Home Editorials New Charter for CSR Funds

New Charter for CSR Funds


With the total budget of CSR funds touching Rs 30,000 crores per annum, and a similar amount in philanthropic outlays by the corporate sector and High Net -worth Individuals (HNIs), the recent steps taken by SEBI and the NSE to promote and propagate a social stock exchange is an idea whose had come.

Although it was announced two years ago in the Union Budget of 2019-2020, it is only now that the operational guidelines with regard to the eligibility of organizations to be listed on the stock exchange have been issued. Like other ‘exchanges’ which act as a bridge between the investors who want returns on capital, and entrepreneurs who seek access to it for launching new products, services, or expanding the existing fasciitis, the Social Stock Exchange will offer a platform to socially conscious individuals and investors who wish to invest in a particular kind of stock, or even stocks or enterprises which do not have returns on capital as the primary objective.

The assumption that capital only seeks to perpetuate itself has been called into question from the times of Adam Smith when he talked of the natural propensity of the human species to engage in ‘truck, exchange or barter’. While a majority of those who possess capital may want to utilise it for their private gain, or their children, scriptural and social nudge for charity s also part of the social eco system.  From the tenets of Guru Nanak who said Kirat Karo, Nam Japo, Wand Chako (do your work, remember the name of the Lord and share  the fruits of your labour) to the Papal injunctions of giving to the Church its legitimate share in the earnings most denominational faiths have asked the followers to ensure that art of their earnings are put to an altruistic use.

Before the advent of urbanisation and migration, most people stayed in the near vicinity of where they were born, and they could easily identify causes and institutions to which these donations could be made. Usually they were made to fund the local temple, mosque, church or Gurdwara, a Dharamshala, or a hospital.

However as the volume of funds available grows as also  the range of causes where these can be deployed – from the preservation of languages to care for the elderly, cleaning of rivers, supporting innovations in agriculture  – there was a need to offer a platform that allows investors to put their capital in select social enterprises or social initiatives. The success of these social enterprises has to be clearly measurable, and the investors can seek answers on the impact which their investment has made – whether in terms of school enrolment or growth in incomes of marginal and small farmers. This will ensure that investment in social cause will be under public scrutiny as indeed it should be and also usher transparency, competition and fairplay in the sector.