CSR impact assessment is now mandatory: Here’s all you need to know
Do you run CSR programs at your company?
If yes, then we’re sure you know about the new rules mandating impact assessment for certain CSR projects.
The Indian Ministry of Corporate Affairs updated the Companies Corporate Social Responsibility Rules earlier this year. The new CSR law amendments bring significant changes to the national CSR policy, including i) an increased focus on impact assessment, ii) decriminalization of offenses through alternate redressal mechanisms, and iii) new guidelines for the management of excess CSR funds.
The updated rules bring forth a slew of changes to how companies conduct their CSR programs – right from design and implementation to reporting of the CSR activities.
In this blog, we will talk specifically about impact assessment as an essential part of CSR programs and what it means for your business.
What does the CSR amendment 2021 say about impact assessment?
The CSR amendment has thrown a focus on the need for companies to define and measure the impact of their larger CSR programs. Here are the most important points you must know:
- Impact assessment is only mandatory for companies with CSR obligations of INR10 crore with projects of INR1 crore or more.
- Companies can set aside a maximum of 5% of the CSR spent or INR 50 Lakh – whichever is lesser – for impact assessment.
- Impact assessment needs to be done before the completion of one year since the end of the project. For example, if your CSR project was completed in April 2020, your impact assessment process for the same should begin in May 2021.
- The assessment report which will be produced at the end of the process will be annexed to the company’s annual report on CSR.
- The impact assessments must be undertaken by an independent agency.
As you can see, the amendments on impact assessment have added strict responsibilities on companies to ensure that they strategize, execute, and assess their CSR programs more effectively.
How will impact assessment benefit your CSR programs?
Despite its multifaceted benefits, many organizations have been slow to measure the impact and performance of their large-scale CSR projects. Partly, it is because it takes a concerted effort from multiple stakeholders and a lot of time to come to fruition.
It cannot be argued that the primary intent behind the introduction of these rules is to increase accountability from all parties involved. However, the benefit of impact assessment is not contained to only that. Impact assessment can help you build stronger CSR programs, as it:
- Serves as a medium through which organizations can communicate to their primary stakeholders about the CSR activities’ benefits.
- Gives better insight into the outcomes and provides organizations the knowledge they need to align and integrate CSR assessment frameworks in their operations.
- Improves dialogue and transparency between the primary stakeholders on CSR-supported contributions to philanthropic goals.
- Gives an enhanced understanding of how public policy and CSR impact can go hand-in-hand.
Following the amendment, impact assessment has now become an essential component of many development initiatives undertaken by companies, foundations, social enterprises, and NGOs.
Challenges to a successful impact assessment exercise
Before starting your impact assessment program, you must define what impact means for your CSR programs, in the context of your business.
With programs lasting between a month to several years, the definition of impact for various stakeholders can be varied and sometimes misleading.
For example, you might have two large-budget CSR projects – one that involves a nutrition program for underprivileged children and another that involves developing a tribal community. The KPIs/metrics used to measure the impact of these two activities will be vastly different. There will also be multi-level stakeholders involved, who will need to be accurately mapped to the process.
While the larger process will more or less be the same (research, sampling, designing, and reporting/analysis), the methodology adopted to study each project will vary.
This can be confusing.
But not with an expert helping hand.
Goodera’s Impact Assessment framework
Over the last 5 years, Goodera has worked with 100s of corporate clients to automate their CSR lifecycle and maximize the impact of their CSR programs. This has given us insights into how best the impact of different CSR programs can be measured and documented accurately.
Like we’ve mentioned before, there is no one-shoe-fits-all approach to impact assessment. The methodology you use to approach your CSR program will depend on the size of the program, the duration of the program, and the nature of the outreach.
Goodera offers a technology stack that enables impact assessments for businesses. Replete with access to the web and mobile application, the offering also enables:
- Integration of IVRS (Integrated Voice Response System) with a company’s CSR portal to undertake detailed impact assessment,
- In-depth beneficiary profiling,
- Detailed project insights, and
- Visualization of impact.
Moreover, we have a documented framework that divides all CSR projects into four buckets, based on their size and reach. Depending on the bucket they are in, we apply a unique methodology to effectively assess the impact of each project.
Get in touch with us
At Goodera, we’re already helping our clients design unique impact assessment frameworks for their CSR projects. We can guide your ability to scale, replicate and significantly improve the efficacy and efficiency of your funds through our framework and data analysis expertise.
From our capacity to seamlessly engage with multiple stakeholders, our pan-India presence, our knowledge of different research methods, and the accuracy of our technology platform, we can ensure that you have a seamless impact assessment experience.
Talk to us to see how Goodera can help you start assessing the impact of your CSR programs.