Indian corporates have upped their corporate social responsibility (CSR) spending, which has seen a 14 per cent rise over the last two fiscals, despite a moderate growth in net profits, says a survey.
The finds were based on an analysis of 1,186 eligible and listed companies by CRISIL Foundation.
“Over the past two fiscals, the amount spent on corporate social responsibility (CSR) has surged at a compound annual growth rate of 14 per cent, despite a lukewarm 5 per cent growth in net profit,” the survey showed.
It said more number of corporates are using non-government organisations (NGOs) as implementing agencies for CSR spending.
“As many as 74 per cent of the eligible companies, including two-thirds of the small ones, used implementing agencies (NGOs) last fiscal when spending on CSR,” it said.
The survey, however, indicated that almost two-thirds of the respondents had less than five dedicated personnel for CSR activities, indicating companies have underinvested in building their own capacity to provide strong oversight.
It said the stipulation that overhead costs cannot exceed 5 per cent of the total CSR spend could be one of the key drivers for companies dedicating a small team for CSR.
“An increase in the limit can ensure a more direct involvement of companies by helping them build bigger teams for CSR. Also, as the use of implementing agencies is inevitable for execution, steps can be taken to promote benchmarking of NGOs to gauge their execution capability and usher in standardisation,” CRISIL Foundation’s President Ramraj Pai said.