In January 2024, we had set forth 5 trends that we expected to see in the coming year. We now take a look to see how they held up.
Trend 1: Shifts in funding towards water and carbon
What we expected?
A move towards environmental investments. With the start of the carbon market and Niti Ayog’s guidelines for measuring water neutrality and offsets, India is poised to guide corporates on how to improve carbon and water neutrality and hopefully positivity.
Did it hold up this year?
Not really. This year presented a mixed bag of investments with Education and Livelihood taking quite a lead. With India’s demographic dividend behind on digital skills, employability, and other work-ready technical abilities, it became the top funded sector, a total 44% of CSR expenditure. This CSR area presented a win-win for sectors like manufacturing that were also able to train beneficiaries through internship programs on their shop floor. Health and Sanitation investments were second highest (29%) and Environment (10%) was third. However, the largest growth in investments were seen in encouraging sports (81%), preservation of heritage (78%), education (53%), gender equality (21%), and rural development (9.4%). Multiple gender equality programs also take into account education and livelihood for women. Health and Environment, although are still large areas of investment, have not seen a notable increase. Although this publicly available still lags behind by a year and these changes may appear in the next round of updated data. Education remains a high priority with high investment and high growth.
Research Insight: As ESG begins to take hold in India, this area of CSR investment (education, skilling, and livelihoods) could unlock hiring potential, especially when it comes to diversity hiring and representation of disadvantaged and minority populations. For further insight, look for our upcoming ESG Practices report in January 2025!
Table 1. Most Recently Published Data on CSR Expenditure (MCA)
| Area | 2021-22 (Amount in Cr.) | 2022-23 (Amount in Cr.) | Percent of Total CSR Spending | Percent Growth |
| Education, differently abled and livelihood | 8635 | 13209 | 44.4% | 53% |
| Health & Sanitation | 10196 | 8739 | 29.4% | -14% |
| Environment | 2908 | 2921 | 9.8% | 0% |
| Rural Development | 1832 | 2005 | 6.7% | 9% |
| Gender Equality | 737 | 893 | 3.0% | 21% |
| PMRF | 1214 | 815 | 2.7% | -33% |
| Encouraging Sports | 291 | 526 | 1.8% | 81% |
| Heritage | 248 | 441 | 1.5% | 78% |
| Any Other areas | 309 | 179 | 0.6% | -42% |
Trend 2: Diversification in CSR partnerships
What we expected?
With the 2022 amendments in the CSR Act mandating disclosure of CSR partnerships and disincentivizing singular longstanding CSR partnerships, many funders have started to explore smaller partners. This poses a challenge in vetting new partners and selecting ones that are able to address project and reporting needs.
Did it hold up this year?
Yes. This past year has seen a rise in collaborative CSR and social start ups and enterprises. India currently (2024) has the highest number of social enterprises globally, an estimated 2 million, followed by China and the United States. With the rise of social start-ups, along with existing NGOs, a new energy is brought to the social development space. One struggle for these startups and for many grassroots organizations is funding. Large CSR firms can utilize their funding with the know-how of these players to create collaborative and holistic solutions and CSR programs. Many social start-ups also train and learn from existing NGOs to develop solutions in the private sector space. This cross sector learning has created a wonderful opportunity for CSR to truly diversify their stakeholders. For example, the Nudge Foundation is a pioneer in skill development across the country. They currently work with over 50 partners including NGOs who implement their solutions on the ground, governments that work collaboratively to bring their programs into schools, ITIs, and other public programs, foundations that offer technical and financial assistance, private businesses that scale up their platform, and academic institutions that work on developing inclusive and forward thinking curriculum. Most of their philanthropic partnerships are with Tata Trusts and Mphasis and Maruti Suzuki collaborate to develop their own CSR program. However, this brings in a deep understanding of the digital skilling space through Mphasis and industry technical skilling and internship opportunities through Maruti Suzuki.
Research Insight: Diversification of partnerships now not only applies to CSR firms but also to NGOs and other social enterprises. There is now a space for valid “give and take relationships” especially as CSR programs start to blend with ESG to move forward the internal “Sustainability” initiative of the organization. Partnerships with auditing organizations, carbon, water measurement organizations, communities that could utilize watershed technologies or skilling programs are all examples of diverse partners. NGOs and social enterprises now should have methods in vetting their next partner.
Trend 3: Need for impact assessments and third party agencies
What we expected?
CSR law in India mandates impact assessments for projects exceeding Rs. 1 crore, ensuring a comprehensive evaluation of how these initiatives influence communities and yield tangible outcomes. Outcries of green washing and labeling CSR initiatives as publicity stunts has now resulted in more transparent reporting of initiatives and demand for reports and case studies to showcase impact. The Business Responsibility and Sustainability Reporting (BRSR) 2023 mandate in India (for the top 1,000 companies) was meant to push the needle in ESG reporting. However, this also influences the reporting of beneficiaries and impact for “social” programs, which more often than not fall under the gambit of CSR programs.
