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To cite this article: Anuja Jayaraman, Vanessa D’souza & Trisha Ghoshal (2018) NGO–business
collaboration following the Indian CSR Bill 2013: trust-building collaborative social sector
partnerships, Development in Practice, 28:6, 831-841, DOI: 10.1080/09614524.2018.1473338
Introduction
It was a historic moment for India when both Houses of Parliament passed the Corporate Social
Responsibility (CSR) Bill under clause 135 of the Companies Act 2013 (Ministry of Corporate Affairs,
Government of India 2013). The Bill set eligibility criteria for CSR contributions, and legally obligated
all eligible businesses to spend at least 2% of their average net profit from the previous three years on
CSR activities (CII and PWC 2013) by funding NGOs or government programmes, or via their own
foundations or trusts.1 The Bill opened streams of corporate funding for development NGOs who
had over the years developed expertise in the implementation of social programmes.
However, CSR–NGO partnerships have not emerged as smoothly or numerously as expected.
While corporate aversion to state interference in CSR has been a major obstacle, a more fundamental
reason has been the inherent lack of trust between the two sectors. In the wake of the CSR Bill, this
article focuses on cross-sectoral collaborative trust building and reports a set of practices that could
be adopted by NGOs and corporates to enhance trust in partnerships with businesses.
The article first provides the macro political-economic background to the CSR Bill, emphasising its
critical importance in the development model of India and the significance of NGO–business CSR col-
laborations. The methodology and objectives are then outlined, before moving onto collaborative
trust building in NGO–business relationships, outlining the theoretical framework and justifying
the focus on trust building. This ties trust-enhancing processes in the governance of NGO–business
collaborations to the production of collaborative capabilities of partners, where collaborative capacity
is understood to generate various forms of value and move partnerships from philanthropic to inte-
grative endeavours.
The article then provides a case study of SNEHA to highlight a set of trust-enhancing practices that
could be adopted by NGOs and businesses to develop their partnerships. It also details areas where
trust-enhancing initiatives are required from the corporate side.
Background
The CSR Bill as developmental policy
The CSR Bill refers to a new form of welfare governance in India that moves part of the burden of
social policy expenditure away from the state to the private sector. This is the result of fiscal concerns
on the part of the state which, in the post-reform period, must promote economic growth without
compromising on the basic standards of well-being for all sections of the Indian population.
The post-reform period has witnessed deep cuts in public spending on welfare (Joshi 2006), while
corporate influence on public policy-making has risen remarkably (Chandra 2015; Kohli 2007). With
the tightening of social sector budgets, business promotion, and economic growth have become
the state’s primary strategies for poverty alleviation. The strategy, however, has produced uneven
results. While on one hand, it has generated wealth for the business class, on the other, a two-
decadal stellar growth rate of 7% has failed to reach the more disadvantaged sections of the popu-
lation. A recent study observes that despite an improvement in India’s overall redistribution index,
several sections of the population have continued to persistently suffer; with an overall welfare
loss over the last decade, primarily because of the composition of economic growth (Anand, Tulin,
and Kumar 2014).
Considering this situation, the CSR Bill can be a remedy to the retrenchment of state away from
direct welfare provisioning, and unequal benefits of economic growth. It is an opportunity for the
corporate sector to contribute to social development and preserve the legitimacy of state support
to economic value creation and growth.
Need for cross-sector collaboration for social development under the new policy regime
The CSR Bill indicates a shift in welfare delivery away from the state, to corporate provisioning and
financing of welfare. This shift is close to a framework of welfare governance often referred to in lit-
erature as the “mixed economy of welfare”. The model has been widely adopted internationally to
smooth the impact of the reduction in the scope of the state (Brejning 2012). While corporate
sector initiatives will be critical to the success of this shift, its true potential may be unlocked only
through fruitful cross-sector partnerships in social development between corporate entities, the
state, and civil society.
Corporates are equipped to contribute influence and funding. Beyond these, CSR initiatives will
lack relevant skills and experience of programme design and delivery without the participation of
civil society organisations (Dahan et al. 2010). One study of corporates investing in rural development
in India as part of CSR found no connection between the companies’ agendas and the development
goals of the community (Vastradmath 2015). Corporates must therefore collaboratively engage with
grassroots civil society organisations to affect any systematic social change.
to see businesses as predatory, the corporate sector appears to be apprehensive of a lack of operational
transparency, financial mismanagement, and inefficiency in NGOs. Corporate concerns are not
unfounded, with at least one report confirming that as late as 2015 only about 10% of NGOs in India
filed balance sheets (India Today 2015). This explains why larger corporations are relying on corporate
foundations to extend CSR funding to social causes, instead of partnering with NGOs (Pyres 2011).
