Having served as the CFO of the third largest company on the 2009 Inc. 500 list Devin Thorpe certainly knows how to handle the big bucks and spend them where it counts. Founder of the Your Mark on the World Center Devin has established himself as a champion of social good and an expert in the realm of impact investing and social entrepreneurship. His Books on personal finance and crowdfunding draw on his entrepreneurial finance experience as an investment banker, CFO, treasurer, and mortgage broker in order to help people use financial resources to do good. In this exclusive interview with Nidhi Singh, Executive Editor of CSRlive, Devin shares some thought-provoking ideas on India’s CSR law and the golden rule for effective CSR.
India is the first country in the world to introduce a legislation that makes CSR mandatory for a certain bracket of companies (with a turnover of about $160 million) to spend 2% of the profit of the last three years on CSR activities. What’s your take on making CSR mandatory by law?
Mandating CSR in this way may formalize that negative association that some corporations have with CSR already. The goal of getting corporations to devote 2 percent of profits to CSR is woefully small; a $160 million dollar firm with 5 percent profit would have to do only $160,000 of CSR. Bottom line, I think your work at CSR Live will cause more good than the law. If you convince one company with $160 million in revenue to devote 1 percent of revenue to CSR that would be $1.6 million, 10 times more than the law demands—and your work will all be positive, helping to change the perception of CSR as a tax.
The world over, the concept of CSR has undergone many interpretations. And with the new CSR law, India seems to be making a shift from ‘cheque book CSR’ to a more strategic form of CSR. How do you see this shift from the perspective of global trends in CSR?
There is no doubt that there is a global change in attitudes underway; I see it everywhere I travel around the world. People are recognizing the potential for corporations to be a force for good in ways that they haven’t been in the past. The leaders of this movement no longer view CSR as a social obligation but instead view CSR as an opportunity to solve social problems.
According to a conservative estimate, every year $ 4.5 billion is available as CSR spend as a result of the CSR law and companies will seek to maximize the grassroots impact with their CSR funds. Are there any golden rules for CSR that you would recommend?
Companies should focus on problems they genuinely hope to solve and should work earnestly to actually solve the problems. If they aren’t honest about their desire to make a difference, their employees and customers will see the truth, that they are simply paying their CSR taxes, and will punish them for it. If, on the other hand, they are really trying to make a difference out of a genuine desire to make a difference, they will both make a difference and improve profits as employees and customers reward them for it.
Can you share some examples of best CSR projects that you feel have the potential to change the world if adopted by more Companies?
There are a number of companies that are making a big difference in the world. One thing that typifies their efforts is that they are not scattering their money and the impact into the wind, but instead are focusing their efforts on a single cause. They may be spreading their money and their time among multiple projects, but all of those projects—or at least most—will focus on a single theme. This allows the company to bring about a big difference it is making in the world.
What in your experience are the key hindrances in effective CSR project execution strictly looking at the Corporate management side?
Many officers want to do the least required rather than the most possible. Given that most consumers will pay more for products from socially responsible companies and that most employees would sacrifice some salary to work for a company that shared their values, companies that do more effective CSR will actually be more profitable than those that scrimp and only do the minimum.
Having come into the ambit of mandatory CSR spend, many Indian Companies are struggling to align CSR with profitability. What would you advise companies facing this dilemma?
The companies that do more than required—much more—are those most likely to make the highest profits. Those that can look past the requirements of the law to the opportunity to actually change the world will not only change the world but will grow more quickly and become more profitable.
Traditionally, CSR tends to be wide-ranging, unstructured philanthropy based on various internal factors and inclinations of the Company involved. Do you think Corporate India’s obligatory passage into a more structured CSR regime has the potential to set new benchmarks for global best CSR practices?
India’s law will create CSR that hasn’t existed in the past. It is the work of inspirational leaders like CSRLive that has the potential to make India a global leader in CSR, establishing a higher standard of excellence. Without CSRLive, the law is likely to institutionalize poor CSR practices.
Also listen to this inspiring talk by Devin Thorpe on CSRlive PODCASTS: How Polio Was Completely Eradicated from India