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How to Wisely Invest Your CSR Fund ‒ CSR Funded Educational Projects

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Jan 03, 2023 / By Biswajit Sana / in News

Giving back to society when your company has grown large enough is a wise and beautiful concept. But it is not as simple as it sounds. How to invest CSR funds properly is a difficult question. Today, we will explore that and other relevant matters such as what is CSR, CSR funding rules, CSR funded education projects, and CSR fund company list in India. If your company is growing, this article is worth reading to you. 

What is CSR Fund

CSR full form is Corporate Social Responsibility, which is a broad term encompassing a company’s beneficial actions towards the society and the planet altogether. According to CSR rules (varies from country to country), a company must reserve a small part of their profits in a CSR fund. Then they can use this fund to finance various projects that benefit the society, the planet, or donate it to a national relief fund. 

The basic idea behind corporate social responsibility is that since a business is profiting so much from the people and the planet, they should give some of that profit to benefit those same people and planet. It is only fair to invest in developing the soil that you got rich off. Plus, it makes you popular as well.

A CSR fund is an excellent opportunity for a large business to give back to people while boosting their brand presence. It varies from company to company and industry to industry, but in general a business will have to reserve some of its profits as a social responsibility fund, and then pass it on to fund some sort of activity that benefits the society or the planet or people in some way.

The phrase ‘corporate social responsibility’ is very hard to define precisely. In general it is a wide concept covering a business’s actions towards improving the world. It means that the business engages in activities that are economically, socially and environmentally sustainable and beneficial.

A business may have four zones of corporate social responsibility, as follows:

  • Philanthropic responsibility: funding educational programs, health initiatives, community improvement, local infrastructure, supporting causes such as anti-war rally, etc. 
  • Human rights responsibility: fair labor, fair trade, abolish child labor, equial rights, and so on.
  • Environmental responsibility: sustainable use of natural resources, reduce carbon footprint, reduce pollution, and make the world healthier.
  • Economic responsibility: engaging in various business practices that are economically beneficial and sustainable.

Why Should A Business Do CSR

Apart from the fact that it has become compulsory nowadays by national law, the reality is undeniable that giving back makes one popular. Indeed, the benefits of CSR are significant enough that some of the corporate giants actually spend more than their fair share required by law in CSR activities. The benefits of practicing corporate social responsibility include:

  • Better brand presence: A company’s corporate reputation skyrockets with CSR activities. A person who donates or helps often is universally a popular person.
  • Better customer loyalty: if they know that you are supporting a good cause, your customers will prefer you over your competitors. Cash in that goodwill!
  • Better employee loyalty: Employees like a firm which puts their hard work for good causes. It becomes more effective in case of talented and key employees who take an active interest in the company’s culture.
  • Better funding opportunities: Investors too like the fact that their patron engages in CSR activities. Dedicating money, resources, and time for a good cause impresses everybody.
  • Better oiling the machine: A business with a good CSR reputation will have a better recognition by regulatory authorities as well.

The key takeaway here is that CSR funding helps both the society and the brand itself. It is a great way to raise morale in office and awareness outside. The CSR business model lets the company make a concentrated effort to enhance rather than degrade the society and environment on which they thrive.

CSR Fund Rules and Regulations

CSR is an universal concept and is internationally practiced. The United Nations Guiding Principles on Business and Human Rights 2011 clearly states that businesses must respect human rights and pay due diligence in their activities. However, it is not clear what ‘due diligence’ means ‒ so, it is better to employ the help of lawyers to find out the scope of the CSR activities in a country before implementing CSR funds.

In India, as per the section 135 of the Companies Act 2013, every company bigger than 500 crores of net worth (or making more than a thousand crore per year) have to implement CSR funds. India happens to be the first country to have made this mandatory for private sector companies. 

The amount to be deposited in this fund depends upon many considerations, but at a minimum a business has to spend 2% of their profits (calculated on the average of the last 3 years) on CSR activities each year. It is worth noting that some companies spend as high as 5-7%. 

Any unspent CSR fund of a financial year will be absorbed by the Prime Minister’s Relief Fund.

