Two years after the law passed more corporate money is getting to charities but critics point to low ambitions and evasion
India is the first country in the world to enshrine corporate giving into law. Following a change in company law in April 2014, businesses with annual revenues of more than 10bn rupees (£105m) must give away 2% of their net profit to charity. Areas they can invest this money in include education, poverty, gender equality and hunger.
At the time India’s policy-makers said the law would release much-needed funds for social development, while critics warned of a tick-box mentality and efforts at evasion.
Some say the change in law is also waking up corporate India to its wider social responsibilities. “The so-called 2% law has brought CSR [corporate social responsibility] from the fringes to the boardroom,” argues Bimal Arora, chair of the Delhi-based Centre for Responsible Business. “Companies now have to think seriously about the resources, timelines and strategies needed to meet their legal obligations.”
Yet fears that companies would find ways of avoiding shelling out for good causes appear equally well-founded. A survey by accountancy firm KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% last year. A smaller proportion has gone further, according to an Economic Times investigation, allegedly cheating the system by giving donations to charitable foundations that then return the monies minus a commission.