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Leveraging the CSR mandate

November 15, 2015

Abstract: A change in extant regulations in 2013 mandated that corporations spend 2% of their net profits on corporate social responsibility (CSR) to fund projects that enhance public welfare, as part of being responsible citizens. Ideally, for the sake of efficiency arising out of scale, institutional arrangements that allow multiple companies to pool their resources should be implemented, along with institutions with expertise to run the activities. Including public-private partnerships in funding will have greater impact compared to programs managed by individual companies. The government can infuse funds from time to time to ensure continuity of mission and signal commitment to stakeholders. By ensuring availability of funds at all times, this arrangement can also mitigate cyclical downturns of the economy that can potentially reduce the profitability of corporations and therefore, their CSR related expenditure.

Keywords: institutions design: formation, operations, and impact; corporate culture; diversity; social responsibility; public-private partnership; urban development strategies; corporate participation; impact assessment; mission design

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