Presentation by RN Mital. CSR for Elderly. Problems faced by NGOs. Creating awareness among CSR mandated companies.

1. CORPORATE SOCIAL RESPONSIBILITY
(CSR)
FOR THE ELDERLY,
its SUCCESS & CHALLENGES
By
R. N. Mital

2. CORPORATE SOCIAL RESPONSIBILITY
 CSR is not a new concept. Tatas, Aditya Birla Group, TVS
Group, GMR and many other business Houses have been
spending generously for the welfare of society.
 In Dec. 2009 MCA issued an advisory to all Public Sector
Enterprises to support CSR which was followed by an
appeal on 8th July 2011 to all Corporate Houses to spend
at least 2% of their average net profit for social causes.
The contribution was voluntary.
 From 1st April 2014 contribution to CSR has been made
mandatory. All Companies having minimum revenue of
Rs 1000 crores or net worth of 500 crores or a net profit of
5 crores or more in a year have to spend at least 2% of
their average net profit for the last 3 years on CSR
activities. Section 135 was included in Companies Act
defining rules and scope of this provision.

3. MILESTONES IN CSR
Companies Bill
Approved by Lok
Sabha
18th Dec.2012
Companies Bill 2013
Approved by Rajya
Sabha
08 August, 2013
MCA advisory
On CSR in
December 2009
Elder Issues included
In Section 135 thru.
MCA notification dtd
22 Feb, 2014

4. SECTION 135 of COMPANIES ACT 2013
 Section 135 in Companies Act includes schedule VII
which defines the social issues which qualify as activities
under CSR and the rules for their implementation. It has
been very clearly laid down that activities undertaken in
pursuance of normal course of business of the Company
or those which benefit only the employees or their families
shall not be considered as CSR activities.
 Any contribution to a political party or expenditure outside
India shall not be regarded as CSR activity.
 Only activities which benefit the issues specified in
schedule VII in project/programme mode will qualify as
CSR activity. One time activity also will not fall under the
purview of CSR.

5. SECTION 135 of COMPANIES ACT 2013 cont
 It is presumed that the Companies shall give preference to
the local area around where it operates for spending the
amount earmarked for CSR activities.
 The CSR activity can be carried out through 1] its own
Dept. set up for this purpose, 2] a registered trust, 3] a
registered society/NGO 4] a Section 8 Company.
 If a Company contravenes the provisions of this section, it
will be punishable with a minimum fine of 50K extendable
to 25 lakh rupees and every officer of the Company who is
in default with imprisonment for up to 3 years or fine
extendable up to 5 lakh rupees or with both. This clause
however may not be applied during the initial years.

6. ROLE OF THE BOARD OF DIRECTORS
UNDER SECTION 135
Board of Directors
Formulate CSR Committee and approve the
recommended policy & declare it.
Ensure implementation of the CSR Policy
Ensure spend of minimum 2% of average net
Profit of last 3 years
Explain reasons for not spending under clause
(o) Of sub-section 3 of Section 134

7. ROLE OF CSR COMMITTEE
CSR Committee consisting of at least 3
Directors with minimum one independent
Formulate & recommend a CSR
P0lcy to the Board
Recommend activities &
Expenditure to be incurred
Monitor the implementation of the
CSR Policy

8.  To judge as to what we can expect from this concept
during years to come we have to look at its performance
in the past.
 Unfortunately its performance in the past presents rather
a gloomy picture. The top 100 Companies, including
PSU’s spent during last year only 1,765 crores on CSR
against the expected 5611 crores that is around 0.6% of
the net profit instead of 2%. Figures for 5 top Companies
are shown here below as an example,
COMPANY REVENUE PAT ACTUAL 2% of PAT
Indian Oil Corp 442,458 7,783 83 158
Reliance Indust 368,571 21,138 288 423
Bharat Pet. Corp 223,315 1,438 8 29
Tata Motors 170,678 8,437 15 69
State Bank India 147,197 13,056 71 269

9. Sectoral Breakup
 Still worse is the fact that less than one hundredth of the total
spend on CSR was spent on issues concerning problems of
Elders as shown in the following sectoral breakup.

