Impact Assessment in India- All Common Questions Answered
The Ministry of Corporate Affairs, on January 22nd, 2021, issued amended Corporate Social Responsibility Rules with evidently increased emphasis on impact assessment. Impact assessment has been largely focused upon for several reasons, which we will discuss as we go about the commonly asked questions about impact assessment. But before, here is what an impact assessment assures for your business:
- Makes the CSR projects transparent and easily manageable,
- Instills trust in stakeholders and makes them accountable,
- Drives emphasis on minimizing negative outcomes,
- Results in either reduction or best utilization of costs.
Additionally, your organization of repute continues to take pride in the positive impacts that your CSR program has made to happen. At Goodera, we have extended our services to 100’s of corporate clients who owe to our understanding of maximizing the impact of CSR projects.
What is the purpose behind conducting an Impact Assessment?
Impact assessment assures that the CSR projects being undertaken by a company have projected measurable outcomes. It tells if the objectives set were actually met. Optimal usage of CSR expenditure is another motive of companies that conduct IAs. Moreover, it has led to companies building stronger CSR programs as now they are bound to evaluate the projects they undertake.
Is it mandatory to conduct an Impact Assessment?
As per the recent amendment in January 2021, companies with an average CSR expenditure equal to or more than Rs. 10 Cr in the last three financial years are mandatory to take an impact assessment for their CSR projects.
Who can conduct an Impact Assessment for my company?
Companies are required to hire independent agencies to conduct these impact assessments for them. Self-assessment is not an option.
What should be the budget of an Impact Assessment?
At maximum, companies can either spend 5% of their CSR expenditure or INR 50 lakh on impact assessment. They have to go with whichever amount comes out to be lesser.
When exactly must companies conduct an Impact Assessment?
An impact assessment needs to be undertaken within a year after the completion of the project. For instance, if your CSR project was completed in April 2020, you have time till May 2021 to conduct an impact assessment for the same.
When to conduct an Impact Assessment for multi-year projects?
For multi-year projects, impact assessment can be undertaken after the completion of the project or program. This implies that if a multi-year project is of 3 years, the first impact assessment will be undertaken after 3 years. Further, as a follow-up, the 2nd assessment needs to be undertaken a year after the completion of the program.
Is it mandatory to conduct impact assessment prior to completion of one year?
You must conduct an impact assessment after one year completion of the project. However, in the case of an on-going project of three years, the assessment needs to be conducted only on completion of three years. However, if programs are upscaled or renewed after each financial year, a separate IA needs to be carried out every year as they are considered as individual single year programmes.
What is the main focus of Social Impact Assessment?
Social impact assessment comprises processes that analyze, monitor, and manage the social impact of a CSR project, which may include the impact on people, communities, culture, political systems, rights, demographic, economic, touristic impacts, and more. Grossly describing projects that in some way impact the way people live are obliged to conduct social impact assessments.
Is Impact Assessment enough to evaluate CSR projects?
Many companies have made it an element of their CSR project’s lifecycle to conduct regular evaluations. From determining the baseline of the project to its completion, companies are conducting these evaluations or assessments. There are a plethora of methods that can lead to an effective impact assessment, but as we always say, there’s no one-size-fits-all when it comes to choosing your IA approach. The agencies you hire to do the job for you make sure they make the most of their expertise. Out of a large variety of assessment frameworks, the one that suits your project will depend on various factors. Just to name a few, we have the size of your CSR program, project type, duration, factors affecting change, and the number of stakeholders involved.
Will the cost for agencies be counted as part of the INR 50 lakh or 5% limit ?
As per the amended rules, the expenses related to ‘general management and administration’ of Corporate Social Responsibility functions in the company come under the Administrative overheads. However, the expenses for the designing, implementation, monitoring, and evaluation of CSR projects will not be included. Hence, the cost for agencies is neither part of the INR 50 lakh cap, nor the 5% cap on Admin expenditure
What is Goodera’s process of ensuring the best Impact Assessment practices for you?
Goodera undertakes qualitative and quantitative Impact Assessments for social impact projects. As part of the program assessment, we evaluate the intended and unintended consequences for program stakeholders and beneficiaries through a participatory approach. We do this by interacting with stakeholders through surveys, key informant interviews, focus group discussions, and transect walk. Our intent here is to understand the equity in access to services in a given geography. This approach has especially turned out to be excellent for village or panchayat level programs amongst others.
Through our participatory approach, we create case studies of beneficiary and program team experience of project services. We focus on understanding the beneficiary life cycle and interaction with program services to understand if they have had a successful exit from the program. This can be by being empowered with better healthcare, employment opportunities, or improvement in education and income levels that enhance their standard of living.
Our Impact Assessments help our clients in reviewing options for replication of program services to new geographies or even opportunities for scaling in the same location. Partnerships for long-term sustainability and achieving a sustainable exit are also explored. We specialize in innovation as a tool of massive transformation.
To know more about how you can make use of our expertise, contact us!