Deepti Meena
Research Scholar, Amity University, Jaipur
Abstract:
The outbreak of Coronavirus disease 2019 (COVID-19) has created a global crisis and its impact are devasting. The Government of India has taken some steps but it was far more difficult for them to reach hundreds of populations as India is very vast. During this blind spot, Non-Governmental Organisations (NGOs) played a distinct role in helping out at large. This trade-off created a win-win scenario as by allowing funds spent on COVID-19 relief work free them from CSR obligation, as it was the statutory requirement under the Companies Act, 2013 and at the same time, they helped the government by raising Crores of funding. A very considerable portion of this funding came from CSR funds that would in the normal circumstances go to NGOs. This article will review the impact of COVID-19 on NGOs with the special purview of the General Circular No. 10/2020 vide dated 23rd March 2020 by the Ministry of Corporate Affairs regarding Corporate Social Responsibility (CSR) expenditure.
The Effects of COVID-19 on NGOs:
The Human spirit proceeds unflinchingly in times of a storm. When a crisis hits, the strength and unity of humanity determine the solution. The nationwide lockdown has critically dislocated our migrant population. While the central government has taken some steps but it was far more difficult for them to reach hundreds of slums and Economically Weaker Sections (EWS) as the population is very vast. During this blind spot, non-governmental organisations (NGOs) played a distinct role in reaching and helping out in every possible way they can, from distributing dry rations to providing cooked meals. They played an extraordinary role. NGOs have been supporting our weaker section of society since time immemorial and at the same time helping address issues that are difficult to tackle.
On June 09, 2020, the Supreme Court said, “Though it is the responsibility of government to take care of migrant workers, the contribution and role played by Non-Governmental Organisations (NGOs) deserves all appreciation for coming forward to help them by providing food, water and transport during the difficult time of COVID-19 pandemic”, the bench comprising of Justices Ashok Bhushan, S K Kaul and M R Shah further added “Non-governmental organisations coming forward to help the migrant workers and to fight the pandemic and extend help by providing food, water and transportation at their cost which deserves all appreciation.”
In the present crisis when they need more support and funding, they are facing difficulties as a very large amount of their funding comes from corporates sector. In the year 2014, the government declared that it is mandatory for large corporates to spend some part of their profits for social welfare activities and it is regulated by Section 135 of the Companies Act, 2013.
Corporate Social Responsibility:
As per this section, there is a specific criterion i.e. a company, whose net worth is at least five hundred crore rupees with a turnover of one thousand crore rupees or more, or has a minimum net profit of five crore rupees during the immediately preceding financial year has to spend two per cent of their profits in Corporate Social Responsibility expenditure. The Corporate Social Responsibility (hereinafter referred to as CSR) funds were estimated approximately thirteen thousand crores[1] rupees in the financial year of 2017-18. With the amendments over the years, the role of the CSR has been improvised, as from “inspiring” the corporate sector for the benefit of public at large, to “punishing” them in case they don’t.
Recently, the Ministry of Corporate Affairs vide its General Circular No. 10/2020 dated 23rd March 2020 in the present light of the event allowed the corporate sector to spend their corporate social responsibility funds to fight this notified disaster i.e. Covid-19 pandemic.[2] “Spending of CSR funds for Covid-19 is eligible CSR activity,” as per the order.
“In view of the spread of novel coronavirus in India, its declaration as a pandemic by the WHO, and the decision of Government of India to treat this as a notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity,” said the Finance Minister Nirmala Sitharaman.
The initiative was appreciated and welcome by Corporate sector, and abiding by the announcement they donated likewise. This trade-off created a win-win scenario as by allowing funds spent on COVID-19 relief work free them from CSR obligation, as it was the statutory requirement under the Companies Act, 2013 and at the same time they helped the government by raising Crores of funding.
Consultancy Corporate Professionals Group Founder Pavan Kumar Vijay said, “For the purpose, it is suggested that the government may immediately create a portal on which specific requirements by way of equipment, medicines, etc may be posted and the corporates may be permitted to contribute in cash or kind towards those specific requirements. This will ensure coordinated efforts and avoid duplication,”
Further, the Ministry of Corporate Affairs said, “Funds may be spent for various activities related to COVID-19 relating to the promotion of healthcare, including preventive health care and sanitation and disaster management.”
A very considerable portion of this funding came from CSR funds that would in the normal circumstances go to NGOs. This will instinctively have an impact on NGOs. “Our calculations suggest that funding for traditional CSR activities – which are not linked with COVID-19 – in this fiscal year will reduce by 30 % to 60%.[3]” This will be a challenge to the NGOs because for helping people, funds are required and they can’t run away from the organisation which was solely created for the purpose of humanity, protection and help especially in these tough times. The further extension of support will be minimal if there is some in future with a lacuna. As the funds are prioritized for the NGOs on the basis of activities related to COVID-19 i.e. NGOs who are focusing on sending migrants homes may get money over those focusing on improving primary education.
There are various other important causes e.g. education, development, human rights, etc that has been supported by CSR funder over the past years and even worked hard to uplift the sectors. In future when these NGOs will need their CSR funders more than ever but they won’t be able to help them as their funds will be limited.
All the NGOs are working out of their comfort zone and doing their best even with the challenges of funding and risk of health amidst this pandemic to offer whatever help they can within their spheres. These organisations are putting heart and soul into what they are doing that even the Supreme Court can’t stop but appreciate their all-out efforts. The High Court, Apex Court, all paid their immense gratitude to the NGOs for helping in these difficult and harsh times. And these humane organisations, the NGOs are ready, prepared and confident to continue their missions and noble ideals amidst the challenges to serve the society in these times of a global pandemic.
Conclusion:
As Corporate Social Responsibility (CSR) is now a familiar term supporting the common social good across globally. While the current crisis is unlike anything we’ve seen before there is literally a devastating influence because of this epidemic.
For NGOs, it will be important now to find a new solution to make it through this fiscal year and beyond. Their approach may include associating their work to the COVID-19 framework so that there is a swift window through which their CSR funders may fund them, sustaining funds or cutting their costs so that they can at least maintain ground capabilities.
Therefore, to enables NGOs to work properly there is a requirement of collaboration between three sectors – organizations, government, and corporates. There are various ways in which CSR funders can still support their Long-term NGO Partners by reducing funding, working alongside with the NGOs to figure out a ground proportion and lastly by providing targeted financial support.
REFERENCES:
[1] www.csr.gov.in/index19.php
[3] Ashish Karamchandani And Sujata Rathi, “With CSR Funds Going to COVID-19, NGOs Are Looking at Steep Reduction in Corporate Support” The Wire, May 09, 2020 available at: https://thewire.in/government/csr-covid-19-ngos
