A self-sufficient and successful couple—a teacher and a judge—suddenly found their world turned upside-down in March 2011, when they were forced to flee their home in Syria due to the violent civil war. Today, they live in a foreign land, impoverished, unable to pursue their careers or support their children without the help of others. Meanwhile, a mother becomes tearful as she laments the fact that her children must work and have no time for school. In another family, a teenage son has now been out of school too long to be allowed back. He lives in a sort of limbo: no school, no recreation, no money. We hear stories like these again and again in our conversations with refugees and humanitarian workers in Lebanon.

Lebanon has a refugee problem—a bad one. War and political turmoil have brought more than one million Syrians to this tiny Mediterranean nation. These newcomers join previous waves of Palestinian and Iraqi refugees; approximately 1 in 4 persons of the country’s 4.4 million is now a refugee.

The result is a major humanitarian catastrophe, now in its seventh year. The original goal of the humanitarian response was to stabilize the situation and return refugees to their homes in Syria; that is now a distant hope. Many refugees have now spent the better part of a decade in the country, and are still living on the margins, neither benefiting from nor contributing to the local economy.

It is simply not sustainable to continue to serve refugees using a traditional humanitarian approach. At least $2.75 billion each year is needed to address the crisis, but year after year less than half that money is available. “To date, the response barely manages to keep the most vulnerable afloat, and they will not be able to face another shock should assistance be reduced,” reads the 2016 annual report of the United Nations High Commissioner for Refugees (UNHCR).

“International policy toward the Syrian refugee crisis is both antiquated and fueled by panic,” wrote international relations scholar Alexander Betts and economist Paul Collier, both of Oxford University, in an article for Foreign Affairs. “It is premised on the same logic that has characterized refugee policy since the 1950s: Donors write checks to support humanitarian relief, and countries that receive refugees are expected to house and care for them, often in camps.”

Volunteers distribute rain boots in a rural informal tented settlement as part of the initial humanitarian response. (Photo by Teresa Chahine)

These funding gaps raise questions about more efficient ways to deliver humanitarian services in this protracted crisis. Our venture philanthropy organization, Alfanar, supports social enterprises that serve the most marginalized populations in Lebanon. During the past six years, we have observed the growth of numerous charities in response to the Syrian refugee crisis. We ask: Can social enterprise play a role? Might Syrian refugees be served as customers rather than beneficiaries?

Humanitarian assistance relies on a charity model of providing immediate relief in emergency situations. But once the emergency has passed, other approaches might deliver services in a market-driven, customer-centric way.

Our hypothesis is that a transition to social enterprise is a natural extension, as a situation evolves from short-term emergency relief to the medium-term delivery of products and services.

This  comes at a time of active interest in innovation in refugee relief. The UNHCR’s Innovation Lab supports and studies new ideas in humanitarian delivery, a few of which involve cost recovery (when service providers find ways to generate revenue rather than rely solely on grants and donations). As some refugees move on to permanent asylum in the West, policymakers and scholars are exploring how they can develop mutually beneficial relationships with local economies.

We were curious about what is actually happening on the ground in Lebanon—whether social enterprise was possible in this crisis, or if there are already any examples of its success. We conducted focus groups with Syrian refugees in Beirut asking them about the services they currently receive, their level of satisfaction, and their willingness to pay for improvements. We also conducted interviews with service providers ranging from the employees of front-line local and international nongovernmental organizations (NGOs) to those at higher-level United Nations agencies and Lebanese government ministries.

Just outside an urban settlement, a market sells household items targeting low income communities. (Photo by Teresa Chahine)

Both refugees and service providers criticized the amount, quality, and efficiency of products and services reaching the refugee population. When we queried our groups as to whether a fee-based model could be more effective in providing satisfactory products and services, however, we received a mixed response. Syrian refugees in Lebanon face employment restrictions, residency permit requirements, and other barriers that limit their ability to pay. Service providers continue to focus on basic assistance and charitable aid, because this is where the funding community remains focused. There are few incentives to adopt market principles and engage in cost recovery.

Furthermore, although Lebanon has a strong entrepreneurial history, and social entrepreneurship is on the rise among Lebanese NGOs, the current sociopolitical landscape does not foster the use of social enterprise. Any humanitarian activities that aim to integrate Syrian refugees into the Lebanese economy risk going against official government policy.

The Enterprise Option

Despite these barriers, some existing social enterprises in Lebanon have already expanded to include Syrian refugees. An example is Ana Aqra Association (“I can read” in Arabic), which provides remedial education to underprivileged children in Lebanese public schools. This organization applies a hybrid model, subsidizing its work in public schools by charging private schools and international NGOs for teacher-training services. When the humanitarian community launched afternoon shifts to provide remedial education to Syrian children, Ana Aqra was at the forefront. Today, it has taught almost 100,000 students, both Lebanese and Syrian.

Microfinance institutions (MFIs) providing microloans have also expanded their customer base to include refugees. Although these organizations face operational challenges (for example, lending requirements that limit services to people who have lived in the same area for some time), repayment rates show that this approach can work with refugee populations. An example is Al-Majmoua, which relies on group lending—where a group of lenders assume joint responsibility for their combined loans—to mitigate the risk of default.

Funders are also becoming more entrepreneurial. Unicef has a vibrant innovation office in Lebanon that works with local NGOs and accelerators to generate new ways to support refugee youths and other marginalized youth in Lebanon. For example, the local NGO The Nawaya Network focuses on bridging the gap between privileged and underprivileged youth in Lebanon through talent development programs. With UNICEF support, Nawaya now runs workshops for Lebanese and Syrian youth to develop income-generating solutions to problems in their communities. The new accelerator program Elevate by AltCity supports Lebanese entrepreneurs who are forming new companies to improve the humanitarian response.

Although a portion of these ventures and organizations rely on donors for funding, data from some sectors suggest that hybrid models may allow for partial cost recovery by providing services for a nominal fee to refugees. For instance, many health service providers offer tiered pricing based on a patient’s ability to pay.

AMEL Association, for example, has incorporated Syrian customers into its Lebanese patient base. Although the organization relied on UN and humanitarian funding for this expansion, it generates some income through nominal fees paid by patients. Despite free options for care, AMEL’s high-quality options have enticed refugees and other vulnerable people to pay for affordable health services. Perhaps a model like the Aravind Eye Care System (which was initially tested for eye care in India and replicated across different specialties and geographies to provide high-quality low-cost care) could be explored in this situation, using a differential pricing model to serve different customer segments.

These observations suggest that there may be a role for social enterprise in the Syrian refugee crisis in Lebanon. The formation of new social enterprises targeting Syrian refugees may not be an obvious solution, given the financial barriers refugees face, the donor-driven incentives of the international response community, and the sociopolitical landscape in Lebanon. Nonetheless, the possibility of expanding existing social enterprises to serve Syrian refugees appears to be a viable option. As funders look for ways to maximize the impact of their investments in a crisis in which every dollar counts, we recommend they turn their attention in this direction.