CSR as a seed fund for social enterprises

Would it not be great if a corporate social responsibility (CSR) fund becomes a seed or social fund for investment in a cluster of a dying art or a traditional skill and transforms it into a success story? Or, how about a CSR fund that transforms an entire village into one where all households are digitally literate?

Even better, how about a CSR fund to transform a remote, illiterate village into a Wi-Fi village?

I see a lot of positives in the way CSR is taking shape and the way companies are responding to it. We have just completed the first year of CSR after the enactment of the new companies law that makes it compulsory to spend 2% of the net profit of a company whose net worth is more than ₹ 500 crore, or whose revenue is more than ₹ 1,000 crore or the net profit is ₹ 5 crore.

There were estimates that the total quantum of CSR funds will be no less than ₹ 18,000-20,000 crore. However, looking at the analytics of how CSR has performed in 2014-15, the actual expenditure is just ₹ 5,563 crore.

According to NGOBox, which recently released India CSR Outlook 2015, covering 250 companies, the figure for CSR obligations for 2014-15 was calculated to be ₹ 7,040 crore. This means that the actual spend fell short of the obligation by ₹ 1,477 crore.

As per NGOBox, CSR spend by these 250 companies will be ₹ 8,016 crore in 2015-16, an increase of more than ₹ 1,000 crore.

While for many it is a big surprise that only one-fourth of the initially estimated amount is actually available for CSR, the big news is that companies are taking CSR funding seriously.

I have experience working with a significant number of companies such as Ericsson, Intel, Microsoft, Cisco, Qualcomm, Vodafone, Capgemini, MphasiS, Zensar and Indus Towers. Besides, I have been invited by several companies to explore where the CSR money can be spent and how Internet and communications technologies and digital tools, especially mobile phones, can be used to intervene in CSR funding.

Talking more particularly about the companies that belong to the IT, telecom and banking spaces, their quest is to use mobile technology and digital tools to help financial inclusion, or digital literacy or delivery of health services, etc. Even more interestingly, considering that CSR expenditure is a must, many organizations are looking at long-term investment and sustained impact.

Let’s take an example of a traditional skill-based cluster—weaving. The weaving cluster in India, especially handloom-based weaving, is practised in more than 500 clusters in India, including Bhagalpur, Barabanki, Pochampalli, Kota, Chanderi, Tiruchirapalli, and hundreds more.

Incidentally, the weaving clusters in India generate more than ₹ 100,000 crore in revenue, yet most of the weaving clusters are suffering from apathy, joblessness, gradual death of traditional art and skills. Without exception, none of the clusters has graduated in integration of any prevalent new technologies, including digital tools. Needless to mention that almost all clusters suffer from exploitation from middlemen and control over information and market reach.

We created an example of how one weaving cluster could be changed to adopt digital technologies like broadband, Internet, digital designing for textile and patterns, linking weavers at large with the market through social media and e-commerce and in general, use of digital media to overcome information asymmetry. The experiment in Chanderi in Madhya Pradesh resulted in a transformation of the entire cluster from a revenue of ₹ 60 crore to more than ₹ 150 crore, besides creating an independent entity sustaining on its own with an e-commerce outlet.

But the story that I would like to share vis-à-vis CSR is that we have been able to have about four companies participating in this idea of targeting a weaving cluster with digital intervention and transforming weavers’ lives for good. In the next 2-3 years, we are going to create stories of how CSR funds could be used as a seed fund to create a transformational story of weavers who could have faded into history but will now join the new-age revolution without giving up their traditional skills. And along with the journey, we will have communities who will be called digitally literate, weavers who will be designing their patterns on computers, who will be selling their products online, and all of them will live in a connected society with an opportunity of accessing information as equals.

The five weaving clusters that we are working to transform are Barabanki in Uttar Pradesh, Nuapatna and Barpali in Odisha, Kaithoon in Rajasthan and Narainpet in Telangana. In all these clusters, the catalysts are CSR funds, and more than that, the willingness to adopt innovation among the companies and their CSR divisions. Even more important is that in all these cases the CSR fund will be transforming the effort into a social enterprise that will be sustained on its own to make an impact in perpetuity.

Similarly, I see a huge opportunity for CSR funds to create village-level Internet Wi-Fi hotspots to serve as access points.

While the initial infrastructure cost will be funded through CSR investment, the running cost can easily be sustained through the pay-to-use model. Working across thousands of villages, I can vouch for the fact that we need Internet access points as badly as we needed STD connections once upon a time. In my next column, I will share ideas that the companies should look out for when investing their CSR funds to make transformational stories.

Osama Manzar is founder and director of Digital Empowerment Foundation and chair of Manthan and mBillionth awards.

He serves on the board of World Summit Award and is co-author of NetCh@kra—15 Years of Internet in India. His Twitter handle is @osamamanzar.