Hong Kong relies on NGOs and social enterprises to provide critical services for under-served populations, such as children and youth, the disabled, migrants, ethnic minorities, and the elderly. These organizations address a range of issues, from homelessness, poverty, hunger, sanitation and hygiene, and social inclusion.
But right now, when the social sector is needed the most, many NGOs and social enterprises are on the brink of bankruptcy and could close their doors forever. The social sector employs more than 50,000 people in HK and serves about one million disadvantaged people, but is not among those benefiting from the HK$30 billion relief package announced by the HK government (1). Due to COVID-19, fundraising and other streams of revenue for the sector were effectively eliminated almost overnight. And like most organizations, NGOs and social enterprises only have enough cash reserves to maintain their basic operations for a few months. A prolonged economic downturn could prove devastating to them and the people they serve.
Hong Kong’s social sector needs a lifeline, and we ask everyone – government, private sector, and individuals – to consider what you can do to support their work. At the Foundation for Shared Impact (FSI), we have worked with dozens of social impact organizations, and based on those conversations have some suggestions for remedial action.
The HK government should consider immediate ways to provide more capital to the struggling social impact sector. Without swift government assistance, the likely result will be the closure of hundreds of NGOs and social businesses. We will lose decades worth of collective education and service, and leave our most vulnerable communities at even more risk, leading to a crash that goes well beyond mere economic recession.
The government and its funding intermediaries, e.g., the Social Innovation and Entrepreneurship Development Fund, which was set up with HK$500 million to alleviate poverty and social exclusion through the promotion and cultivation of social entrepreneurship, can make direct impact through measures such as rent abatement and unrestricted capital injections to cover headcount and basic operating expenses.
And while political leadership is critical in times like these, contributions from individuals, companies, and institutional donors are also more necessary than ever. The private sector can do a lot to help plug the resource and funding gap with creative and aggressive solutions.
For individuals who are able, please consider donating the HK$10,000 stimulus money to a charity or social enterprise of your choice. This is not only tax deductible, but studies show that giving can be wonderfully uplifting for your spirits. We all need that at times like this.
Companies should consider being flexible with the timing and conditions of their philanthropic grants and CSR programs over the next few months. In terms of timing, companies could consider accelerating their 2020 giving to help address the immediate needs and funding gaps. Reach out to your partners in the social sector and ask them what they actually need in order to keep their doors open and operations running. Organizations like FSI can help guide you as you adjust your policies.
Please do not restrict your contributions, and ensure they can be used for existing headcount and basic operating expenses. The immediate focus should be on keeping the doors open and the lights on. Specific programs and directed funding will only matter if these organizations are still operating a year from now. Lifting funding restrictions will alleviate the immediate pressures of having to make cost-cutting decisions.
Additionally, since many industries are slowing down, and employees are not 100% occupied, large companies should consider developing secondment opportunities between their employees and the social sector. During the global financial crisis, many large firms created such programs. Employees take a salary deduction but remain employed, with a guarantee to return to service after a specified period of time. These opportunities usually last from six to twelve months, and can be a great way to boost morale, keep employees engaged, reduce overhead, and also provide significant social impact, which if desired can be great for company PR.
For institutional donors, please simplify your application process and allow for more flexibility in the timing and conditions of grants. And as mentioned, please eliminate the restriction on using funds for headcount and normal operating expenses. These restrictions are onerous in the best of times, but in times like this, can be crippling.
Although these suggestions are written in the context of Hong Kong, we believe that they apply in any jurisdiction. So no matter where you are based, please consider how you and your organization can help. Now is the time to live the values that we all claim to espouse. If we do not work to keep the social sector alive, the effects of COVID-19 will be far more prolonged and devastating than anyone can imagine.