The whole world has turned upside down by the Covid19 pandemic. But how is the social sector dealing with the Covid19 pandemic?
The social sector, comprising of NGOs and social enterprises (either for-profit or non-profit) are an increasingly important element of the global economy. In the US alone, the social sector contributed as much as 905 billion USD to the US economy or 5.4% of the total US GDP. The non-profits account for 10.1% of total US employment. It is clear, looking at the numbers & the positive impact created by the social sector that the social industry can’t be overlooked, but needs to be fully supported and nurtured. (Source: https://www.classy.org/blog/infographic-social-sector-numbers/)
This is especially important during times of crisis, such as the global situation due to the COVID-19 pandemic. The social sector can become a powerful force in helping to relieve the ramifications of the COVID-19 pandemic. Especially for the more vulnerable sections of society. And, therefore the need to support them in their efforts is more even more paramount today.
Impact of Covid-19 on the social sector
Like most industries, the impact of the Covid-19 on the social sector is quite major. Cash flow and the lack of mobility being the two main challenges.
- A survey by the Hong Kong General Chamber of Social Enterprises suggests that the average turnover of Social enterprises in Hong Kong has halved. And 20% of social enterprises do not have any revenue.
- Among them, enterprises that provide Education & Training services are affected the worst.
- Around 40% of the people surveyed say that their cash flow situation is only sustainable for less than three months. This puts them in a high risk of closing down if the situation does not get better.
- Additionally, one in four of the enterprises surveyed have already either closed or suspended operations. Mainly in the areas of catering, services, organic products, and environmental protection.
These findings could be extrapolated to provide a general picture of how COVID-19 is impacting social enterprises globally. Making the situation globally quite bleak.
How can the social sector deal with these challenges?
- For social enterprises, at times like this, it is imperative to focus on their revenue streams and cash flows. Some of the possible ways in which this could be done are by restructuring their business model or adopt new funding schemes or they could also look for government support in the form of stimulus packages.
- For NGOs and nonprofits, it is more important than ever to understand what are the needs of current impact investors and, if possible, how can they attract more and more impact investors and philanthropists alike to donate through them.
- Another important solution that both social enterprises and NGOs could try is the scaling up of the social impact that they bring. It is especially important for organizations in the social sector to become an initiator of collaborative projects to add value, in order to mitigate the impact of COVID-19. Some are scaling up with the assistance of their skilled and dedicated staff and volunteer teams, others are changing what they deliver and using innovative approaches.
How is the social sector helping society during Covid19?
Despite the fact that the social sector has been hit hard they are coming out in full force to help society fight the pandemic. NGOs and social enterprises are using different approaches to deal with the problems that have emerged like food supply, medical issues, etc.
Scaling by collaboration
There are examples of the said ‘scaling up’ approach taken by ‘social’ organizations in different parts of the globe. In Australia, there are efforts from 18 social enterprises that teamed up and built a ‘collaborative food relief system’. This project aims to provide food to the most vulnerable that are experiencing increased need due to COVID-19.
In Italy, Progetto Quid, along with other 12 social enterprises banded together to produce a million masks. The masks are reusable and can be washed at high temperatures multiple times while still retaining their signature antimicrobial features.
In Indonesia, one such collaboration is Peduli Pangan by private organizations like HARA, Innovator 4.0, Artemis Impact (a social impact measurement tool), and others in collaboration with the Ministry of Cooperatives & Small & Medium Enterprises. The program aims to deal with the break-in the food supply-demand chain and also provide free food to people who have lost their jobs due to Covid-19.
This method of collaborating together has allowed organizations to bring their strengths together to fight the challenges posed by the pandemic.
Adapting the business model
Other efforts by organizations, besides scaling up by collaborating with other organizations, including changing their business model. E.g. many organizations have made their services open to access and free. One such example is Indonesian Startup Ruangguru which is making its online learning services available for free use. Other examples include Dimagi, a social startup based in the US, which gave free subscriptions for use of CommCare, its mobile data tracking platform. This enables people to use CommCare for surveillance, case management, contact tracing, and laboratory data management for COVID-19 patients.
Another success story, this time in Sub-saharan Africa, is how a startup called Simprints had successfully deployed its biometric patient ID system with health workers in 12 countries and is adding a contactless mode that has demonstrated high accuracy. Using Simprint’s technology, people in Sub-saharan Africa could identify COVID-19 patients, track cases, or maintain disease surveillance. This is especially beneficial due to the fact that the area has low resources and still lacks sufficient technological equipment.
How can we help the social sector?
For investors and funders, including the government, giving direct financial support to the growing social sector can become a game-changer to mitigate the impact of COVID-19. An article by South China Morning Post outlined that Governments in six economies in Asia spend, for varying reasons, US$1 billion annually in direct support for social enterprises (US$100 million).
However, that is a story of the past; right now the world needs the role of social organizations more than ever, as governments will have to face important challenges such as food security, job creation, manufacturing of PPE, rapid testing, and others which can be alleviated by giving support to social innovators and organizations that are in the frontline to directly give value to beneficiaries. For investors, the demand for impact investors still far outstrips supply; however, hopefully, that could change soon if investors start to understand the impact the social sector brings to help rebuild society during and post COVID-19.