Miller Center’s Social Entrepreneurship at the Margins (SEM) accelerator program graduated a cohort of 18 organizations in December 2018 that are all serving and/or led by refugees, migrants, and human trafficking survivors. As we accompanied the entrepreneurs leading these organizations over the past year, we learned more about the needs of social enterprises serving these marginalized communities that were formerly supported solely through humanitarian aid. In order to share our learnings and encourage other stakeholders to join us in this work, Miller Center convened and facilitated a panel at SOCAP 2018, presented at the December 2018 ANDE Network Update, and is now publishing a report, “SOCIAL ENTREPRENEURSHIP AT THE MARGINS Helping Refugees, Migrants, and Human Trafficking Survivors Reclaim Their Futures”.
An important tension that surfaced throughout the SEM accelerator program is the gap between the funding needed by each enterprise to grow its impact and the minimum investment current refugee-focused funders are able to deploy. This disconnect emerged onstage at our SOCAP panel discussion featuring 4 SEM program alumni and 3 funders including Omidyar Network, Open Society Foundation, and KOIS Invest. Experiences of the SEM accelerator social enterprises confirm a gap between what social enterprises in the emergent sector need and what funders seek.
Impact funds for refugee-focused entrepreneurship are seeking organizations with earned revenue in excess of US$1 million. Our panelists shared that typically seed-stage funding for start-ups comes from friends and family. Many refugee-focused social enterprises haven’t yet attained $1 million in earned income, however, in order to implement their growth strategies, need more funding than can reasonably come from friends and family.
I wondered: how would an entrepreneur who is also a refugee have a network of friends and family with money to fund her start-up? How can entrepreneurs looking to fill in the large gaps left by humanitarian aid change a broken system with only donations from friends and family?
The ideas put forth by Anand Giridharadas in his book Winners Take All, and referenced in his own talk at SOCAP resonate, “I once heard a quote attributed to Archbishop Desmond Tutu addressing a room full of philanthropists, ‘Your job’ he said, ‘is not to make the poor more comfortable in their chains. Your job is to break the chains.’ The question I would ask those of you who seek to change the world through capitalism […] is whether you are really breaking the chains or making them more comfy?”
This is an essential question for those pledging to fund the creation of new systems that can better support our world’s most vulnerable communities. Is reserving both philanthropic and impact investment capital for only those enterprises that are able to scale to US$1 million of earned revenue really helping change the broken system that is leaving millions of people in refugee camps for decades? Is it even making refugees more comfortable?
In this same speech, Giridharadas calls on philanthropists to provide the capital to “serve as the start-up incubator for government action […] test things in the quiet of philanthropy and then seek to mainstream them into our laws and institutions and systems.” Using philanthropic capital to propagate emerging, more socially responsible systems, is not a new idea. Monitor Group and Acumen Fund’s “From Blueprint to Scale – the case for philanthropy in impact investing” talks explicitly about the idea of “enterprise philanthropy” and how, “philanthropy is the essential but often overlooked catalyst that unlocks the impact potential of inclusive business and impact investing.” The urgency and scale of the refugee crisis demands impact capital solutions across the entire spectrum of available options. Philanthropic capital is a key part of the equation, and could be the vehicle that ensures the nascent social enterprise solutions that support refugees are able to flourish and exceed that magical–some might argue arbitrary–million dollar revenue mark. Natasha Freidus, co-founder of Needslist and a Miller Center SEM program alumni, agrees, “I find it disappointing that philanthropic institutions who frankly, can afford to take the risk, are not investing in early-stage startups or providing philanthropic capital to help cover the ‘pioneer gap’.”
Miller Center and other stakeholders, such as the Refugee Investment Network, are working diligently to try to connect the seemingly disparate needs of entrepreneurs whose passion is to change a broken system and impact investors who are averse to risking capital in new and untested ways. There is no impact without risk. You can read more about our findings from working with our initial Social Entrepreneurship at the Margins cohort in our report: SOCIAL ENTREPRENEURSHIP AT THE MARGINS Helping Refugees, Migrants, and Human Trafficking Survivors Reclaim Their Futures. We look forward to hearing from you about how we can work together to build new and better systems that allow everyone in our human family to thrive.