CSR: New Karnataka policy says 'spend your money in your own state'

Bengaluru: The Karnataka government has prepared a policy requiring companies operating in the state to use their Corporate Social Responsibility (CSR) funds for developing the existing Karnataka Public Schools (KPS) or establishing new ones.

Currently, there is no such condition for companies to spend their CSR funds in the state itself. The government has decided to bring in the new policy considering the large amount of CSR funds going outside the state from the companies functioning within the state.

“Once the new policy is implemented, it will be mandatory for the companies to spend the CSR within the state,” a senior official of the School Education and Literacy Department said.

However, approval for the new CSR policy was deferred by the Cabinet on Thursday so as to make some corrections.

“The draft policy had insisted CSR funds should go to schools through the government. But some suggested that it is better to be handled at the local School Development and Monitoring Committees (SDMC) and other school authorities. With those amendments the policy will be placed before the Cabinet scheduled on December 4,” the official said.

Details shared by the department officials reveal that Karnataka has a CSR potential of Rs 8,500 plus crore annually, but a majority of it is going to other states. The data shows that in the year 2024-25, companies spent Rs 352 crore on education initiatives in Karnataka and in 2023-24 it was Rs 81 crore. “Following the shortage of funds for strengthening the KPS, the department had approached Asian Development Bank (ADB) for funds,” the official said.

“The aim is to involve CSR companies morally in developing and enhancing the quality of school education in the state,” the draft policy states. As explained in the draft policy, each KPS has been set up with the aim of attracting at least 1,200 children from 8 to 11 villages in the surroundings. The department called the new policy a “transparent” and “creative model” to help companies spend their CSR on strengthening school education in the state.

“As companies spend their CSR mainly on construction, technology development, and providing basic facilities, the financial burden on the government will be reduced,” reads the draft. Sources in the school education department said that despite their efforts, some companies refused to spend the CSR fund in the state and this forced the government to come up with the new policy ‘spend your money in your own state’.

A majority of the CSR funds is going to Delhi, they said.