Companies in India appear spoilt for choice when it comes to choosing implementation partners for their mandated CSR activities. The ratio of NGOs to people (1 NGO for 600 people) currently outnumbers the ratio of policemen to citizens (1 policeman for 943 people). However ascertaining the credibility and efficacy of an NGO for a company’s CSR implementation is as daunting in sheer volume as it is in the depth of work involved, simply because of the staggering variety and nature of work of NGOs.
So what factors do companies need to look at while implementing their CSR strategy?
Legal compliance, responsible governance and financial sustainability are necessary but not sufficient conditions to identify appropriate implementation partners. Companies need to move beyond these factors and look at the “fit” of an NGO, taking into account the dynamic nature of their work, the lack of standardized reporting procedures and easily comparable benchmarks.
Criteria used to assess organizations in the business world, may not represent an NGO’s suitability for CSR accurately. For instance, a well-established NGO may rank well on governance and processes but may not have a suitable project that lends itself to corporate engagement or may not have the “community connect” with remote villages that a local NGO would. NGOs work according to the evolving needs of communities and donors and should therefore capture both long-term trends as well as recent activities to present a clearer picture of their work and impact to companies looking to implement programs with them.
The problem of reporting is compounded by the lack of adequate regulation for NGOs to disclose information to the public, resulting in irregular reporting and ad hoc reporting procedures. This presents a serious problem to companies that require information about the NGO and their work for their own compliance.
Another factor that companies should take into account is the difficulty of developing standard measures with which to compare NGOs. Some institutions are working to develop an accreditation system for NGOs based on their performance over the past 3 years. The system is being developed to help companies choose the right partners for their CSR work. It will be interesting to see how NGOs are rated because the varied nature of their work may present an incorrect picture when looking at numbers without context. For example, league tables comparing staff costs may have wide disparities as many NGOs employ their own staff to deliver critical services while others may work with partner organizations. Staff requirements also vary according to the nature of work – operations such as community outreach are labor intensive while others, like advocacy, may require less staff.
Similarly, comparing fundraising ratios across NGOs may also be misleading as these cost ratios are influenced by a number of factors such as the age of an organization, fundraising mix (few donors with large contributions or many donors with small contributions)etc.
One of the most important factors that companies look at is the impact of an NGO’s programs. Comparing these numbers while choosing implementation partners is not feasible because of varied definitions of impact across the sector, as well as the metrics used to determine impact.
Grading NGOs may be a formidable task for companies that are not very familiar with the workings of the NGO sector. In order to implement effective programs with NGOs that are aligned to a company’s CSR strategy and philosophy it may be necessary to conduct a comprehensive due diligence process. While it is equally necessary to evaluate NGOs for their programs, it is important to keep in mind the context within which NGOs are examined and understand the reasons behind the disparity, because numbers only tell half the story.
– Anushree Parekh, Senior Manager, Samhita Social Ventures