Feeling 'been there, donor that?' Lessons on CSR longevity from Tata Education Trusts

Resumption of grants by Tata Education Trusts to rescind the termination of contractual faculty and staff at Tata Institute of Social Sciences (TISS) last weekend bears a lesson for companies undertaking CSR. The incident highlights a fundamental problem concerning philanthropy: how long should one support a cause or an institution? There are no easy answers.

Philanthropy, like reputation, is easy to set up but difficult to live up to. Typically, giving starts as a voluntary action borne out of the need to give back to society, or help the less privileged. The bigger the vision, the better the outcome - provided the execution capabilities are in place. However, an assured grant of funds can lead to expectation setting, over-dependence and sometimes inefficiencies on the part of the donee organisations. In such cases, the giving can end up feeling forced.

Moreover, determining the nature and length of engagement is difficult, especially when it comes to establishing institutions of excellence in education, healthcare or research. In the case of Tatas, the group has become associated with several premier institutions - Tata Institute of Fundamental Research (TIFR), Tata Memorial Hospital (TMH) and TISS. Does this mean the group has to continue to support them eternally? When does the association stop? And when it does, should it raise doubts over the group's philanthropic intent?

Corporate philanthropy is difficult to thrive on due to fluctuating fortunes, changing business cycles and shifting priorities. It is a good funding source but not necessarily a sustainable one. It should be used as a seed capital to initiate something meaningful, not as an annuity by donee organisations. It should be the endeavour of those setting up institutions through CSR/philanthropy to ensure that institutions can run self-sufficiently in a specific period.

One of the important objectives of philanthropy should be to ensure that its beneficiaries become independent. This approach involves bringing in accountability, setting up efficiency parameters and hand-holding to become self-sustaining. This shouldn't be difficult for corporate donors who can bring to the table management principles, operating efficiency and business sustainability in their CSR engagements.

Incidentally, there are several examples of institutions globally that have demonstrated this. For instance, Stanford University was founded in 1885 by Leland and Jane Stanford in memory of their son. However, it no longer receives grants or financial support from the family. Over time, the university has developed a diverse and robust funding model that includes endowments, tuition fees, research grants and philanthropic donations.

However, there are untoward implications when donor entities reduce or cease to patronise their donee institutions.

Donee organisation may not continue with the same vision with which the donor funded the idea.

A new donor can come in and leverage the goodwill created by the earlier donor.

It may not be possible for the donee organisation to become self-sufficient given its activities. For instance, India has seen several traditional arts and crafts dwindling from prominence due to a lack of patronage from the rich or privileged.

For lack of funds, the donee organisation may have to increase the price or decrease the quality or breadth of the services that it renders, impacting choices of users, who could be students, patients or the poor. The older the organisation, the more difficult it is for the stakeholders to undergo such a transition.

So, it is important for the donor entity to smoothly transition from being a key donor to no donor for an organisation. An abrupt ceasing of grants can create unexpected issues for the organisation and raise questions about the donors' intent. Donors should aim for a 'successful exit' from an impact engagement to ensure that the donee organisation isn't adversely impacted.

In FY23, listed companies invested over ₹15,600 cr in CSR programmes. This is significant money in the social sector, and several organisations compete for the same pool of funds. Some of this amount can be used strategically as seed capital to support institutions that are important for nation-building, but ones that are created to become self-sustaining.