Sports & CSR - Towards Sports Development

The Purposeful Corporate - Purpose Beyond Profit

Corporate Social Responsibility (CSR) encourages companies to be more aware of their impact on society. Its focus can be wide-ranging, addressing issues such as education, health, gender inequalities and the environment.

As stipulated under Section 135 of the Companies Act, companies with a net worth of INR 500 Crore or more, a turnover of INR 1000 Crore or more, or a net profit of INR 5 Crore or more in a given financial year are mandated to 2 percent of their average net profit (of previous three years) on CSR programs.

Only socially driven and purpose led organizations will be of relevance in the near future. Companies with a narrow profiteering purpose will become irrelevant to society at large.

Consumers are increasingly becoming averse to buying products & services from companies that are profit-centric in their approach to business.

Investments in sports is a collective effort towards nation building. It empowers communities and develops skill and improves national health.

In time, it leads to a healthy and vibrant ‘youth force’ that propels the country forward. Most importantly, sports unites communities, builds national pride, changes mentalities, creates community icons and breeds next generation leaders.

Benefits of Investing in Sports Development Through CSR

• Investing in Sports through CSR delivers long-term societal impact by aligning core business objectives with Positive Social Change
• Sports has the power to Influences Communities and Unites a Nation
• Leads to Profitable Value Creation
• Generates a ‘Giving Momentum’
• Investing in sports through CSR can be a Competitive Brand Differentiator.
• It enhances Brand Visibility, Reputation, Loyalty & Patronage.
• It creates positive Brand Equity, generates tremendous Good-Will and builds deeper emotional, Consumer & Community Engagement.

Total CSR Spend Towards Sports Development

Sports spending through CSR doesn’t seem to be high on the priority list of Corporate India. While sports has been included in the list of acceptable CSR spends, not many companies consider it while choosing their CSR projects.

Corporate India only spent INR 795 Crores out of INR 49,600 Crores towards Sports between FY 2014 and FY 2019. That amounts to a meagre 1.6% of the total CSR spend.

CSR Spend on Sports - FY2015 - FY2019

Sports is a Winning Proposition

For sports to deliver a ‘winning proposition’ to all parties concerned, government policy, corporate intent and the sports ecosystem need to align.

In addition, ‘systemic enablers (independent advisors and not for profit entities) need to find a way to stitch together a value proposition that meets all stakeholder objectives.

Moreover, a nationwide communication effort to create awareness needs to be initiated to build focus and momentum towards corporate investing through CSR in sports development.

CSR Funds Allocated To Sports Development Could Be Used To Make A Significant Impact as highlighted below:

Allocation of CSR Funds to Sports Development

The National Sports Development Fund

A National Sports Development Fund (NSDF) was created with a promise of combining private & public sector spend to better fund talent, services and infrastructure in sports. The government was to equally match any contribution that was made by the private sector to the NSDF.

In order to reenergize the intent, the NSDF will need to be restructured and repositioned to reassure Corporate India around governance, accountability, transparency, focus, capability and execution. In addition, the NSDF provides the opportunity to synergize and integrate sports development efforts under one roof in order to drive cumulative impact on sports development.

The NSDF Operating Model

NSDF Operating Model

NSDF Core Roles & Focus

• Board - Members will include prominent sportsmen eminent business professionals and one government ministry representative. This team will be autonomous and work independently with full public accountability. Each team member will have a three-year team but can be rotated out based on fund performance.
• Head Development - Craft developmental strategies & program for the sports support system including coaches, referees & umpires.
• Head Operations - Manage the delivery of athlete development programs including talent, athlete management, athletes services, program develop & internal liaison.
• CEO’s Office & Fund Raising - Focus on fund raising, sponsor management, financial management special projects & performance reporting.
• Marketing & Communications - Crafted marketing & communication program to build industry wide awareness. Promote NSDF across all appropriate platforms.

Key Pointers

1. A five-member fund management team (as highlighted above) needs to be constituted to manage this fund and guide distribution of funds as per the framed fund charter and long-term sports development plan.
2. Focus will be maintained on both grassroots development & elite athlete management (performance excellence) efforts.
3. The fund will ensure full transparency will regard to all aspects of fund activities at all times.
4. Initiate a policy advisory that stipulates that all companies in India that fall within the ‘2% average profit rule’ have to allocate X% of their CSR spend to Sports ensuring that the average contribution over a 10-year horizon is at least 10% of the total budget over the same time period.
5. Each year, the Indian Government through its union & state budgets will also be required to contribute an equal amount, to this fund. This would constitute the ‘National Sports Development Fund’.
6. A percentage of the total NSDF can be specifically allocated towards campaigns aimed at building awareness about sports and towards generic sports promotion.
7. The sports development plan needs to be built around measurable objectives & impact, themes of development, sports coverage, time periods, regional coverage, athlete support, services & ecosystem support. Corporates will be allowed to choose a combination that delivers their objectives of the association. This will ensure consolidated monies across corporates aligned to big themes and a structured plan towards implementation.
8. The money contributed by each corporate to this fund can be converted to credit points as per some conversion measure. In lieu of these credit points accumulated by the corporate over a 5 year period, central and state benefits will accrue. In addition, these credit points could be bartered between any two corporates to exchange goods and services within the CSR & sports ambit.
9. All funds contributed by a corporate to the NSDF against a theme, say athlete development will be spent along the same theme with branding benefit and credit given to the said corporate.
10. A awards platform can be created and called Purpose & Sports to recognize the varied contribution under different categories to encourage the 'giving momentum' in Corporate India.

"Sports has the power to build an immediate emotional connect with society and can help Corporate India establish credibility, loyalty and enhance reputation. The talent in this country is immense. We have to collectively find a way to provide this talent, an opportunity to develop and deliver to its full potential."

For further details, please reference "Sports & the Purposeful Corporate, a seminal research published by GoplaySport in partnership with the Federation of Indian Chambers of Commerce & Industry (FICCI)