Go CSR Way to Foster Entrepreneurship
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Every country in the world is trying to promote entrepreneurship by various means including Corporate Social Responsibility (CSR). However, it is important to understand how companies can join the effort to promote entrepreneurship effectively.
In India, the CSR law puts your money in profits and non-profit projects. None of these strategies are good for supporting entrepreneurship because both these projects are not sustainable in enterprises which exist for a long time. So when you require investments to be in a project, you are thinking about it in an unsustainable way because projects get over after a certain time.
It doesn’t mean that some amount should not go to non-profit but when you make that separation, you prevent the competition that has to happen to reach sustainability. You have to compare sustainable for-profit approach with others and pick the one that solves the problem most sustainably. This would be the most important aspect that businesses, business schools and business leaders could consider.
Partnering With Scalable Enterprises
To find the right approach, we need to partner with enterprises that are already scaling. There are social enterprises that are for-profit or hybrid, doing fabulous work that could be brought forward as examples of where a part of the CSR money should go.
They are not projects, they are ongoing efforts that are designed to be sustainable. India needs minimum 200 million toilets and that’s not going to happen unless you have multiple organizations like non-profit Financial Inclusion Improves Sanitation and Health (FINISH) society that works for promoting sustainable and equitable development of sanitation, hygiene and waste management sector in India.
India’s Clean India campaign is more heavily focused on toilet provision than on the system to gather that waste, process it and turn it into sustainable fertilizer and energy. And that needs to be a for-profit business that cannot scale as a non-profit business.
So if we look at India’s biggest goal, that is the CSR, the non-profit approach mitigates funding the most under-funded part of that goal, and this is not a good idea.
This is one of the examples of important policy issues that when I hear that it will take five years to change, I think it’s too long.
Dedicating Funds to Social Models
India is much more aspirational in terms of entrepreneurship from other countries. There is much more of an inclination towards becoming socially impactful even among regular entrepreneurs in India. If India wants to have an increased impact of newly launched startup fund under the Startup India program, it has to dedicate it to social models to replace unsustainable models.
Some of the great examples of such models are companies like Ekal Vidyalaya Foundation, a non-profit working towards education and village development in 60,000 villages across India.
They maintain the position that assets need to be locally managed so they provide the training and knowledge to the local people to do that. They have a donor-driven model where they have 54,000 donors in the US and Europe who generate over €10 million a year and they get phenomenal sustainability impact out of that.
(This article first appeared in the Indian edition of Entrepreneur magazine (March 2016 Issue).