of Rs 500 crore and above or revenue of Rs1,000 crore and above or net profit of Rs5 crore and above to spend 2% of their average net profit of the last three years on social development, including sanitation, education and healthcare.
A closer study of the annual reports reveals the CSR funds classified as being spent on education are not exclusively going to education. For instance, some companies used the funds to construct toilets at schools under the Swachh Bharat mission, or to provide infrastructure and equipment. Funds used for such activities sometimes are grouped under ‘promoting education.’
Niraj Seth, a senior partner at Ernst and Young LLP, said education receives maximum attention because it is visible and lends itself to easy interventions by firms.
“Education is favoured because it touches on various aspects of many social problems,” he said, citing the impact education has on standards of living and the job opportunities that it opens up. But if the CSR funds are not being used to improve the quality of education, then the purpose is lost, she said.
Firms should go beyond supporting tuitions, providing books or building school infrastructure with their CSR funds, says Prachi Jain Windlass, director of the India Education division at the Michael and Susan Dell Foundation.
“Under CSR in education firms could look to support processes, organisations that have clear learning outcome targets, which are also easily measurable,” she said.
The philanthropic organisation announced a $50 million fund in September 2016, spread over the next 3 years, for supporting education, skill development and financial inclusion across primary, middle, high school and colleges in India.
The annual report of ABB Ltd indicates that out of Rs1.70 crore it spent on CSR in the past fiscal year, Rs 78 lakh was allocated for ‘promoting education’.
The company has included activities such as purchase of shoes worth Rs 43,000 for school children at Nashik Govardhan School in Maharashtra, and building infrastructure and water proofing work at schools.. It also spent Rs64.27 lakh providing prefabricated toilets to 42 schools in Bihar. Similarly, Bharat Electronics Ltd included over Rs2.5 crore of its CSR funds for the construction of classrooms and infrastructure facility maintenance in educational institutions in Karnataka and almost Rs3.7 crore for building toilets in schools across the state in FY16.
These facilities are indeed essential, but they do little to improve learning outcomes. Seth explained, “There is no separate category for sanitation projects in schedule VII of the CSR rules. Since such facilities are part of government’s Swachh Vidyalaya mission and are being built in schools, firms have categorized these as educational activities in the annual reports.”
This could be another influencing factor for the high jump in CSR spending on education last fiscal, she said.
One of the older corporate players in the education sector is Bharti Enterprises, which started Satya Bharti schools way in 2006. “There is no dearth of social causes that one can work (on) in our country. But we felt the need to focus on quality rural education because of the long-term impact this has on the community," explained Vijay Chadda, CEO of Bharti Foundation, the philanthropic arm of the Bharti group.
The foundation operates close to 1,500 schools and training centres across 11 Indian states, with a majority of the funds for the foundation’s work coming from CSR corpus of Bharti group amounting to Rs 72.46 crores.
The foundation has gone through its own learning curve, starting with setting up brand new schools it paid to build and equip. In more recent years, the foundation has been working on training teachers, collaborating with government agencies to improve the quality of education and methods of teaching, said Chadda.
Firms like elevator and walk-way manufacturing company Otis India Ltd are focussed on supporting education and are largely looking at providing books and other infrastructure to students.
Otis has chosen to contribute its CSR funds in India exclusively to the education sector. In November last year, the firm announced that it will support 1,800 children across 25 SOS Children’s Villages. Otis said it spent Rs 3 crore towards helping educate children in SOS villages in FY15-16 .
Joseph Sebi, Otis India president, said India will have the largest working population by 2030, which is why the company wants to focus on eduction.
The company offers support in terms of Otis employees volunteering at SOS villages along with the monetary support for textbooks, stationary, school bags and tuition fees.
According to Sebi, Otis chose these activities because CSR funds go “directly to the beneficiary and also impact the learning outcomes in the long run.”
Experts say that’s what companies should focus on in allocating CSR funds.
“It is not enough just to build infrastructure. The government already does that. What we need is to supplement that infrastructure with quality education,” Jain of Dell Foundation said.