Flux of CSR Funding in India

As per the reports of various high level committees investigating CSR activities of companies operating in India, ever since its inception most major businesses are quite attracted to the idea. Only in five years, the total amount of CSR funds have grown up to a hundred thousand crores. Many top-level companies are voluntarily spending more than their required 2% of profits. 

The best year so far has been 2015-16, when companies managed to spend 85% of their profits. About half of that came from the top 2% companies. NGOs were responsible for spending a majority of the budget, but businesses themselves implemented CSR spending activities as well.

According to data, companies like to spend locally. Over half of CSR projects go to local area development projects where the company densely operates. There were major donations to various relief funds and to the Swachh Bharat Program too. 

Top CSR Fund Company List in India

As per the companies act it is now mandatory for all large companies to contribute to their CSR funds. However, some companies do it better than others. Here is a list of top 20 companies in India contributing to corporate social responsibility.

  1. Reliance
  2. TCS
  3. HDFC (bank)
  4. ONGC
  5. Infosys
  6. ITC
  7. Indian Oil
  8. NTPC
  9. Power Grid Corporation
  10. Hindustan Zinc
  11. HCL
  12. Tata Steel
  13. ICICI
  14. HDFC (finance)
  15. Mahanadi Coalfields
  16. Wipro
  17. JSW Steel
  18. Hindustan Unilever
  19. Power Finance Corporation
  20. L&T

These and other companies are contributing to the development of the nation through various donations, projects, and initiatives. 

How to Use Unspent CSR Funds

In section 135 as stated previously, there are several focus areas notified as to where you can spend your CSR fund. Obviously, you can let an NGO take care of it and do some good in your name. That is all well and good, but it’s not that popular. What’s more interesting is that most of the CSR activities tend to converge towards working in the education sector. Just look at the following list of educational projects taken up by major corporations.

  • Reliance Industries: Reliance Foundation Education, Sports For All, Digital Learning Van, Dhirubhai Ambani Scholarship, and more. Estimated spend: 527 crores.
  • NTPC: NTPC Utkarsh Scholarship, mobile science labs, providing computers to classes VII-X. Estimated spend: 132 crores.
  • Wipro: Systemic Reforms in School Education, education for children with disabilities, Wipro Earthian, Azim Premji University, Santoor Women’s Scholarship, WASE/WiSTA STEM learning. Estimated spend: 124 crores.
  • Infosys: Free meals for BPL children in Bannerghatta, Avanti Fellows, Spark-IT programme. Estimated spend: 95 crores.
  • Mahanadi Coalfields: Beti Bachao Beti Padhao, various improvements at poor primary and lower secondary level schools. Estimated spend: 69 crores.
  • Tata Steel: 1000 Schools Project in Jharkhand. Estimated spend: 67 crores.
  • Hindustan Zinc: Project Khushi, Nand Ghar, Shiksha Sambal, Jeevan Tarang, Yashad Sumedha, Women’s Scholarship at Vedanta Girls’ College. Estimated spend: 51 crores.
  • HDFC bank: HDFC Parivartan, Project Disha, ECSS, Navachar Pustika, 3T programme. Estimated spend: 48 crores.
  • Mahindra & Mahindra: Mahindra United World College, Project Nanhi Kali, Mahindra Pride. Estimated spend: 40 crores.
  • TCS: ALP, Launchpad, Project InsighT, Lab on Bike, CBFL software. Estimated spend: 36 crores.

From the above, it is conclusive that it makes more sense to invest CSR funds in the education sector, directly or indirectly. Indeed, according to  IndiaTimes , companies plan to increase spending of CSR funds in skilling and education in 2022-23. 

Nearly 7 out of 10 companies express interest in the education sector as far as their CSR funds are concerned. Close to half of that are also planning to invest in women empowerment, gender equality and other equality issues, old age homes, and similar projects. However, some of the latter would still dedicate some of their funds towards education. 

The reason for that? Let’s explore!

Why Dedicate CSR Funds to Educational Projects

The educational system in India, as a whole, is subpar. Our success rates are way below what it should be for a growing country like us. Every year, millions of students drop out of school, especially in rural, underprivileged areas. Why? Because, they are simply more productive at home than in school. Poverty and social and economic insecurity force children to get into work before completing their education in the majority of cases.

