Social Entrepreneurship in Brazil: Surviving a Crisis

Lewis is a participant in Global Citizen Year, an international bridge year program designed to unleash the potential of high school graduates as leaders and effective agents of change.

Six years ago, annual inflation in Brazil was just above 5 percent, average household income was rising steadily, and GDP grew by an astounding 7.5 percent in a year. Investors were making their way to Sao Paulo, and companies were racing to create overseas headquarters in Rio.  

But if markets are like oceans—sometimes calm and sometimes moving quickly, with companies drifting on the currents—then Brazil is currently in a “Category 6” storm: Its financial situation is a complete mess. The spread of the Zika virus, the costly 2016 Olympics, a president facing impeachment proceedings, a multi-billion dollar corruption scandal, a 9.4 percent annual inflation rate, and a GDP shrinking by more than 1 percent per quarter all have undermined Brazil's once-promising economic prospects. Today, Brazil’s credit ratings are junk, and of 145 rated countries, it has the 17th highest GINI coefficient. That means that Brazil, with more than 200 million people and a 1.8-trillion-dollar GDP, is among the most unequal countries in the world.

But these massive inequalities and financial strains provide innovators and entrepreneurs with opportunities to step in.

For the past seven months, I’ve lived in one of Brazil’s wealthiest cities, Florianopolis. It’s a tech-tourist city off of Brazil's southern coast, packed with more than 40 beaches and a concentration of software start-ups. While there, I interned at two organizations: Social Good Brazil (SGB), a nonprofit supporting Brazilian social innovators who working on a wide range of issues, including medical literacy and female empowerment, and Impact Hub Floripa, a Brazilian branch of the global Impact Hub community. As economies crumble, start-ups and NGOs reliant on funding from private donors tend to be some of the first to go under, but so far these two organizations have been able to weather Brazil's economic storm. What have they done to stay afloat?

If a boat is taking water, the first things to go overboard are the nonessentials—the grand pianos and birthday candles—as the captain tries to sail onwards. A company or nonprofit in financial shock can react the same way, cutting programs and letting go of employees as times get worse, but always remaining focused on its goal. Both SGB and Impact Hub Floripa have had to create and innovate their way out of financial difficulty caused by the country’s economic crisis by sharing necessary resources with others and throwing those that aren’t necessary overboard.

Historically, SGB has accomplished its mission of supporting Brazilian social innovators through a 2,000-person Social Good Summit and an incubator-esque SGB Lab program that has launched more than 100 different social ventures. But as the economic crisis in Brazil has grown, nearly half of SGB’s corporate partners have withheld their investments, forcing SGB to rethink how it can accomplish its goals while remaining financially viable. It’s had to share resources, looking to crowd-based fundraising rather than relying solely on corporate donors, and restructure its grand Social Good Summit into two smaller events: a 700-person Social Good Brazil festival, which covers all aspects of social entrepreneurship, and a 500-person Social Good Brazil Pocket, which focuses on the business side of social entrepreneurship. Perhaps more importantly, SGB realized that its skill set is valuable not just in achieving its own organizational goals, but also in offering consulting services to companies that are looking to begin or better their corporate citizenship by backing larger foundations or local activism. This foray into social consulting has given SGB another revenue stream while allowing it to greatly expand its social impact.

The same approach is working for some for-profit startups. Founded just over a year ago, Impact Hub Floripa filled an unmet need and has been able to grow despite a shrinking national economy. As at other Hubs, the group’s coworking service provides entrepreneurs with the space and administrative flexibility to run their startups without most of the usual overhead of running a business. Instead of going it alone—as entrepreneurs have typically done in the past by working out of their homes or small offices—Impact Hub Floripa has brought entrepreneurs under one roof so that they only need one bathroom, one Wi-Fi network, and one coffee maker. Just as the Brazilian economy began to crash down on its entrepreneurs, Impact Hub Floripa provided them with a place to flourish without worrying as much about the effects of the world around them. Enterprises such as Healfies, a social network for medical providers; WeGov, a consultancy on innovation in government; and Cientista que Virou Mãe, a crowdfunding platform for research into women's issues, would be hard pressed to bear the financial burden of running a business in a major recession without Impact Hub Floripa.

There’s still much troubled water ahead, and as unemployment rises and social impact funding dries up, many Brazilian nonprofits and entrepreneurs, especially in poorer parts of Brazil, won’t be able to withstand the coming turbulence. But with the above examples, there is still hope—a company or nonprofit can brave a Category 6 storm. They're doing it in Brazil by teaming up, sharing what they can, and throwing everything unnecessary overboard. As Amazon founder Jeff Bezos put it, “Frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.” That’s what successful Brazilians are doing, and hopefully, when the next crisis comes, it's what others will do, too.

Read more stories by Daniel Lewis.