Saturday, September 16, 2006

Individual Social Responsibility - an article by an XLer - from the Hindu Business line

A case for individual social responsibility

Gayatri Krishnamurthy

Instead of CSR, companies should encourage individual social responsibility of stakeholders

Corporate Social Responsibility or CSR is the latest buzzword and the in-thing. However, big corporates are only a bunch of shareholders and as a minuscule holder of shares, I would like publicly listed companies to give me the money spent on CSR so I can decide what to do with it. I have an ally in Milton Friedman, the renowned economist, who argued that a company's principal purpose is to maximise returns to shareholders while obeying the laws of the land. If CSR is instrumental in retaining talent and creates a distinct customer preference for companies with a social conscience, I will give it a big `thumbs up'. Otherwise, shareholders should be free to take their money and support the causes they deem fit.

I support an organisation for the disabled. At the beginning of last year, I got a call from them asking for some urgent monetary help. The reason was that the regular corporate donors preferred to give their yearly dole to tsunami-related charities. It is my individual social responsibility that helped the organisation stay afloat. It is this `individual social responsibility' that companies should foster. Unless there is a consensus among shareholders about their commitment to certain causes, companies should focus on the main purpose of their existence: maximising returns for stakeholders

Charity is tough work
Warren Buffett is one of the richest people in the world, with an estimated current net worth of $42 billion. With his announcement that he is giving away 85 per cent of his fortune to charity, he has, with one stroke, become arguably the most charitable person as well. He is shrewd and far-sighted. The time it took him to decide how and whom to give to was considerably longer than the time it took to make the decision on where to invest.

I have prided myself on being charitable in a practical way. I was outside a bakery and an old, impoverished looking old woman came begging. It was lunchtime and I told her that I would foot the bill for whatever she wanted at the bakery. She walked away in a huff, cursing me for not giving cash. I was told later that she was quite well off and used the money she got to lend to the poorest of poor at a `back breakingly' high rate. It is quite a dilemma to select a cause and charity that actually does good.

I believe that having more than you need has to do with many factors, and quite a few of these are not under our control. As a mark of respect to our good fortune, we should give back. The noblest way to do this would be to do it ourselves by becoming a grassroots social worker. The other, more comfortable way is to finance people who do such work.

Twelve cents out of a dollar dilemma
When we were in the US more than 15 years ago, we gave to a children's charity and were very happy that we had done our bit. We were assigned specific children and given progress reports on them. After a few years, that turned into a bit of unhappiness because a leading newspaper ran a story saying that out of every dollar we gave, only 12 cents went to the child. There were insinuations, but no proof of mishandling. That could happen to you as well. When a charity starts out, a bulk of the money will go towards the set up itself. Then as the scale expands, the percentage trickling down will be more. After some time, every dollar extra will go to the bottomline that in this case was the child. When one gives instead of doing, there will be intermediary costs that one should be willing to bear. Now, there are organisations that assist us in choosing charities by doing background checks on the charities.

How to choose a cause
Every person of some wealth is familiar with the multiple requests for charity that far exceed the total wealth. A charity should be evaluated in the same way that a wise investor looks at a stock. The bottomline here is the contribution made to real upliftment, instead of monetary returns. The business model should be good and scaleable, and it should have good management and corporate governance. Charitable organisations now have Web sites and contact details from which one can obtain information as well.

Charity, of course, begins at home. I end with a famous comment from the `Oracle of Omaha', Warren Buffett, which is an excellent parenting tip, as well, "I want to give my kids enough so that they could feel that they could do anything, but not so much that they could do nothing." As for me, I plan to keep enough so that I will have a comfortable and hopefully unpretentious lifestyle, and after that it is off to do some really hard work and give away the rest. One day individual social responsibility will be on everyone's lips.

(The writer, an alumnus of XLRI, is a freelance HR consultant and trainer)

Thanks Revive Ramesh for bringing this to our attention

No comments:

Post a Comment