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Social Enterprises in Times of Crisis – Actors of Solidarity

As companies that value people and the planet equally or more than profit, social enterprises are recognized as one of the main carriers of positive change in society and as actors who make a practical contribution to solving problems in the community.

A simple glance at social problems, whether in Serbia, Europe or the world, is enough to recognize at least one social enterprise that contributes to solving that problem. Whether it is about the employment of the marginalized, social inclusion through training, coaching and education, aid packages for vulnerable categories in emergency situations, or environmental efforts to preserve the environment – there are social enterprises. The Schwab 2020 Impact Report “Two Decades of Impact” highlights the contribution of a network of 400 leading social enterprises and innovators: they support improving the quality of life for more than 622 million people, protecting life expectancy, promoting social inclusion and environmental sustainability and providing better access to health, sanitary protection, education, and energy.

As such, social enterprises have been dealing with social challenges since their inception, regardless of whether we live in times of global or local crises, and are motivated by the idea of ​​tracing the development of (local) communities to create a more fair and better system for people and the planet.

It was the COVID-19 crisis that re-focused the resilience of social enterprises during socio-economic crises and gave rise to new optimism when it comes to the strength of these enterprises to resist the destructive factors of economic crises in the mainstream economy such as: recession – declining production and consumption; reduced investment, difficult distribution and the like. According to the experience during and after the World Economic Crisis in 2008, apart from the fact that a large number of people lost their jobs in for-profit companies in the first place, a large number of those who were in the social protection system had difficult access to services. The only sector that recorded growth at that time was the social entrepreneurship sector. In countries where this sector has a long tradition, such as Spain and Italy, a significant number of people have found employment in organizations such as cooperatives, social enterprises, and associations.

Although it is too early to see the overall consequences of the COVID-19 crisis to the economy and community as a whole, it is possible to see the reasons why the social entrepreneurship sector, although affected, can not only overcome the crisis, but also point out the shortcomings of the existing economic system and the need to develop social entrepreneurship and solidarity economy as a model of economy and society that cares about the community, people and the planet. By analyzing the performance of social enterprises during the COVID-19 crisis, many expert groups within theWorld Economic Forum, the International Small Business Council, the Social Enterprise Network in the UK and many others have identified characteristics that make social enterprises more resilient to crises than traditional actors in the economy. With the strong integration of the local context into the activities of social enterprises, the world still globally recognizes social entrepreneurship as an effort to build a better society and social enterprises as actors that make greater efforts to combat crises.

What characteristics of social enterprises help to better cope with crises, such as the COVID-19, compared to other actors in the economy?

1. Social enterprises reach the most vulnerable categories more easily, compared to the government or individual economic initiatives;

As we have already said, social enterprises deal with social challenges regardless of the nature of the crisis. In some cases, social enterprises care more and provide better services to vulnerable categories of society than the state itself. In times of crisis, social enterprises have a better infrastructure for working with vulnerable groups, which are more affected by the crisis, and as a result are more willing to provide these people with urgent and necessary assistance.

2. Social enterprises become part of the effort to provide assistance with a quick reaction more often;

As companies with strong social missions, social enterprises recognize problems in the community and have the power to orient themselves to extraordinary social changes – have you heard of social enterprises that provide social services and then make masks, gloves and other sanitary supplies during the crisis to help the community in times of shortages? It is consistency in dealing with social problems that puts social enterprises on the front lines when it comes to combating crisis while it lasts.

3. Social enterprises operate more locally and are more present in the community;

Although many social enterprises also export their products or market their services and products online, they are still building the community locally, because they carry out the social mission locally. This approach makes it possible for both social enterprises to help people during crisis, and for social enterprises to rely on a community of people who recognize their efforts.

4. Social enterprises are not necessarily dependent only on profit and the hybridity of their financing can be an advantage;

Although the financial sustainability of social enterprises is often talked about as a common challenge for this business model, periods of crisis also indicate that exclusive dependence on profit can be a disastrous business model. As it is not only about business, but also about the positive impact in the community, social enterprises can rely on donations and philanthropic benefits during crises, as well as in periods outside them. This model enables social enterprises in no way to create additional profit or significantly improve their business in times of crisis, but to more easily withstand the blows of the recession, which again distinguishes them from traditional enterprises.

When we talk about the resilience of social enterprises in times of crisis, we are talking about the characteristics that social enterprises have outside of crisis. It is difficult and too opportune to say that social enterprises can easily withstand crises or do even better business in crisis. Social enterprises, as well as other enterprises, are affected by the crisis, the only question is whether due to these characteristics they are more resistant to the impact of the crisis, which results in the cessation of business. In addition, social enterprises differ in their business, and generalization would lead to the wrong track, if we were to say that they would all survive because of the characteristics of social entrepreneurship that exist anyway. Despite that, what is common to all social enterprises is, nevertheless, the chance that precisely because of these characteristics, such as consistency in action, they are able to eventually withstand the hardest blows of the crisis.

People are at the center of attention for social enterprises. Building a stimulating environment, nature conservation, development of the community in which they live, and institutions are the basis of their activities. Social enterprises do not deal with the symptoms of poverty, but with its causes. Through their actions, they influence the creation of structures that make it impossible for citizens to be out of the system. However, the ecosystem in which they operate determines their efficiency. The ecosystem is understood through development factors (public policies, ability to self-organize, research and training, managerial ability, finances) and their interconnectedness, which forms the climate in which social enterprises are created and developed.

As it is known that crises can bring about positive social changes, the recognition of the importance of social enterprises in crises, indicates that one of the main positive changes in the coming period may be prioritizing support for the development of social entrepreneurship on the political agendas of many governments, as well as in Serbia.

It is of fundamental importance for the sustainability and equitable development of the whole society to recognize these initiatives in the measures related to the recovery of the society after the pandemic. Worldwide, local, regional, and national authorities have also included support for social and solidarity economy organizations, e.g. social enterprises in recovery programs. Even before the crisis, Serbian society was more vulnerable, due to weak institutions, non-transparent processes conducted by institutions, gray and black economy, which results in exceptional segregation of citizens and a large number of them excluded from various spheres of society. The sector of social and solidarity economy in Serbia operates without a policy and law that recognises these actors. Now is the opportunity for articulation and solidarity economy organizations to articulate and take a common stand on development policies and the measures they need to respond more sustainably to the crisis and long-term business stability.

The Coalition for the Solidarity Economy Development has launched the first blog on social entrepreneurship in Serbia within the project “Fostering the development of social and solidarity economy”  in cooperation with the Heinrich Boell Stiftung – Belgrade Representative Office.

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