Objectives
The CSR Bill is a mandate to promote CSR funding of development programmes as philanthropic or
strategic contributions by businesses to NGOs. As the trust deficit between NGOs and businesses in
834 A. JAYARAMAN ET AL.
India as a major roadblock to the success of the CSR Bill, this article aims to emphasise the importance
of trust in cross-sector collaborations and use the case study of SNEHA to showcase practices that
could be adopted by NGOs to enhance trust and build collaborative capacity in partnerships with
businesses.
Methodology
The study draws from researchers’ exposure to non-profit business partnerships for funding in a mod-
erately sized NGO working on maternal and child health and violence against women in low-income
communities of Mumbai. Key informants include the NGO’s chief executive officer, and senior man-
agement officials with first-hand experience of managing corporate funders. Informal interviews were
carried out between July 2015 and July 2016.
Theoretical framework
This section outlines the importance of trust in the success of cross-sector collaborative relation-
ships and identifies practices that could help establish and enhance trust in cross-sectoral collab-
orations. The theory of trust-based rationalism emphasises that trust is the foundation of
collaborative relationships. Trust is critical to the quality of partnership outcomes. Literature
suggests that trust-laden partnerships equalise power in agreements between partners and offer
opportunities for meaningful exchange (Kumar et al. 1998 cited in Cao and Zhang 2013). The pres-
ence of trust increases cooperation, lowers the cost of coordinating activities, and increases the
level of knowledge transfer and potential for learning of all partners (Madhok 1995; Inkpen and
Beamish 1997 in Nielsen 2004).
The role of trust in cross-sector collaborations is even more intriguing. Cross-sector collaborations
link information, resources, activities, and capabilities of organisations in two or more sectors to over-
come the limitations of asymmetric partners in independently tackling complex social issues (Bryson,
Crosby, and Stone 2006). Relational risks are high in such propositions. Partners are not only expected
to encounter and negotiate common relational risks and calculate the cost–benefit balance in terms
of economic, strategic, and reputational gains; they must also deal with the additional tasks of recon-
ciling value frames, technological/process gaps, and cultural differences.
Trust is understood to stabilise expectations and promote joint value creation under such complex
circumstances. It promotes risk-taking in the direction of innovation (Coleman 1990; Das and Teng
1998 in Vangen and Huxham 2003; Sanzo et al. 2015). Innovation leads to joint production of
social capital (Nooteboom 2005) and also generates new knowledge. Collaborative capacity, the
capacity of partners to generate various forms of value via the partnership, is closely linked to the
measure of trust incipient in cross-sectoral partnerships, and is the chief indicator of a collaboration’s
potential for success (Blomqvist and Levy 2006).
Cross-sectoral trust building, while necessary, is a tenuous process. The challenge is momentous
for the task is to infuse trust between participants that operate under divergent organisational and
power structures, and even divergent world views. The differences could be fundamental enough to
include even the very definition of trust (e.g. Selsky and Parker 2005).
It is understood that the infusion of trust happens in two distinct phases of a cross-sectoral collab-
oration. Once partners are identified, formal contracts written in the early stages of a partnership
induce a measure of future trust in any partnership. The second and more complex phase is the insti-
tution of operational trust. Initial formal agreements smooth the process of goal-setting and establish
linked interests. Operational trust-building requires credible information sharing, demonstrating
intention and competence (Barber 1983). This is achieved through effective communication, knowl-
edge transfer, resource sharing, and joint action (Simonin 2000, 2002; Nielsen 2004). In this phase,
trust is built via monitoring, negotiation, and transfer of skills and knowledge.
DEVELOPMENT IN PRACTICE 835
While these efforts have significantly improved SNEHA’s relationships with its funding partners,
the organisation continues to feel the need for corporate initiatives in trust building and continues
to encounter challenges in conveying the operational limitations and costs of managing programme
implementation. This section elaborates on SNEHA’s experience with trust building initiatives and
identifies challenges that the organisation continues to struggle with.
New metrics have ensured that monitoring data are routinely generated and used to update
monthly process reports, outcomes reports, and key result areas reports. All reports are shared
with corporate partners on a periodic and request basis. The practice has helped SNEHA retain credi-
bility with corporate partners through phases of target revision and course correction. Owing to the
routine conveyance of intermediate outcomes to funding partners, the NGO has not had to expend
effort in negotiating longer timelines and additional resources. For instance, regular data sharing
helped SNEHA convince the funders of the Child Health and Nutrition Programme that there are
no quick solutions to achieving reductions in maternal mortality and malnutrition. This helped
SNEHA successfully renegotiate more realistic timelines and funding spans.
