Indian law requires companies to give 2% of profits to charity. Is it working?

India boasts a handful of family-led conglomerates with a long tradition of philanthropy. “Charitable giving used to be a big reputation builder for us,” says a sustainability director in one such firm, “now it’s just about legal compliance”. In a number of cases, he adds, companies that were giving more than 2% have scaled back their charitable spend.

Those who believe CSR needs to be embedded through the whole business, not just philanthropy, argue that companies must go further. “The focus is now on how much money you give to what cause and the whole question of how you make that money is totally ignored” says Ruchira Gujral, Unicef’s corporate engagement specialist.

This business rationale to corporate responsibility is now at risk of being lost, argues Vikas Goswami, head of Godrej Industries’ sustainability programme. “For most organisations, the discussion at board level is now not about what we do, but does it count as CSR and does it meet the legal requirements,” she says.

Opinions in the voluntary sector are also split. A major point of disquiet is who gets what. While more corporate cash is now swilling about, it’s not spread evenly across among charities, with large charities getting the lion’s share.

“One of the challenges for the corporate sector is finding credible partners and good projects that they can support. So what’s happening is that the bigger charities that are more well known are being flooded with money,” says Gujral. Compounding the problem is that smaller charities often lack the capacity to cope with companies’ bureaucratic and operational demands.