Engagement with corporates is moving beyond conventional funding initiatives
By Chaarvi Badani
Fundraising is the most important work of a start-up, apart from their actual mission itself. It probably feels like every employee’s full-time job despite their designations! In their quest for funding, most entrepreneurs look at traditional options such as seed funders, incubators, impact investors and venture capital firms. But today, let’s focus on the new kid in the block – corporates and their pool of funding from corporate social responsibility.
The new Companies (Corporate Social Responsibility) Rules 2014 mandates that 2% of companies’ net profits should be spent on the activities specified in Schedule VII of the Companies Act. These activities are broad and include education, skills training, agriculture, health, livelihoods etc. Corporates are also eager to spend this amount, so much so that there has been a 20% increase in CSR spending in FY 2017.
But it’s important to remember that interacting with corporates and tapping in to this CSR pool is a different ball-game altogether. Here are some tips to keep in mind in the process:
1) Do your research and find areas of alignment
After you’ve met the corporate team or come across a good option, do your research thoroughly. If they’ve had previous CSR engagements, understand the nature of those and in which areas has it been. Find an area of alignment early and draw up on that. Most big companies list their focus areas on their website.
For example, Mahindra & Mahindra’s areas of focus are on the girl child, youth and farmers through programmes in the domains of education, public health and environment. Online research will show that their past engagement under CSR has been with Flybird Innovations – a social enterprise that has developed a smart irrigation controller, Lifeline Express trains that take medical treatment to far flung communities, to name a few. In education, they aim to increase enrolment and reduce the girl dropout rate in low income communities. So if you are working on interventions to support any of these focus areas, Mahindra & Mahindra is a good fit for your enterprise!
2) Focus on a one-year engagement proposal
Apart from the usual solution-programme bit of your proposal, focus on strong outcomes and a detailed usage of funds deployed. Keep in mind that most CSR funding is for a year and renewable on an annual basis. Apart from this, sustainability of the project is a key factor that companies look for to ensure that the intervention is not reliant on their funding and will carry on post the grant period. Corporates prefer projects that are in and around their office/factory site. You don’t need to change a programme to match their alignment but implementing a pilot in their area of interest can be a good one-year project to being with.
3) Understand who has the decision-making power
While you are interacting with the company, be mindful about who has the final say and try to get an audience with her/him. Often, if you are stuck in conversation with mid- or junior-level personnel, they cannot call the shots or push your case across. The deciding power is usually with the CEOs/Directors and while it is no feat reaching them, it is an absolute must to push the paperwork. Most corporates have a strong and deep-seated hierarchy and jumping a few levels up in your communication will only help you fast track the process.
4) Understand the Corporate’s motivation to work with you
In conversations with the corporate, probe and understand why they are working on the given focus areas/geographies to understand their story. Be mindful of the fact that a main reason that corporates want to invest in your company because of its impact. Build a story around it and be sure to showcase the social benefits well, as well impact numbers, even though numbers projections are what we despise!
Also understand their other motivations to work with you and your enterprise, be it to work with cutting-edge technology, belief in innovation etc and focus on those aspects as well. They are also keen on reaching the last mile population through products and services that make economic sense for both themselves and the end-users.
5) Look at tapping into corporates beyond the funding
Corporates have a lot to offer besides their large coffers. They have the benefit of economics of scale especially in the areas of commercialisation. Tap in to these benefits and explore different ways of getting their help, especially if they are in the same sector as yours – be it in go-to market access strategies, sales etc. In the case of technology and innovation, if the company has access to labs and workshop spaces, use them well! Another soft-touch collaboration method is mentoring by the heads of departments. A corporate name against your enterprises is also a great PR tact to leverage.
6) Be ready for multiple follow-ups
While companies are eager to spend their CSR, it is not their top priority and they have many other issues occupying their plate. Most of the companies are only recently forming their CSR teams and their idea of ‘social responsibility’ is tree planting and donating books to government schools. Be mindful of this, ensure that the alignment is strong with this one and re-iterate it multiple times in your interactions with them. Be persistent with your follow ups. Patience is the key in the fundraising, and 100x more so in corporate engagements.
7) Post conversion, keep the corporate involved
If you’ve made it till here, congratulations on converting the corporate engagement! Keep the corporates informed of the impact and outcomes of the projects that they fund – in the form of regular reports, newsletters, impact videos, interviews etc. If they are open to the possibility, have the team contribute by being on the field and witnessing the impact first-hand. Employee volunteering is a win-win situation both parties involved. Branding projects with the corporate’s names can have the benefit of larger visibility and help attract more corporates towards your enterprise.
Some of the companies who are active in the CSR phase and are advanced in their CSR policy are Marico Innovation Foundation, MindTree, Mphasis, Reliance Foundation etc. Unsurprisingly, Mahindra & Mahindra and Tata group account for the largest and most active CSR spending.
As per a 2015 study by Responsible Future, 48% of top Indian companies are investing in transforming business models to create products and services that minimise adverse social and environmental impacts and, in many cases, have positive sustainability impacts. These are definitely exciting developments and we must work towards using this new pool of capital that can be harnessed for social change at a large scale.
Chaarvi Badani works on development and partnerships at social enterprise incubator, Villgro. She has a PGDM in Liberal Arts and Leadership from the Young India Fellowship, Ashoka University, where she also co-founded a startup that aimed to provide market access and vocational skills training to cobblers with the goal of fostering sustainable livelihoods.