Rethinking CSR spending: are we missing the mark?

As India rises to become the world’s fifth-largest economy, Corporate Social Responsibility (CSR) holds immense potential as a catalyst for nation-building. Over the past nine years, more than Rs 1.84 lakh crore has been invested through CSR, establishing it as a significant source of development finance. Today, CSR has evolved beyond being a compliance-driven obligation to emerge as a strategic tool for driving sustainable and lasting social impact.

What has changed over the past decade? CSR initiatives have attracted three times the private sector investments while adopting a collaborative approach. We’ve witnessed the government, academia, incubators, accelerators, and CSR initiatives working in tandem, sharing expertise and resources to maximise impact.

Even CSRs across companies have come together, especially for education, healthcare, and environmental sustainability initiatives, where technology-driven solutions have emerged as transformative tools. Today, CSR serves as a vital bridge between businesses and social value, strongly emphasising sustainably achieving long-term goals.

This is evident in how, over the past three years, companies in the Rs 100–500 crore and Rs 50–100 crore spend categories have reduced the number of projects while increasing the average project ticket size. This shift further underscores the move toward larger, more impactful initiatives.

And, it is not just cheque sizes that have grown; companies are also diversifying the sectors they invest in. Between FY 2014 and FY 2023, education dominated CSR funding, receiving 29.07% of total allocations, followed by healthcare at 21.83%. However in FY 2022-23 we saw CSR spending in livelihoods double.

While the CSR landscape in India has undoubtedly become more robust, and poised to deliver systemic transformation, there exists some scope to rethink CSR spending in India. Especially when it comes to spending in underserved regions, funding deep tech innovations, and catalysing large-scale systemic transformations.

Addressing geographic disparities

One of the most glaring issues in India’s CSR landscape is the geographic imbalance in funding distribution. Industrialised and urban-centric states like Maharashtra, Gujarat, and Karnataka receive a disproportionate share of CSR funding. In FY 2022-23, these three states accounted for over 31.53% of total CSR spending, while eastern states remain critically underserved. Bihar, which accounted for over 9% of India’s population in 2022, received less than 1% of CSR funding. Similarly, Jharkhand, a state with a large tribal population and low Human Development Index (HDI), continues to lag in receiving the necessary CSR support.

Although spending in Aspirational Districts—a group of 112 districts identified by the government for focused development—has increased by 30% in FY 2022-23 compared to the previous year, these districts still receive only 2.5% of total CSR funds.

This disparity perpetuates existing social and economic inequities. While urban regions benefit from investments in education and healthcare, remote and tribal areas continue to struggle with basic issues such as access to clean drinking water, malnutrition, and quality education. For instance, 35.5% of children under five suffer from stunting due to malnutrition, yet only 4.09% of CSR funds in FY 2022-23 was allocated to projects addressing poverty, hunger and malnutrition.

Enabling systems change

Beyond addressing immediate needs, CSR has the potential to drive systemic change by scaling successful interventions and influencing government programmes. By focusing on long-term solutions, businesses can ensure that their efforts have lasting impacts far beyond the lifecycle of individual projects.

Take, for example, the Karnataka Model School Pathways Programme (KMSPP), which was initially piloted as a CSR initiative to improve the quality of education for rural girls. This programme impacted over 22,000 schools and became a model for state governments to replicate across the country. Another compelling example comes from digital infrastructure development. The Ayushman Bharat Digital Mission (ABDM), supported in part by private-sector collaborations, has created a digital health ecosystem that connects patients, healthcare providers, and insurers. This initiative has improved access to healthcare for millions of Indians, particularly in rural areas where healthcare infrastructure is sparse.

Corporates like Cisco have also played a critical role in enabling systemic change by bringing technological innovation to underserved regions. Their digital transformation initiatives have not only improved access to quality education and healthcare but have also enhanced the efficiency of government programmes.

By adopting this systems-change approach, CSR can become a catalyst for scaling interventions, building institutional capacity, and influencing public policy. This requires a shift in mindset from isolated, short-term projects to initiatives that align with and strengthen government programmes.

Catalysing deeptech innovations

India's innovation ecosystem has become a key driver for economic and social growth, powered by over 1,000 incubators and accelerators, including 450 government-approved Technological Business Incubators.

Despite these advancements, areas such as deep tech, science-driven innovations leveraging cutting-edge research in physics, biology, and chemistry, among others—remain under-explored. Deep tech offers transformative potential, addressing pressing issues in education, healthcare, livelihoods, and sustainability through groundbreaking advancements in AI, biotechnology, quantum computing, robotics, and clean energy.

At the same time, Indian corporates are increasingly aligning their CSR strategies with both business priorities and national developmental goals. CSR spending has grown to Rs 29,749 crore in FY 2023 and is projected to nearly double by FY 2027. However, innovation receives only 0.3% of this funding, leaving deep tech solutions critically underfunded despite their potential to solve complex challenges and deliver scalable impact.

CSR can play a pivotal role in fostering research and technological advancements in areas like renewable energy, climate-smart agriculture, and sustainable supply chains. For instance, CSR investments have supported India in achieving one of the largest renewable energy capacities globally. Similarly, health-tech innovations funded through CSR have improved rural healthcare delivery, making telemedicine accessible to remote populations.

However, fostering innovation in CSR faces challenges, including leadership buy-in, a lack of information on potential partners, and the complexity of impact assessment. Addressing these issues will require a concerted effort to build awareness, strengthen partnerships, and develop robust frameworks for measuring the long-term impact of innovation-driven initiatives.

To achieve its full potential, CSR must move beyond compliance-driven spending and evolve into a strategic instrument for systemic change. By prioritising underserved geographies, focusing on long-term solutions to catalyse large-scale transformations with deep-tech as a lever, CSR can help build an equitable, sustainable, and inclusive India.

(Srikrishna Sridhar Murthy (Krishna) is the Co-founder and CEO of Sattva Consulting. Lekhya Reddy is an Engagement Manager at Sattva.)

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)