10. INDIFFERENCE TOWARDS
ISSUES of a FAST AGEING SOCIETY
 It is a general experience that both the Central
Government and the society are indifferent towards the
Age related issues. It is probably because of lack of
realization of the serious socio-economic problems which
will arise due to the major demographic shift taking place,
if remedial measures are not taken in time.
 The indifference is apparent from the fact that in the
Companies Act passed by Rajya Sabha in 2013 the age
related issues were not included even in schedule VII of
section 135, listing social causes which qualify for CSR
support. It was only through a campaign launched by us
and Help Age that on February 27, 2014 Age related
issues were included through an amendment which
unfortunately appears to be half hearted and does not
cover all concerns and issues of an ageing society.

11. AGE RELATED ISSUES NOW INCLUDED IN
SCHEDULE VII of SECTION 135
Elder Issues
Setting up of Old
Age Homes
Setting up of
Day Care Centres
Setting up of
Day Care Centres
1]Such other facilities
For Senior Citizens
2]Enhancing vocational
Skills of the Elderly

12. INDIFFERENCE (cont)
 The CSR departments of most Companies are not even
aware of the issues arising due to ageing society. They were
surprised when we told them that there are 12 crore senior
citizens in India 70% of them belong to BPL category & live
in villages, 37% of them are so poor that they can not afford
even two square meals a day.
They are the retirees from the unorganized sector of our
economy which contributes more than 62% of our GDP. They
are thus our real bread earners but they starve when they
become old.
 Many are too old, disabled, suffering with terminal diseases
often regarded as burden by their families and abandoned in
temples, hospitals or even on highways. We have to provide
shelters for them
 6% live alone or with their spouse. Loneliness causes
depression which is source of various health problems. We
need Day Care Centres equipped with basic facilities for
socializing, health care, physiotherapy etc.

13. INDIFFERENCE (cont)
 There is need for poor senior citizens of Nursing Homes,
Respite and Palliative Care Homes, Alzheimer’s re-habilitation
centres, mobile health care facilities etc.
 Issues arising out of Fast Ageing of Society can throw up
challenges which can prove to be disastrous if ignored. The
socio-economic burden due to depleting work force, increasing
burden of welfare expenses can hinder economic development
of society.
 Health care expenses will be a major burden. Take
Alzheimer’s for example. Its risk explodes from 1 in 8 at age
65 to 1 in 2 at 85. It cost in 2010 Globally 605 billion dollars.
You can imagine its cost to India with 80+ population
increasing at 500% from 2006 to 2050
 According to WEF the NCD’s alone are going to cost India
during next 2 decades more than USD 4.58 trillion which is
more than double our GDP.
 These are some random examples where CSR can play
important role.

14. PRESENT SCENARIO REGARDING CSR
 When CSR was made mandatory it was expected that
the 16000 Corporate Houses in our Country will be able
to contribute around 20,000 crores to social sector. It is
now being realised that it was a gross over estimate and
it may not exceed 5000 crores in the first year.
 The reasons for the shortfall appear to be,
-- No penalty at least during the initial period if the
mandate is not complied with hence many
Companies are adopting wait and watch policy,
-- Contribution to non project-specific general PM/CM
relief funds regarded CSR spend
-- Companies find it difficult to identify credible NGO’s
operating with same objectives as those of the
Company

15. PRESENT SCENARIO REGARDING CSR(cont)
 Moreover less than10% Corporate Houses are really
interested in participating in CSR programmes because,
-- many are in a fix to decide which social cause to support,
-- or they are just not interested in any activity other than their
normal activity,
-- information gap.
 Likewise NGO’s find it difficult,
-- to showcase their credibility and ability in a particular field
-- to identify the Corporate House in their area having same
objectives
-- most of the Corporate Houses prefer to undertake CSR
activity in an area where their major operations or head
office is located.

