Economic downturn: diamond in the rough? New opportunities for change

It has been a busy first two weeks for me here at SSE. The staff members here at the school are all very dynamic individuals, each with much to add to the conversation surrounding social entrepreneurs. One of the interesting conversations I’ve picked up on here, is one about the challenge of finding funding for small to mid-size non-profit organizations. With the recent credit crunch, there will inevitably be cut backs in government spending, and the endowments of various foundations and investment trusts have already begun to subside. Many people suggest that the private sector should pick up the slack, but corporation’s are experiencing their own economic hardships, and are not likely to increase their financial support to the sector anytime soon. Meanwhile the competition among various non-profits for the available funding is ever increasing. There is constant pressure to reinvent ideas so that they appear fresh and new. This proposes a demanding, however potentially extraordinarily stimulating environment for the avid social entrepreneur.

Nearly everyone is looking to make ends meet, and non-profits are no exception. In the past decade, the solution to lack of funding resources in the non-profit sector has seen a move towards being socially enterprising. Social enterprises aim to construct alternative methods for generating revenue to support mission-based programs. A regressing economy ushers in increasing social tension and disparities. Higher unemployment rates cause individuals to seek self-employment or reinvent their careers in order to regain control of remaining resources.

People tend to take fewer risks and become less creative when the commercial sector undergoes rampant downsizing and reorganizing. Creativity requires trial and error, and no one knows what happens to those who experiment with a new approach and then fail. It takes a real leap of faith to become a test case. The irony here is that this tendency to avoid risk comes just at a time when creativity is most needed in the workplace. However, fortunately, challenging and dodgy conditions are often the type of circumstances in which entrepreneurs thrive. When times are tough, people are more willing to find deals, strike partnerships, or work towards new negotiations.

It seems as though in the current climate, attitude is everything. An optimistic outlook will likely open more doors and sustain enterprises much longer than a negative narrative. Defining oneself as an entrepreneur can take time and involves gradual building of confidence. However once someone begins to see the positive outcomes of their actions or innovative solutions, they begin to feel more passionate about identifying themselves as a social entrepreneur. Perhaps the changing economic environment will create entrepreneurs out of some individuals who may have never considered dreaming up and testing out their own solutions to persistent problems. In his 2007 Nobel Peace Prize acceptance speech, Al Gore pointed out that in Chinese and Japanese, the word “crisis” is written with two symbols. The first symbol stands for “danger,” and the second stands for “opportunity.”  A new premium has been placed on vision and strategic planning instead of short-term financial risk taking. Ultimately this type of constructive thinking will benefit everyone, even as some will suffer now.

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3 thoughts on “Economic downturn: diamond in the rough? New opportunities for change

  1. Nick
    Happy New Year!
    A testing time indeed. It is times like this that challenge us all–and unfortunately many good projects and businesses will fail.
    You are spot on, attitude is critical. I also think that things in the social sector have a natural advantage–they benefit as those which are purely financial will suffer. For example, we began our successful fundraising for ( on 15 September, the day Lehman collapsed. This resonated especially with me as I worked there for 8 years!!
    In this context I think the work you all do at the SSE becomes even more important–you will be helping to create the businesses which will fill the gap in the years to come.
    Good luck in the year ahead!
    Rodney Schwartz

  2. Thanks Rod – and good luck to all you at SocialInvestments and Catalyst as well. I’d love to claim credit for the post above but it was actually written by our January intern Hannah Clark, over from the US. Which either goes to show that she is very perceptive and got up to speed very quickly…or been completely brainwashed in record time. (The former, obviously….).
    Best wishes for 2009.

  3. In the wide world of economy for every downturn there is a boomtime in the anvil.If we stop for a while and consider neither is a downturn or a boomtime hitting business from extra terrestrial sources.
    The reason for every downturn and boom time is an entrepreneur who takes on a bunch of assets and the source of risks along with opportunities. A great leader is one who binds the business with ample guts and viable vision. More importantly understand the assest and risk and set about the balancing act deligently.
    Todays chieftants of the corporate world have found it convenient to run to the government seeking bail out to make good of their errand judgement in understanding the risk element or ignoring the risk element or plain and simply not haveing skill to manage the risk as they show up
    In my view it is the best time for the uncut diamonds , leader with substance , conviction and character to stand up and be counted . Vitally important is to remain positive while understand the risks as much as you understand the opportunites and deploy assest to business play with a lions heart. These are the men and women who will bail the global businessess out of the trenches …not the government …cause at that rate the governments are blowing up taxpayers money ..very soon all of us will be bankrupt.