How did the Ukrainian social entrepreneurs react to the war?
The Ukrainian social entrepreneurs responded to the war in a variety of ways, depending on their individual circumstances and the needs of their communities.
Some saw the conflict as an opportunity to address urgent social needs in their communities. They created new social enterprises or expanded existing ones to provide essential goods and services to people affected by the war, such as food, shelter, medical care, and psychological support. For example, some social entrepreneurs established mobile clinics and hospitals to provide medical care to people who had been displaced by the war, while others created community centers to provide social and psychological support to those affected by the conflict.
Others focused on promoting peace and reconciliation in their communities. They created programs and initiatives to unite people from different sides of the conflict and promote understanding and dialogue. Community projects improve living conditions of the target groups and contribute to easing community tensions, thus strengthening the resilience of both the local population and institutions.
Ukrainian social entrepreneurs played an important role in responding to the humanitarian crisis and promoting reconciliation in their communities. Their efforts demonstrate the resilience and creativity of Ukraine's civil society in the face of adversity.
Social entrepreneur Katja Blagodyr, founder of HUG, supporting Ukrainian refugees. Katja is part of our Swedish Incubator with funding from our partners Kivra and Hogia.
What is the state of the social entrepreneurship system in Ukraine now?
According to the research conducted by the Platform for Social Change (former Ukrainian Social Academy), the leaders of social change in Ukraine are mostly women (65%).
In terms of official registration, community and charitable organizations occupy almost 50% of the social entrepreneurship development market in Ukraine. It is important to note that this percentage includes both organizations that are directly engaged in social and entrepreneurial activities and those that support social entrepreneurs with financial and non-financial instruments. A significant proportion of the respondents organize their activities either as a combination between a charitable organization and NPE - natural person-entrepreneur - (28% of the respondents) or exclusively as NPE (20% of all respondents).
Most of the organizations that work for the development of social innovations and social entrepreneurship have been operating from 2 to 5 years (45%). Another 20% have been active for 6-9 years, and the same number of organizations have been operating for more than 10 years. We can also note a positive trend in the creation of new organizations because 15% of representatives' organizations that are a part of the survey were created within the last year.
Negative impact on micro and small business
During the first week of the war, 75,3% of Ukrainian companies fully stopped their operations. As of May 2022, 20.6% were still closed, and 28.5% almost stopped their operations. Among Ukrainian businesses, the micro and small ones suffer the most. The data shows a decrease in their expected sales volume.
The main issues in the Ukrainian business recovery are the absence of enough numbers of clients in internal national/regional markets, the absence of capital and lack of access to the low-interest loans, destroying supply chains, and the unstable situation the Ukrainian and other markets Trying to solve these issues, the Ukrainian CEOs and business owners put their efforts into finding new clients and selling channels, and finding new partners in international markets. At the same time, at the operational level, they decrease their expenses (including salaries) and are often forced to decrease the number of employees.
Stagnation of social enterprises
This crisis made a negative impact on those social entrepreneurs who have weak capacities in business administration or on those organizations that started their social business activities on the basis of NGOs or other forms of non-profits.
Being mission-driven, the majority of Ukrainian social entrepreneurs temporarily stopped their business activities and started to provide their products or services pro-bono or provide humanitarian assistance on a 100% voluntary basis.
Consequently, their biggest challenge now is to reconstruct their business models and restart business operations. Similar to the other micro and small businesses, the crucial needs of Ukrainian social enterprises are access to finances - grants or loans with no or low interests, and professional consultancy in the reconstruction of the business models, business strategy, marketing & sales.
Lack of cash is the key issue for citizens
The research of the International Organization for Migration has revealed that Internally Displaced Persons (IDPs) have significantly less access to financial resources. When asked to identify their single most pressing need, cash (financial support) was identified by the largest number of IDPs - 45.2% indicated this was their most pressing need. This problem is a result of the aforementioned economic crisis and its negative impact on small and medium-sized enterprises, which resulted in decreasing salaries and/or dismissal of employees.
The state social services provide displaced persons with financial support, especially for those IDPs who lost jobs, and partially subsidizes local communities and families hosting IDPs in their homes. However, this financial support is not enough to fully cover the basic needs. Moreover, this does not solve the issues of unemployment. Consequently, the lack of income is the key issue for the majority of Ukrainians which makes them dependent on state social support services or constant humanitarian assistance.
Access to social services and the local communities’ issues
It has become a challenge also for the sphere of social services provided in Ukraine, which takes care of vulnerable groups. In the early days and weeks of the war, the government of Ukraine focused on evacuating children and adults from vulnerable categories. The challenge for the host institutions and communities (mostly in the West of Ukraine) is to find both financial and human resources to provide the newly arrived residents with the necessary social and medical services, as well as decent living conditions. Another challenge is the need to provide psychological assistance to newcomers who have survived the fighting, and to permanent residents, for whom many new neighbors can be psychologically stressful.
Promoting entrepreneurship to the public and among ecosystem actors
Key gaps identified in the local ecosystem are lack of systemic interaction and communication among the actors and little knowledge of each other. The ecosystem will be more effective if it is supported by a platform designed to ensure regular interactive in-person communication and networking, continuous peer-to-peer training, experience-sharing, and meetings between donors, investors and social entrepreneurs. Also, it is necessary to establish interaction with the business community, which can mentor social enterprises to promote their growth and scale up.
Lastly, popularization of social entrepreneurship will help overcome a paternalist perception of social problems; involve individuals and businesses in more actively addressing them; achieve more intentional interaction between government, civil society and business; and shape “for-purpose businesses.
Petro gave an insightful and emotional lightning talk during our Partnering for Change event in 2022. Click on the image to see his speech.
How do you feel as someone involved in the ecosystem? And do you see hope?
Since the social entrepreneurship ecosystem in Ukraine is nascent, it is hard to assess how effectively it is functioning at this moment. But, it is evident that the it continues to grow and develop. A wealth of opportunities exists for new and existing actors to engage in and improve collaboration within the ecosystem.
In these painful times, I believe in the power of social economy in Ukraine because we have the most necessary resource - social capital. We have lots of entrepreneurs who put people over profit. And this guarantees both social and economic development of the state.
Overall, I believe that there is hope for social entrepreneurship and the ecosystem, as more people and organizations recognize the importance of using business as a force for good. However, there is still much work to be done to support and enable social entrepreneurs, and to create an environment where social and environmental impact is valued and rewarded. We can create an effective infrastructure for developing social enterprises in post-war Ukraine with our partners.