The adoption of corporate evaluation methods has not only helped SNEHA maintain credibility, it
has also compelled it to improve programme design. Post adoption, the organisation now designs its
programmes with careful consideration of target populations and the overall environment of the
population. Greater visibility of intermediate outcomes of programme implementation has motivated
SNEHA to study best practices and protocols to solve emergent issues, adjust implementation models
as needed, and train staff to deliver high-quality programmes.
More significantly, SNEHA has used the data generated to carry out careful research on the per-
formance of its model of intervention. The knowledge generated is shared with present and
future funders. Academic research evidence has considerably increased corporate confidence in
SNEHA.
a major multinational mass media and information firm selects a group of employees to engage with
NGO for two months on a specific project. One such team visited SNEHA in 2010 and suggested a tech-
nology platform, along with helping set up email facilities, servers, staff training, and so on.
Such engagements have exposed corporate employees to the harsh realities of the lives of the
underprivileged and increased their sensitivity. From the corporate point of view, employees who
volunteered have taken a more positive culture back to their own work environment and reinforced
team spirit, and also developed leadership skills. The NGO gained expertise that it would otherwise
find difficult to afford.
Conclusion
NGO–business partnerships are a key requirement for the success of business-led social change via
CSR in India. However, the establishment of successful NGO–business collaborations is marred by a
lack of mutual trust. Trust in cross-sectoral partnerships is the result of joint value creation. Joint value
creation and the infusion of trust require fruitful exchanges in terms of information, technology,
DEVELOPMENT IN PRACTICE 839
personnel, and processes, among other resources. This article highlighted how efforts from the NGO
side have contributed to the creation of collaborative capacity at SNEHA.
SNEHA has used information sharing, knowledge creation, technological infrastructure improve-
ments, process rebuilding, and process reviews to build trust with its partners. However, efforts at
trust building need to also come from the business side for any meaningful engagement to
sustain. SNEHA, for instance, needs corporate understanding in terms of project cycles and overhead
costs to maintain trust and improve the quality of engagement.
Successful partnerships are possible when corporates truly want to make a difference in the areas
they undertake to work on, and when the partnerships benefit both partners and society (Barroso-
Méndeza, Galera-Casqueta, and Valero-Amaro 2014; Gupta 2014). The impulse for social responsibility
needs to come from a space deeper than long-term business reputation. Businesses need to allocate
the same level of priority to their investments in the social sector as they do when they invest for their
own business. They need to think strategically, invest deeply to gain a good understanding of the
sector, and then allocate resources accordingly. It is necessary for them to engage with the NGO
throughout the investment period to gain a good understanding of the challenges in programme
implementation and in bringing about long-term sustainable change.
NGOs, in turn, need to be transparent and invest time in providing corporate partners with a good
understanding of the challenges at grassroots level. In such collaborations, NGOs need to be proac-
tive and not reactive, and need to be aware of their own attributes and risks involved (Al-Tabbaa,
Leach, and March 2014). Only through mutual understanding and trust can corporates and NGO’s
work together to bring about sustainable change on the ground.
Limitations
The insights shared here draw from the experiences of an NGO that operates in the public health
sector, and are expected to be of relevance to NGOs that function under the service delivery
model of programmatic community intervention. However, this article does not address the possibi-
lities, gains, and issues of NGOs involved in other roles – particularly democracy building, human
rights promotion and protection, and advocacy for governance reforms.
Notes
1. The eligibility criteria were companies with an annual turnover of 1,000 Crore INR or more, or a net worth of 500
Crore INR or more, or net profit of 5 Crore INR or more.
2. Value creation could be in the form of social value, interactive, or associational value (Austin and Seitandi 2012) or
in the form of co-creation of social innovations (Sanzo et al. 2015).
Acknowledgements
We would like to thank Maaike Bijker, Sheila Chanani, Kyoko Miura, Luis Miranda, and Gayatri Divecha.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Anuja Jayaraman is the Director, Research at SNEHA (Society for Nutrition, Education, and Health Action).
Vanessa D’souza is the Chief Executive Officer at SNEHA (Society for Nutrition Education, and Health Action).
Trisha Ghoshal is a Research Coordinator at SNEHA (Society for Nutrition, Education, and Health Action).
840 A. JAYARAMAN ET AL.
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