Beyond CSR: How corporates can build India’s social capital

This article is authored by Achal Agarwal, chair, AVPN.

Under the overarching umbrella of the climate crisis, food security, gender equality, and the evolution of AI, the issues that India needs to address are rapidly escalating. However, the burden of solving them remains largely with the public sector through schemes, subsidies and other critical investments. The Dasra Philanthropy Report estimates that nearly 95% of social-sector spending in India comes from the public sector. The 5% that comes from the private sector is a mixed bag of corporate social responsibility (CSR) funds, family philanthropy, corporate foundations, and donations by ultra-high-net-worth and high-net-worth individuals (UHNI/HNI). While in monetary terms, private investments amounted to $ 15 billion in 2024, they must increase if we are to effectively counter and scale viable solutions to the myriad problems the country faces.

CSR

CSR forms about 40% of the social spending by the private sector in India. However, it remains a largely compliance-driven space rather than one that can affect systemic change. There are several reasons for this.

Due to the 2% ceiling, many companies treat it as a budgetary item, which shifts the focus to highlighting utilisation rather than creating high-impact pathways. The funding cycles are short, CSR planning happens annually as it is tied to financial-year profits; therefore, long-term, multi-year, systemic programmes are difficult to sustain. Further, as they function in the larger landscape of audits, scrutiny and legal compliance, the risk appetite is lower. With small teams managing a large number of projects, it becomes practically impossible to navigate the complexities of emerging avenues such as innovative financing, social impact bonds and outcome-based funding.

With the lack of an ecosystem that enables long-term funding, CSR spending becomes more about utilising funds and counting beneficiaries rather than measuring shifts in behaviour, incomes or fuelling structural changes.

On the other hand, the issues we face demand complex solutions. The climate crisis, health care, gender, food security, early childhood care, mental health and accessibility are issues that require risk-taking, multi-year, flexible, and patient capital.

CSR, while necessary, is constrained by regulation. Therefore, corporations can tap into other mechanisms of private-sector social investments alongside it. Akin to CSR, these can be aligned with the company’s vision and sectors it views as priorities.

Take blended finance mechanisms, for example. With philanthropic backing that de-risks investment, commercial investors (whose funds are safeguarded) are more inclined to financially back socially oriented solutions that generally entail higher risks. Thus, by attracting commercial investors, blended finance opens avenues for larger sums to be directed towards solving social issues.

Other options to support large-scale or multiple programmes that a CSR fund alone would not be able to include: Pooled corporate funds wherein a number of companies can combine resources through a shared fund; outcomes-based funding, in which payments or concessions are given based on achievement of pre-set milestones; and venture philanthropy where funders provide multi-year, flexible grants to build capacities of non-profits enabling them to scale their solutions.

There are several examples of how funds based on these alternative mechanisms have deployed capital towards solving issues by addressing underlying causes and their intersections with other problems. Take, for example, the Climate x Health Lighthouse Fund by AVPN, Asia’s largest network of social investors, and partners. This $ 5 million Fund addresses issues at the nexus of the climate crisis and health in Asia-Pacific by enabling collaborative contributions from multiple partners, including the Bayer Foundation, India Health Fund, Prudence Foundation, PATH, Dalberg, MovingWorlds, and SingHealth Duke-NUS. The Fund is invested in multiple grantees across the region working on various facets of climate and health care, enabling them to scale their solutions and reach more people or achieve key milestones. Since the Fund is managed centrally, the grantees are provided with capacity-building support, due diligence and impact evaluation, which help them clearly measure and communicate progress.

By aggregating capital, such funds overcome the limitations posed by fragmented funding and enable multi-year, flexible and outcome-oriented investments.

The development challenges we face today are unparalleled in complexity. The climate crisis not only causes disasters but also healthcare challenges, gender-based violence, and forced migration. The evolution of digital technologies and AI has added new dimensions to how we view work, mental health, autonomy and privacy. Gender equality concerns now extend to the recognition and rights of people across the entire gender spectrum. Even for women, these issues have gained an urgency based on economic disparities, not just the need for social protections. In this landscape, funding is not only about ensuring basic needs such as meals or scholarships, but about underlying intricacies that are deeply structural and cannot be solved with one-time donations or isolated interventions.

Thus, the focus must not just be on the amount of capital but also on how it is deployed. Avenues such as collaborative philanthropy, pooled funds, blended and innovative finance, and impact investments are emerging as more effective means that invite solutions from a wider base of organisations and amplify their impact. The private philanthropy sector, whether it is HNIs, corporate foundations or family philanthropy, must acknowledge these realities and align towards more ambitious, bold, and innovative ways of giving.

This article is authored by Achal Agarwal, chair, AVPN.