Challenges for Social Enterprises during COVID-19
As social enterprises address social problems by means of market they are vulnerable to market disruptions. After the first large outbreak of COVID-19 in Germany in March 2020, the German Federal Government adopted lockdown measures to slow down the spread of the virus. To protect enterprises, the government set up financial aid programs. While the lockdown impacts organizations of all kinds, social enterprises face a particular financial challenge. By nature, they have limited financial reserves and the KfW assistance programs initially explicitly excluded non-profit organizations.
Actors in the social entrepreneurship sector in Germany had only recently joined forces to represent their interests more effectively. The registered association Social Entrepreneurship Netzwerk Deutschland e.V. (short SEND) was founded in June 2017. Before the COVID-19 outbreak SEND had been in the middle of organizing a campaign to raise awareness for its more than 400 member organizations and their societal impact. They quickly put their original plan on hold and focused on supporting social enterprises during the crisis. To better understand the specific challenges for social entrepreneurs, SEND and the Chair of Social Business of EBS Universität started cooperating. A joint survey provides interesting insights into the challenges social entrepreneurs face during the crisis.
158 social enterprises took part in the survey between April 23 and May 5. The data suggests that until now many social entrepreneurs found creative ways to keep their business running (see Figure 1). In many cases they even managed to increase their social impact (see Figure 2) despite limited financial reserves and a larger difficulty to get access to financial support during the COVID-19 crisis.