Effective use of Financial Funding: Corporates know best?!

Finance is essential for NGOs. With CSR, NGOs were hopeful. But the language both speak is different, with relation to reasonable overheads, sustainability, beneficiary needs, organizational capacity building. We posed the debate to 4 sector veterans.    By Pradeep Mahtani

While corporate giving has been part of corporate DNA for decades now, the recent “forced philanthropy” via CSR has enormous possibilities, but corporate vision is blinkered by five constraints.

Geographical – Corporates prefer to implement CSR programmes close to their work-site resulting in numerous corporates working with the same NGOs. This continues to have increasing disparity between comparatively developed geographies and those neglected.

Programmatic – Corporates prefer working to supply goods – outcomes that can be seen, counted easily:  toilets, piped water etc. No sense of ownership among beneficiaries, often builds a feeling of dependence & entitlement in them.

Time horizons – Corporates speak a language (3-5 years is the long term) that is far different from the development sector. Attempting to bring about sustainable changes in a time frame is something that all NGOs have sadly learnt to pretend they plan to achieve. Reportage at the end of every year has to be shareholder-friendly and meant to cater to “optics”. This places undue and unfair pressure on the development partner to deliver irrational behavioural outcomes.

Organisation size – Despite the fact that large NGOs have proportionately large overheads, corporates prefer them as they have a familiar, corporate-like culture.  Smaller NGOs may do excellent work, but fail to provide slick presentations, well-formatted reports, and conduct jargon-laden conversations. Smaller NGOs will continue to languish unless corporates learn more about the development sector.

Investing in NGOs – NGOs could benefit by putting their people through training, but is hardly supported. Corporates provide their employees with all creature comforts, but suggest that an NGO should have comfortable offices and the corporates question the credentials of the “social workers”.

Corporates should spend more time to understand what the development sector has to say – even if the language is not exactly music to corporate ears.

Lt Col AV Paranjape (Retd)

MBBS MD, Executive Director, Community Aid and Sponsorship Programme

CASP has sponsored more than 100,00 children across India in the past four decades to complete their education. It works in Maharashtra, Delhi, Gujarat and Kerala.

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CSR giving is not new in India. However, the mandatory giving from a company’s profits, is. Introduced in 2012-13, it seemed like a blessing in disguise for NGOs eagerly looking for funds for their projects. The Companies Act 2013 Schedule VII makes the areas to be funded very clear. Workshops across the country are being held by government to help companies understand the finer points of the Act. How, for example, welfare of the company’s employees cannot be counted as CSR nor can volunteering during office time be called CSR.

Companies are wary of extending grants to NGOs even when their projects fall under the purview of Schedule VII. They fear that NGOs are not professionally run, especially their accounts. So, companies tend to favour national level ‘branded’ NGOs and rush to fund them liberally and unconditionally. They establish their own foundations, prefer funding infrastructure (school buildings, toilets etc.) and do not support operational costs.

Since the debate is more about small NGOs and CSR partnership, companies with their vast experience and skill, can play a constructive role by coaching NGOs and developing them to become more professional, build their capacity for accounting, raising funds, doing good work properly evaluated, monitored and reported. They can also help them scale up. Insistence on due diligence could be a starting point. Involving them as partners in the decision making process is the other.

NGOs on their part must ensure that their legal and financial compliances are in perfect order. They should also be open to accepting constructive feedback, and proactively seek to develop themselves.

Dr. Viney Kripal

Executive President, GREAT Foundation, Pune

Former Professor and HOD/HSS/IIT Bombay

GREAT Foundation, Pune was founded in 2002 by IIT-IIM professionals. It provides less privileged students an equal opportunity for social and economic equity through quality education. It has impacted around 45,000 students in 91 government/low income schools.

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While the style and sensibilities of NGOs and Corporate Foundations may seem at counter-purposes to each other, I believe that both are fundamentally connected by a common goal, viz. to create a difference in lives of people who need it the most. It is therefore imperative that both drive towards a shared vision to achieve maximum social good for the beneficiary. 

The way I see it, the Law, systems and processes are a way to ensure that both entities remain focused and committed to achieve that goal. Also in a rapidly changing environment, when every action and reaction is being scrutinized with a hawk’s eye, it is important to de-risk the Foundation as well as the Parent from any adverse outcomes or loss of reputation.

For both Corporate funders and NGOs to become truly impactful, passion needs to be insulated from individual agenda; purpose needs to be guided by systems and subjective decision-making needs to be reined in within legal boundaries. 

While this adds time to the process at both ends and calls for commitment of specific expertise and resources, both CSR Foundations and NGOs cannot and should not wish these systems away. They need to build each other’s capacities while being realistic in their own expectations. For instance, we are consistent in support and guidance to our NGO partners in areas of accounting and compliance whereas our partners help us to build on our understanding of grassroots reality.

It is only when both sides bridge the trust deficits and see each other as partners will we be able to accomplish the common goal of creating an equitable society.

Prashant Paleja 

Head - Finance, Corporate Social Responsibility, Cipla

‘Caring for Life’ has been at the forefront of Cipla’s business philosophy and remains the principal purpose of doing business. Its initiatives as part of CSR programmes effectively contribute to developing a sustainable and resilient community, particularly in community welfare, health and education.

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Money is at once the most important resource of, and the most difficult to generate resource for, NGOs. Primarily because NGOs cannot generate business profits and are therefore dependent on donors for income to conduct activities.

NGO leaders who are preoccupied with ensuring day-day maintenance budgets, often fail to prioritise activities (capacity building of staff, putting systems in place, etc.) that are crucial for an NGO’s effective performance, stability, and growth. 

For small and medium size organisations, it is a constant struggle to raise funds to ensure sustainability of the programs and the NGO itself, as donors are not willing to support the scaling up and sustainability needs of the NGO.

While the NGO sector expected relatively quick and easy money with introduction of CSR, the experience has been otherwise. The corporate, with little, or no prior experience, or understanding of the social sector, were hesitant in giving money, till they had built up their own understanding of the sector.  The corporates who did give, chose to fund specific projects of NGOs, not the NGO itself. CSR managers looked for programmes/projects that had tangible results which were clearly defined and measureable. 

With CSR still being relatively new, the relation between organisation building of NGOs, and greater impact in the field of social development, is as yet a largely unexplored area. There is even now, insufficient understanding and risk appetite to invest into organisation building of NGOs, to enhance NGO productivity and outcome.  I believe, there is strong need for the CSR Foundations to come together and partner for collective giving, not only for specific projects, but also for investing in long-term growth and impact.

Dr Atul R Gandhi

Chief Manager - Monitoring & Evaluation, EdelGive Foundation

EdelGive Foundation is the philanthropic arm of the Edelweiss Group. Since its inception in 2008, it has worked towards being a bridge between the users and providers of philanthropic capital and knowledge by bringing the skills, resources and talents of the for-profit world to the not-for-profit arena.