Covid-19 has revealed some valuable lessons that have shaped the way we think of solutions and the way we invest in them. Since early 2020, philanthropic institutions have been responding with fierce urgency to support non-profits in their interventions, and communities worst hit by the virus and its subsequent variants. In doing so, three important learnings have emerged.
Firstly, a multi-sectoral and multi-stakeholder approach is key to solving developmental issues. This entails harnessing the potential of the interlinkages between various sectors and converging corporates, government, civil society, impact investing, tech community, policymakers to work together.
Secondly, the developmental issues of society need to be solved at a systemic level. For instance, where there is no electricity, there is no light, no access to the tools that power business and only limited access to modern healthcare or education. Providing reliable electricity is the first step toward helping a community lift itself from poverty.
And lastly, we need to invest in the future as we address current issues.
Paying attention to these lessons is important because each year, foundations around the world, spend more than $150 billion to support the social sector working on a range of programs. Having said that, the disruptions caused by the pandemic at social and economic levels have led philanthropic foundations to pivot funding for emergency response and Covid-19 recovery. Let us now look at three ways in which philanthropy will need to work in the post-pandemic era.
In the near term, foundations are prioritizing sectors and areas that can directly mitigate the impacts of Covid-19, most notably health and economic support and recovery. Often, this is realized at the expense of sectors and issues seen as less urgent or have longer-term impact horizons. For instance, presently, several foundations are focusing on health spending to tackle issues such as testing, PPE, vaccine development, and contact tracing in the short term. They have signalled concerns about potential shrinkage in funding in other areas. These include climate change mitigation and adaptation, gender, education, energy access, and financial inclusion.
Philanthropy can bring much more than just risk capital.
Through new partnerships and the development of creative financing solutions, philanthropies can catalyze private capital at scale to bridge these gaps. Given their magnitude, investments which can be replicated and built to scale are critical. We can do this by aggregating and deploying grants and catalytic capital into high impact solutions alongside multi-sectoral partners.
Roadmap to resilience
The inequities underscored by the pandemic have pushed governments and foundations to assess long-term solutions to bridge gaps in a more sustainable manner.
Moreover, this reality is coupled with an increased awareness of the fragility of core systems such as public health infrastructure and socio-economic safety nets. When India was hit by the deadly second wave, it tested the pandemic preparedness of both the central and state governments. A severe shortage of oxygen, ventilators, beds, and access to critical healthcare debilitated everyone, especially the vulnerable communities.
In light of such catastrophes, foundations need to recognize the importance of starting to build resilience in core systems and planning for future shocks as they move beyond direct Covid-19 mitigation in 2021. This will be achievable only through collective effort.
The recovery from the pandemic and the resulting economic recession is likely to last for years and no one stakeholder will have the resources or the bandwidth to address the complexity of it on their own. Covid-19 has pushed business, government, investors, and the philanthropic community from silos to common ground; from supporting to collaborating. Together they stand to call for funding from various global financial institutions as well as the International Monetary Fund.
Philanthropy can bring much more than just risk capital. It can provide technical expertise and thought leadership by supplementing government and private sector efforts with patient investments. This can help advance innovation, fill key gaps, anticipate and address challenges that will continue or arise after the immediate crisis is over.
Foundations need to recognize the importance of starting to build resilience in core systems and planning for future shocks as they move beyond direct Covid-19 mitigation in 2021.
As the investments the world makes over the next decade will determine the future of our planet and our wellbeing, innovative financing mechanisms will play an instrumental role. Co-investments and collaborations will enable sharing of financial and operational risks, deliver sustained impact across sectors with cross-cutting interventions and in some cases achieve economies of scale with commercially-viable interventions.
Levelling up with future crises
Right now, philanthropy, nonprofits, and other implementing organizations are showing that they can respond quickly, flexibly, and collaboratively. Most importantly, philanthropic institutions are leading this effort to complement and enable government efforts. Their key role is to fill significant gaps to address strategic and critical needs and lay the groundwork for a longer-term recovery effort and future preparedness. The goal is to match up with the magnitude of the ongoing or any other crises that may emerge in the future.
Deepali Khanna is Managing Director of the Asia Regional Office at the Rockefeller Foundation