16. PRESENT SCENARIO REGARDING CSR(cont)
 Moreover some NGO’s find it difficult to prepare
Project and Progress Reports in the format
required by the Company.
 According to a study there is a very large number
of NGO’s registered in our Country being more
than 30lakhs, the largest number is in
Maharashtra, next is in Andhra
Pradesh (undivided) being more than 3lakhs.
Despite such a large number of NGO’s operating
in social sector both NGO’s and Companies find it
difficult to find suitable partners.

17. PROBLEMS IN INITIATING CSR ACTIVITY
By Corporate Houses
1]Difficult to find trustworthy
NGO which can carry out the
Project efficiently & submit
prog-ress
reports etc. in right format.
2] Choosing thru Tender/Bid
cumbersome.
3]Cause & area restrictions
4]Sustainability of Project
5] Financial restrictions
By NGO’s
1] Locating right Donor a problem
2] Cause & area restriction.
3] Submitting reports in proper
format a problem
4] Long time for approval
5] Delayed release of funds
6] Some Donors support only
capital costs

18. PROBLEMS IN INITIATING CSR ACTIVITY
(Cont)
 Considering that in a year or two CSR is going to be a major socio-economic
activity with 16000 Companies and equally large number
of NGO’s operating we will require a well knit network of
professionals and devoted workers..
 The earlier tables show that at least for the Geriatric sector there
will be a need for
-- A sort of a Match Maker who is in touch both with the NGO’s
and the Donor Companies in the area and can put the right NGO in
touch with the right Company
-- Professional CSR executives both in tne Companies and as
private practitioners/consultants who can liaise between the NGO’s
and the Donors
 Probably similar set up will be required for other areas of CSR
activity..
 Fortunately as far as Ageing issues are concerned we have an All
India Organization namely Help Age which can be trusted as the
match maker. This suggestion needs further discussion and study.

19. PROBLEMS IN INITIATING CSR ACTIVITY
(Cont)
 To my mind provision of CSR opens a very lucrative possibility for
retired Senior Citizens having working experience in Corporate
Houses. With proper professional training they can look forward to a
rewarding second career both in Companies in their CSR
Departments and also as private consultants or advisors.
 One such on line course is offered by IICA extending over 36
weeks, only they charge a fee of one lakh which probably is too high
for most of the retired Senior Citizens looking for second career. We
should request IICA to make it free for the retired or at nominal
charge.

20. WHAT SHOULD WE DO?
 We have seen earlier that less than one hundredth of the total CSR
contribution was spent last year on Issues of the fast Ageing Society.
We have to make co-ordinated effort to ensure that this aberration is
corrected. There are a few suggestions.
 We should represent to the authorities that,
-- present situation where there is no penalty for not complying with
the mandate should be corrected,
-- credit to non project specific PM/CM general relief funds as
contribution to CSR is not desirable.
-- considering that ignoring issues of fast Ageing society can prove
disastrous & as awareness of these issues is very limited, spending
10% of CSR funds on Age related issues should be made
mandatory.
(already under consideration of GOI, Ref-Nov.22,2013, TNN)

21. WHAT SHOULD WE DO? (cont)
 Most of the Corporate. Houses concentrate their CSR
activities in and around their main centres of operation
which deprives major part of the Country of the benefits of
this concept. They should be asked to give more impor-tance
to district towns, talukas and villages.
 All senior citizens’ associations and NGO’s if they are
interested in taking advantage of CSR support, should get
themselves registered as a trust or society (if they are not)
and get recognition by the IT Department under section
12A preferably 80G.
If they are already engaged in philanthropic activities, they
should get themselves enrolled as a NGO with IICA or an
appropriate authority

22. WHAT SHOULD WE DO? (cont)
 Since the general awareness in the community and the
CSR teams of the Corporate Houses is very very poor, it
will be useful to meet the CSR officers of the Donor
Corporate Houses periodically and inform them of the
age related problems. Submit a memorandum giving
details about our concerns and problems even if you do
not have a project in mind.
 India is the only Country in the World which has made
contribution to CSR mandatory. If this concept is properly
handled, it can prove to be a very effective tool to
promote equitable and sustainable growth of the Country
specially its Social Sector.

23. Thank you