Large businesses can do wonders in this scenario.

At the moment, education should be the biggest priority of our nation. It builds a national backbone, creates more opportunities, prevents wasting into political cadreship or antisocial activities. When performed holistically, it creates a people so enlightened that they leave behind all dogma and go forward to create an advanced nation. This is every learned person’s dream. 

But that requires a lot of work. Social entrepreneurship requires a lot of administrative and organizational clout. Large businesses are experts at that. They know how to plan a project and run it. They can invest their management expertise for the greater good. And of course, they can pay for the projects from their CSR fund. Therefore, investing into education feels more natural to large corporations. 

Education and skill development are two most prominent avenues defined in section 135 about where to spend CSR funds. Philanthropy is something a business generally never thinks about, but it is actually a critical component. Engaging volunteers from your army of workers into community service is a great way to build connections within and outside the company. It builds stronger bonds, advertises your brand by word-of-mouth, and helps out those in need. It is a win-win for everyone!

There are different levels of engagement a company may prefer with CSR activities. Some may want to just donate the CSR funds to an NGO and let them do the legwork. Some may want to donate products or services to a school. Some may give volunteers to support a cause. And a few of the large organizations can actually create and organize projects that affect hundreds if not thousands of people’s lives directly. For a small example, Infosys runs a project for providing free meals to children in small schools in the Bannerghatta region. 

To be precise, a company can adopt one of the following three models to carry out CSR activities: 

  • Programme ownership
  • Funding provider
  • Partnership in implementation 

A business can choose to work in any of these modes with CSR, or in case of larger concerns, can adopt all three models. Most of the large companies stated above work in a mix-and-match way. 

What does a company get out of it? A lot. First and foremost, the wholesomeness of helping out somebody’s education is undeniable ‒ it is one of the noblest forms of charity and social work, with far-reaching consequences. The sheer ‘feelgoodness’ of it helps you keep a clean and bright public face.  

Secondly, think about it from a marketing perspective. When your brand sponsors a child’s education, when your brand becomes the reason someone is successful in life, you gain a dedicated volunteer spokesperson for your brand. They will nigh worship your brand and do word-of-mouth advertisement for free. 

Thirdly, your employees will love your company if they go larger than life this way. Most people have depressing thoughts like “What does my hard work matter? Is it just to make profits?” With community services, you can show your employees that they are serving a better purpose than just money. It works even better if you can pick volunteers from every room ‒ they will provide entertainment and dreamy break times, spreading their fieldwork stories. It would immensely help building your company culture and cohesiveness. 

Enter Labkafe: Your Friendly CSR Guide

Practical education is still swallowed by uncertainty in this country, in most places. In rural areas especially, there is scarcely any hands-on education to speak of. Labkafe intends to change that, root and stem. We envision bringing affordable practical education to every child in India. 

But we need your help to get that far.

Spending your CSR funds for building school laboratories is an excellent idea. First, this is the way to build a skilled workforce for tomorrow ‒ god knows we have plenty of need for that. There are too many MBAs but few good mechanics with official training. In other countries, most technicians and hands-on workers are properly passed and licensed from some vocational schools. Here? Bunch of learn-on-the-job tired people with no imagination or innovation. How about we change that?

Sponsoring a chain of schools for their laboratories can make a business famous ‒ more than they already are. But are you wondering how? Don’t worry. Labkafe can take care of the legwork for you. 

Labkafe has been in the laboratory building business for over seven years. As such, we are networked within a huge web of government and public schools from all over the country. We can gather CSR partnership from any state, any district, and mediate the proceedings. 

Together, Labkafe and You can make a difference. 

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Labkafe is among the most promising laboratory supplies vendors in India. We manufacture and supply lab equipment, lab furniture, lab consumables, lab glassware, lab machines and more! Not only we manufacture lab items, we export to international resellers too. We fulfill CBSE ICSE ISC IGCSE IB State board affiliation requirements for schools by providing affiliation packages to schools. Our featured products are:

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