CSR

From Compliance to Conscience —Why CSR in India Needs to Reclaim Its Original Soul

• ByStartupStory     |    July 11, 2025

When Corporate Social Responsibility (CSR) was enshrined into law under the Companies Act, 2013, it was nothing short of a revolutionary step. For the first time in the world, a country had dared to formally ask its private sector to think beyond profits. The 2% mandate was not just a legal clause; it was a call to reimagine the relationship between capital and community.

CSR was meant to be a bridge – connecting boardrooms with grassroots, businesses with Bharat. But over a decade later, one can’t help but wonder: has CSR lost its soul?

CSR: From Vision to a Checklist

CSR was always supposed to be strategic – a commitment to inclusive growth, a way for enterprises to consciously co-create a better future. It was never meant to be a philanthropic afterthought or a hurried December donation spree. Yet today, what was once a moral compass has been reduced to a compliance checklist. Instead of being anchored in vision, much of today’s CSR is driven by regulatory urgency and year-end obligation.

Increasingly, CSR is being handled by compliance departments rather than those driven by a passion for social change. Visionaries have been replaced by accountants, and the drive to create genuine impact is often lost. Annual targets and boardroom pressures push companies to invest in short-term, visible projects that offer quick wins and photo-ops – not in long-term systemic change. Partnerships with NGOs, once envisioned as collaborative, have often turned transactional. Many civil society organizations are treated like vendors, contracted to deliver deliverables rather than shape solutions.

Outputs Over Outcomes: Where Did the Depth Go?

Even reporting has become more about outputs than outcomes. Beneficiary numbers dominate, while deeper questions – like what changed in people’s lives – are rarely asked. Add to this the recent policy changes like mandatory transfer of unspent CSR funds to government accounts, and many companies now find themselves more constrained, operating from a place of fear rather than freedom. CSR, in its current avatar, often lacks conviction. Somewhere along the way, the sector has chosen convenience over courage.

CSR-Washing and the Irony of Philanthropic Capitalism

Let’s also confront the rise of what can only be called CSR-washing. A closer examination of corporate strategies reveals a growing irony. Many companies now channel their entire CSR budget into their own foundations. “Community impact” initiatives are tightly controlled within their corporate ecosystem, complete with branding guidelines, internal audits, and pre-packaged narratives. The idea of real engagement with communities often takes a backseat to visibility and internal alignment.

And then there’s a trend that borders on satire: companies investing CSR money into startups under the pretense of social good – and taking equity in return. Yes, CSR money, meant for nation-building and inclusive development, is being used to fund startups, often aligned with the corporate’s own business interests. The result? Companies gain business returns from what’s officially declared as philanthropy. One could almost admire the innovation – if it weren’t such a blatant diversion from the spirit of CSR. So, let’s recap: take funds meant for charity, invest in a startup, take shares in return, and call it CSR. Ingenious? Perhaps. Ethical? Debatable. Aligned with the original purpose of CSR? Certainly not.

CSR’s Original Calling: Tackling Hard Problems

At its core, CSR was meant to tackle the hardest problems – the ones that require patience, persistence, and deep engagement. These include transforming education in rural and tribal areas, creating sustainable livelihoods in underserved regions, investing in public health infrastructure where access is still a challenge, protecting cultural and ecological heritage, reclaiming forests, nurturing biodiversity, and strengthening governance at the grassroots. These are not glamorous endeavors. They do not offer quick publicity or high ROI. But they are crucial to building a just, inclusive, and sustainable India. Unfortunately, very few CSR portfolios reflect this depth of commitment today.

A Government-Led Course Correction?

Perhaps it’s time to ask a bigger question: should the government rethink how CSR funds are spent? One radical, yet necessary step, could be to mandate that at least 50% of all CSR funds be allocated to registered and verified NGOs across the country. These NGOs, many of which have been working in challenging terrains for decades, hold critical contextual knowledge and community trust. Redirecting half of the national CSR budget to such organizations would decentralize impact, break corporate monopolies over fund utilization, and create space for authentic, grounded change. The remaining 50% could still be used by companies as they deem fit – including through their own foundations – but with greater transparency and oversight. Such a shift would not only democratize CSR but also restore its credibility.

The Need for a Collective Shift

This is not about assigning blame. It’s about introspection. We know there are many CSR professionals who care deeply and work tirelessly. We know of NGOs that continue to uphold values even when resources are scarce. And we know there are policymakers who believe in inclusive development. But to bring CSR back to life, we need a collective shift – from outputs to outcomes, from visibility to vision, from fear to freedom. CSR cannot remain a box to tick. It must become a bridge – a bridge between corporations and communities, between profit and purpose, between what is and what could be.

Restoring the Soul of CSR

Bringing the soul back into CSR will require a fundamental change in how we engage with development. It means co-creating solutions with NGOs instead of simply contracting them. It means investing in systems, not just treating symptoms. It means moving beyond transactional metrics and embracing frameworks like Social Return on Investment (SROI) to measure real, lasting transformation. It means listening to communities and giving them a say in shaping the projects that impact them. It means celebrating progress even when it’s slow – because not all impact can be measured in quarterly reports.

CSR, at its best, is a shared responsibility. It’s not just about spending money; it’s about standing for something bigger than your brand. It’s about playing your part in shaping a better future for all. It’s time to move from the “Corporate” in CSR to the “Social.” To see it not as a rebate, but as a responsibility.

A Final Word: Can We Reclaim the Soul of CSR?

So here’s our question to the ecosystem: can we bring the soul back into CSR?

The Foundation for Health and Learning Empowerment (FHLE) is committed to this cause. FHLE works at the intersection of health, education, livelihood, and humanitarian relief, with a vision to create equitable systems and empower underserved communities. Last year, we conducted comprehensive health camps across 20 districts in Uttar Pradesh and Uttarakhand, with generous support from Aaviskar Foundation and Aarohan Financials Ltd. In just two months of on-ground execution, we reached over 4,500 individuals – offering free medical check-ups, health awareness sessions, and essential treatments. The outcome? Tangible improvements in community health indicators, early detection of chronic illnesses, and enhanced awareness about preventive care. More importantly, it built trust and local partnerships that can be scaled for sustained impact. We invite like-minded partners – corporates, governments, civil society, and communities – to join us in making CSR meaningful again. Because in the end, true responsibility is not what you spend. It’s what you stand for.

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