New Delhi: For an impactful implementation of social development initiatives as part of their corporate social responsibility (CSR) obligations, companies should be increasingly renewing their focus on capacity building at their partner non-government organizations (NGOs).

“Companies can build CSR capacities of their personnel, as well as those of their implementing agencies, through institutions with established track record of at least three financial years—but such expenditure of the company shall not exceed 5% of the total CSR expenditure," according to CSR rules.

There is a belief that having a budget cap on capacity building does not do justice to the NGOs. Just like in the private sector, investment in the organizational element of NGOs are important, says Pritha Venkatachalam, partner at Bridgespan Group, a non-profit.

“Investing 5% for non-programme expenditure, which could be for human resource, technology, finance, or for knowledge building, is incredibly low," she says.

CSR rules, which came into effect on 1 April 2014, state that companies with a net worth of Rs500 crore, or revenue of Rs1,000 crore, or net profit of Rs5 crore—should spend 2% of their average profit in the last three years on social development-related activities such as sanitation, education, healthcare and poverty alleviation, among others.

Capacity building is required at multiple levels that include building leadership, financial budgeting and planning, managerial skills and so on.

Ashok Alexander, founder-director of Antara Foundation, adds that for capacity building for NGOs, field engagement plays an extremely important role since pure classroom training won’t suffice. “It is baffling that field engagement in the sector is not what it should be, especially at the senior level."

He points out that many NGOs, especially small ones, need support in training and capacity building, but “this can be a very expensive exercise and most conventional donors don’t make budgetary allocations specifically for this".

Also, lower compensation in the social sector and with CSR grants capping administration and operational expenses, it often limits operational capacity of NGOs. Vijaya Balaji, chief executive of Mumbai-based consulting firm Social Lens, says that since funding of capacity building falls under “non-program" expenses, only a few donors are willing to support it.

“The need to offer these services at affordable costs is essential. Pro bono support is available and accessed by many NGOs but more often than not, it is not sustained support. The need for designing customized solutions suited to the absorptive capacity of NGOs must be addressed," Balaji said.

Some progressive philanthropic entities such as the Azim Premji Foundation and EdelGive Foundation are providing direct support and grants to non-profits to utilize their potential, apart from sharing knowledge and operational expertise. However, more established donors and philanthropists should look to invest more than a threshold level in institution building, NGOs say.

“Capacity building is more important now given that a lot of the NGOs are struggling on some of the other functions like building a strong leadership; how do they scale programmes? And you can’t do that without strong capacity," adds Venkatachalam.

Farzana Cama Balpande, head of BookASmile, the charity initiative of event ticketing company BookMyShow, says there is a dire need to explore projects that would empower NGOs to learn and strengthen their potential through self-development and skill programmes.

She argues that the NGO space in India is still in its ‘embryonic’ stage, and most NGOs stay stunted for long periods, preventing them from achieving their full potential.

“Investing in entrepreneurial energy to help NGOs innovate, collaborate and sustain is definitely important to accelerate development. It will, therefore, be immensely beneficial to build a sustainable non-profit ecosystem that can innovate, collaborate and problem solve."

Shubha Srinivasan, director of Deloitte India, says that some companies and their foundations focus significantly on building the capacities of their NGO partners and have taken a mentoring outlook, dedicating programme funding towards this aspect. “This can be effectively achieved by not organising a single annual capacity building workshop for the NGO partners but by supporting them through the course of programme implementation."

Another way to build capacity is through qualified individuals sharing their skills with NGO partners. “Employee volunteering is a strong pillar of CSR, and has been an integral part of our culture. Through the Intel Involved Match Grant Program, Intel enables its employees to invest their time and skills at NGOs with the eligible hours being matched with a grant to the non-profit from Intel Foundation." says Satya Prakash Singh, head of communications at Intel India.

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