Did it hold up this year?
Absolutely! CSR spending grew by approximately 3,300 Cr from FY 22 to FY 23 with a higher number of projects and an increasing number of more complex CSR programs. There has been a requirement for agencies that are able to pick up nuances of the community and context and convert these intro quantitative and qualitative measurements, highlighting any indirect impacts that the program may have caused. There has also been a steady demand in assessment ToRs and RFPs requiring the measurement of SROI (Social Return on Investment) with companies Ambuja Cement Foundation, HDFC Bank, and Kotak Education Foundation wanting to measure SROI in long-term projects over a multitude of years,. Consulting and assessment organizations now need to be able to traverse through multiple methodologies, contexts, topics, industries, while meeting reporting guidelines. With the mandate of BRSR, consulting organizations are now also pivoting into the offering of assessments and reporting of both CSR programs while being mindful of BRSR reporting and other ESG implications and benefits that they can bring.
Research Insight: Our upcoming insight article on the transition from CSR departments to Sustainability departments uncovers how many organizations are trying to bridge CSR and ESG under a larger umbrella of Sustainability. Multiple expert interviews lead us to believe that the design, measurement, and reporting of programs will require more than just a mandate; this will now require internal stakeholder buy-in. A key step in achieving this is to design programs that align with both internal organizational vision and their beneficiary needs and report on it accordingly. SROI is one way of showcasing this, however new innovative approaches of measurement are in demand to ensure that sustainability is a key strategy for the organization rather than an afterthought.
Trend 4: Rise in data validity & assurance and the need for organizations that can manage this mandate
What we expected?
CSR Act Amendments in 2022, BRSR mandate of 2023, and the Data Protection Act of 2023 all put into momentum the need for data validity, assurance, and also data protections while still meeting reporting requirements
Did it hold up this year?
Data surrounding this is extremely scarce, especially in the social development sector. Current debates around data protection and privacy surround the use of behavioral data and is phrased as a market opportunity vs personal rights. This frames the topic in legalese and the market rather than the ethics and societal responsibility. Within the social development space, anecdotally it has been noted that CSR funders are asking for more transparency of data storage and handover techniques and are more stringent on the use and ownership of data through assessments. This has translated into an ad hoc requirement for data privacy policies for implementation and assessment agencies, although non-profits and NGOs tend to report difficulties with involving operational costs to have this process in-built and easily documented for transparency and traceability.
Research Insight: The need for balancing privacy and assurance opens up a new space for technology social enterprises to provide solutions for grassroots organizations. To read more about this balancing act and the next new opportunities, read our insight article on this topic!
Trend 5: Preparing for the unpredictability of technology
What we expected?
Technology, especially AI and ML, are being adopted and utilized at break-neck speed. The social development world is not immune to that. Robust indicators and assessment systems are crucial to gauge technology sustainability and align operations with sustainable development goals, enabling responsiveness to technological shifts and societal expectations. For example, as AI becomes more prevalent, upskilling and vocational training CSR programs will need to be able to quickly integrate this to ensure that their beneficiaries don’t receive training that doesn’t quite match industry requirements.
Did it hold up this year?
One hundred percent. Technology adoption was one consistent trend throughout this year. We saw the rise and use of generative AI among research, NGO/CBO dashboards, provision of analysis such as IDR answers, A for AI, and many other versions being used to improve efficiencies for funders, implementors, and assessment agencies. Digital India, Bharat Net, National Digital Health Mission, among many others have launched a multitude of digital solutions with many assisted with AI for service delivery, diagnostics, education, skilling, and others. Incubators and prizes have been offered to incentivize these digital solutions and as mentioned in our trends, digital skilling has become one of the key initiatives among education, skilling, and livelihood, the most funded sector in CSR.
Research Insight: Although the adoption of technology is ubiquitous in the social development ecosystem and there is immense pressure to utilize generative AI, many firms are still hesitant. One of the reasons is the cost constraint as India, and the social development sector, remains extremely price sensitive. The other large determining factor is the lack of know-how. Many social enterprises do not have AI-ready infrastructure and smaller attempts of integration take large amounts of bandwidth or monetary resources. Our AI Maturity Assessment Framework and associated toolkit allows you explore where your organization is in the AI adoption spectrum and what concrete next steps can you take to reach where you want to.
References
- Connect with Protean to explore CSR solutions
- World Economic Forum: The State of Social Enterprises
- EcoVadis: Overview of BRSR Reporting Requirements
- Ambuja Cement Foundation SROI 2020 Report
- HDFC Bank SROI Report
- Deloitte: Data Protections & Regulations Landscape of India
- Deloitte: AI adoption in India
