The Immediate and Sustained Need for Social Capital
How social entrepreneurial ventures are pivotal to pandemic response
When the COVID-19 pandemic took hold around the world in March 2020, it was generally recognised as one of the harder crises the world would have to deal with, especially with no time-bound end in sight on a global level. A slight inclination towards finance will tell you that recognising ‘time horizons’ is a rather important facet for any kind of funding, and this is what exacerbated the problems posed by the crisis – the fact that no end was truly in sight.
Since then, we have continuously tried to adapt to the needs of the crisis, dealing with challenges as when they spring up. Social entrepreneurial ventures have sprung up all over the world to provide additional support to governments and local bodies. The needs of today have changed drastically with regard to the beginning of the crisis. The palpable shift of focus has brought us to the ‘weathering of the storm’-phase of the crisis, as compared to the ‘immediate survival’ phase that was noted in March.
Putting the ‘Social’ in Social Entrepreneurship
In a world beset with excess debt, slow economic growth, social unrest and high unemployment, the COVID-19 crisis swooped in almost like a wrecking ball. Measurable impacts have been observed across the board, especially with regard to the movement of capital in the industry. The COVID-19 pandemic forced, according to the WEF, “a massive surge of organizations tumbling into immediate crisis, as the crisis caused an urgent and often existential need of the employees and customers of these entrepreneurs for basic goods – be it food, education or healthcare.”
In order to combat this, several funding organisations had to come to the fore and set out emergency measures for social entrepreneurs in the front lines of the crisis: Open Road Alliance, for example, doubled its grant-making budget in order to provide enough cover for entrepreneurs. Requests for grants, however, outnumbered available funds within a matter of days.
This required entrepreneurial funders to adapt – especially once the realisation that the COVID-19 pandemic would be a health, economic, equity and ecological crisis all in one, had dawned on them. Stress now began to be laid on long-term viability instead of just short-term bursts for immediate crisis reconciliation measures. US-based GHR Foundation, for example, established an agility fund not only to address partners’ operational needs beyond their usual programming but also increased support to a number of other partners who were leading the charge against the pandemic.
Several other global bodies, such as the Vatican’s COVID-19 Commission, Religions for Peace’s multi-religious humanitarian fund and the World Economic Forum all responded to “both the acute crisis and (to) promote a necessary paradigm shift that allows social entrepreneurship – and the communities they serve – to flourish.”
Adapt to Survive
“Alliance member Aspen Network of Development Entrepreneurs (ANDE) has been surveying its constituents since the start of the crisis in an attempt to take the pulse of the on-the-ground COVID reality among small and growing businesses (SGBs). Its data presents a worrying reality. In April 2020, almost 42% of SGBs indicated being at risk of failure. By June, ANDE concluded that 12% of SGBs had already failed while an additional 37% were at high risk of failure. At the same time, many SGBs had forced layoffs or had temporarily shut down operations. Another Alliance member, Intellecap, corroborated these findings in its June 2020 research of the 106 Indian and African entrepreneurs it surveyed, 32% had already closed their businesses while 27% had laid-off employees.” (WEF Report)
We’ve said this before, and we’ll say it again: Adaptability will be key to surviving the pandemic.
Currently, estimates show that over 40% of small and growing businesses (SGBs) and social entrepreneurs are at risk. In order to combat this, several global organisations from around the world have collaborated to bring these organisations together and to prepare an adequate response platform. The World Economic Forum ‘COVID-19 Action Plan’ is one such platform that aims to promote collaboration across sectors – making sure solutions reach grassroots organisations whilst protecting social entrepreneurs and their communities as well.
The challenge has become further accentuated as the need for financial and non-financial support has kept fluctuating over time. Early on during the crisis, several governments from around the world acted quickly to meet the liquidity needs of their economies, primarily supplying massive stimulus packages and quantitative easing measures. The problems of now, however, are a little more complex, and ‘just three months’ of bridge financing is not enough.
As crisis becomes the new normal, organisations are now looking to adapt models to put themselves back onto the path of growth, and not just survival. Organisations, on some occasions, have even had to flip their entire business model on their head. Poignant examples of drastic transformation have been provided by the WEF: “Street Child, an education enterprise serving remote communities in rural Nepal had to pivot its entire delivery model to continue the education of girls with no in-person contact and no access to standard ‘remote learning’ tools such as a computer, internet, or even reliable electricity. As another example, Medical Teams International, a healthcare enterprise in Colombia serving the Venezuelan refugee population, had to redesign their entire approach moving from a door-to-door to a digital outreach strategy.”
Going forward, a flexible mindset and maintaining a steady solution-driven approach will be key. Recognition of the fact that this is not a time-bound crisis will be as crucial – and organisations’ ability to adapt and weather change will be severely tested. This also calls for a time of collaboration between funders, corporations, entrepreneurs, activists as well as governments – a challenge that so far, has proved to be no less than the pandemic itself.
You can access the World Economic Forum COVID-19 Action Plan from the following link:
http://www3.weforum.org/docs/COVID19_SocEnt_Alliance_Report_2020.pdf
