How to back an inclusive post-COVID recovery

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This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Vineet Rai, Founder and Chairman, Aavishkaar Group & Carolien de Bruin, Head, COVID Response Alliance for Social Entrepreneurs, World Economic Forum


  • The COVID-19 crisis has shown that philanthropic and grant capital is best placed to mobilize rapid relief.
  • Impact investments can drive long-term innovation, especially among local community organisations.
  • Both approaches are required to channel much-needed financial resources into innovative community-focussed organisations working on the frontlines of the crisis.

During the first wave of COVID-19 last year, tens of thousands of desperate migrant workers deserted Indian cities to make the long journey back home on foot. They walked thousands of kilometres and exposed the deep fault line between industrial and agrarian India.

At the Aavishkaar Group, we felt helpless. As a pioneer of impact investing – an approach that taps into market forces to drive positive change – we could not think of a business model to feed the hungry in the shortest possible time that would also meet our capital allocation criteria. We had come face-to-face with the limitations of impact investing.

An outpouring of humanitarianism

Our response was to launch the Aavishkaar Foundation to mobilise grant capital from the Aavishkar Group and provide immediate support to those in need. Working with a network of trusted community-focussed organisations across the country, within three months of launch we had distributed a million food kits and supported frontline workers in seven government hospitals by providing them with personal protective equipment (PPE).

We were not alone. Across India, we witnessed an immense and inspiring response to the COVID-19 crisis mounted by social entrepreneurs, local businesses, and philanthropic organisations alike.

This outpouring of humanitarianism reminded us that capital has a variety of important roles to play in meeting global development challenges. What could we change by channelling more global capital – both philanthropic and investment – to create sustainable local impact?

What could we change by channelling more global capital – both philanthropic and investment – to create sustainable local impact?—Vineet Rai, Aavishkaar Group & Carolien de Bruin, World Economic Forum

The growth of impact investing

The term “impact investing” was coined in the mid-2000s when the Rockefeller Foundation hosted multi-stakeholder conversations on how to use capital differently. It aims to challenge traditional mainstream capital allocation strategies by positioning impact investment alongside philanthropy to achieve sustainable outcomes.

Such a mission has never been more important. The world will need around $2.5 trillion every year until 2030 to meet the UN’s Sustainable Development Goals (SDGs), according to estimates from the Business and Sustainable Development Commission’s 2017 Better Business Better World report. This amount is huge compared to the total donor capital available, which we estimate at close to $250 billion annually. However, it is less than 1% of the nearly $400 trillion global capital pool held by banks, institutional investors and asset managers. If we are to have any chance of meeting the SDGs, impact investors must step up to inspire global mainstream investors to both “do good” and “do well”.

What is the COVID Response Alliance for Social Entrepreneurship?

The COVID Response Alliance for Social Entrepreneurship is a coalition of 85 global leaders, hosted by the World Economic Forum. Its mission: Join hands in support of social entrepreneurs everywhere as vital first responders to the pandemic and as pioneers of a green, inclusive economic reality.

Its COVID Social Enterprise Action Agenda, outlines 25 concrete recommendations for key stakeholder groups, including funders and philanthropists, investors, government institutions, support organizations, and corporations. In January of 2021, its members launched its 2021 Roadmap through which its members will roll out an ambitious set of 21 action projects in 10 areas of work. Including corporate access and policy change in support of a social economy.

For more information see the Alliance website or its “impact story” here.

This is already starting to happen. Dedicated impact investing funds jumped from $502 billion in assets under management in 2019 to $715 billion in 2020, according to the Global Impact Investing Network (GIIN). Increasingly these investments are recognised as benefiting both society and investors’ bottom line – they are delivering above-market returns precisely because of their focus on environmental, social and governance (ESG) factors.

A powerful combination

Delivering a financial return while doing good is no longer considered far-fetched, but impact investing cannot do the work of philanthropy or vice versa. As Eric Kessler of Arabella Advisors points out, solving many problems will always depend on generosity. This is particularly true in times of crisis when there is a need for the kind of agile, rapid response and relief work that foundations and non-profits are best-placed to provide.

By contrast, one of the strengths of impact investing is that it can drive long-term innovation and systems change by funding the development of market-based solutions to complex human problems. It is in the nature of impact capital to invest in high-risk, early-stage social enterprises that mainstream investors tend to neglect – including those that are based in rural and semi-urban regions where they are delivering essential services in the last mile.

What would the world look like if more investors joined philanthropists in backing organisations like these?—Vineet Rai, Aavishkaar Group & Carolien de Bruin, World Economic Forum

Building a better world

The pandemic has highlighted many great examples of such enterprises. Take for instance social business Haqdarshak, an agent-based model that uses technology to help citizens and small businesses apply for government welfare. It has helped more than a million individuals, connecting over 600,000 people to benefits. During the COVID-19 crisis Haqdarshak used its 200-plus field operations team and 2,000-plus active field agents to provide support for welfare programmes, vaccine registration, and even insurance coverage. Its services are free and it emphasises communicating with vulnerable communities, including migrants and the rural and urban poor, in their own languages. As such, its work during the crisis has been invaluable.

Another social purpose organisation, Sustainable Environment and Ecological Development Society (SEEDS), takes an ecosystem approach to partner with vulnerable communities to build their resilience to disasters. It uses innovative methods and technologies tailored to specific communities. For example, a recent partnership with Microsoft provided local communities with specific, localised and clear disaster alerts and warnings. This was designed to change how they use disaster-related information to make decisions and avoid loss of lives and assets.

We saw a momentous response from social entrepreneurs and community organisations during the COVID-19 crisis – what would the world look like if more investors joined philanthropists in backing organisations like these? To build a more resilient world, we need a global investment system that values and supports such on-the-ground projects. By working together, philanthropy and impact investing could create a powerful engine to help drive an inclusive recovery.

This article is part of a series published by the World Economic Forum’s COVID Response Alliance for Social Entrepreneurs on the Indian response to its second wave of COVID-19. The Alliance is hosted by the Schwab Foundation for Social Entrepreneurship and includes 86 leaders in social entrepreneurship, including the Aavishkar Group, collectively supporting an estimated 100,000 entrepreneurs.

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