Section 135 of the New Companies Act 2013 brings in a new regulatory stance for companies while enabling them to undertake Corporate Social Responsibility (CSR) programs for social development. The focus areas mentioned in schedule 7 of Section 135 have been mostly aligned to the Millennium Development Goals like poverty alleviation, hunger eradication, reducing child and maternal mortality, environment conservation and supporting social business.
CSR has the potential of reducing the concentration of wealth and economic power in the hands of few and removing inequality. CSR is not an alternative or a standalone solution to the social problems but should be understood as a catalyst to augment the government’s efforts.
In this context, the emerging and fast growing social enterprise (SE) ecosystem has a lot to gain in terms of funding, partnerships and skill development. Through CSR, companies can help SEs to grow and become profitable in multiple ways.
In order to explore the various aspects of partnerships and corporate-social enterprise engagement, IICA organized a round table discussion in association with Samhita Social Ventures and NMIMS on 22nd January 2014 titled, ‘CSR as a Value Proposition for Promoting Social Entrepreneurship’. 120 delegates from multiple backgrounds like corporate, NGO, SE and academic institutes attended this discussion.
Session 1: Understanding and defining SEs
The speakers of the first session were Vinay Somani, Founder, Karmayog, P. Pradeep, Partner and Executive Director, Founder, Aavishkar Investments, S.K. Shelgikar, Founder Chairman, Yunus Social Business School and the panel was moderated by Dr. Meena Galliara. The first session highlighted the challenges and dilemmas the industry faces in defining an ‘SE’. The panel discussed two ways to define an SE. The first approach is based on the idea of ‘needs versus wants’. If a business is designed to fulfill a social ‘need’ like safe drinking water or access to electricity, then it can be termed as an SE. Businesses providing goods and services that are ‘desired’ and not ‘needed’, cannot be called as SEs. The other approach talked about defining SEs based on their motive – either ‘profit’ or ‘impact’. SEs can aim to be profitable as long as the underlying motive should be to positively impact the masses.
Understanding ‘need’, ‘want’, ‘profit’ and ‘impact’ should be based on various components of India’s social fabric like income level, social status etc.
It was also observed that there are many SEs with the dual motive of creating social impact by addressing a social need or gap.
Session 2: Good Practices for addressing gaps
The panel in the second session included founders of “Mirakle Couriers” (run by deaf and mute people) and “Swasth India” (with the mission to ensure affordable and quality healthcare for 10 million low income urban population by 2018) and the Project Director of “Shrujan” (creating markets for women artisans). They highlighted the challenges faced while running an SE such as raising funds and scaling up the operations while underlining the need for continuous innovation and strong partnerships.
Session 3: Role of cross sector partnerships
The panel included Gaynor Pais, CEO, IRFT, Anagha Mahajani, Dy. GM, CSR, Ambuja Cements, Mangesh Gupte, Head, CSR, ACC Ltd. and Ramdas Dhumale, State Coordinator, HR, MSRLM who emphasized the importance of corporate partnerships with SEs. Partnerships are crucial for an SE to grow. Successful partnerships have the potential to make more funds available, open up new markets, impart new skills and scale up the activities manifold. SEs can aim for cross sectoral partnerships from corporate, government and NGOs to maximize their impact. These views ratify Samhita’s intentions behind establishing the CSR Marketplace.
The New Companies Act will see a large inflow of funds for social development via CSR projects. Representatives of the SEs on the panel also shared that it is difficult to get a corporate partnership. CSR is a medium through which the corporate can create meaningful partnerships with SEs by funding new innovations, imparting sectoral and managerial skills and creating employee volunteering opportunities.
Session 4: Promoting Social Innovations
The panel consisting of Pooja Warier, Co-founder and Director, UnLtd. India, Nilima Achwal, Head, Seed Program, Villgro and Shalabh Sahai, Co-founder and Director, iVolunteer emphasised the need for companies to support incubators through their CSR arm so that highly innovative SEs can be supported. The moderator Nikhil Pant, Chief Programme Executive, NFCSR outlined the section 135 of the Companies Act and its implications.
The event reinforced Samhita’s findings and conclusions around prerequisites for meaningful and long term partnerships between corporate and SEs.
- As demonstrated by various case studies (read them here), to foster partnership with corporate; SEs must be more accountable, impact oriented and responsible.
- SEs need to have strong operating systems and impact measurement systems in place. Writing an effective proposal in projectivized and rupee measurable mode is of utmost importance.
- The proposal should reflect a strong business case for the corporate. It is appealing for a corporate to have an SE as a partner that is focused on impact creation and at the same time understands the commercial prerequisites of ‘business’ very well. There is a higher chance of such an SE to become profitable and sustainable.
- Corporate prefer investing in projects which are more likely to become profitable over a short period of time
- Continuous innovation and adapting sector-specific best practices result in keeping the partnership alive for a longer duration
The event was a great opportunity for all the participants to understand the fundamentals of social entrepreneurship, potential challenges and risks, best practices to maximize the impact and importance of cross sectoral partnerships. The roundtable highlighted ways in which companies can support social business through their CSR arm. The event also served as a networking platform for the representatives of corporate, SEs and NGOs.
There is more need for such events nationwide to foster productive conversations between the different players and lay norms for future partnerships between companies and social enterprises. We appreciate the effort and commitment of IICA and NMIMS Centre for Distance Learning in this direction.
You can read the full report on the session here. (prepared by the Jasani Centre for Social Entrepreneurship & Sustainability Management, School of Business Management, NMIMS, Mumbai)