As most nations emerge from the COVID-19 shadow and many essential firms plunge into bankruptcy, communities are likely to encounter excruciating fiscal decisions. Small businesses are the most hit by the pandemic since they are fragile. Most startups have less than 14 days of cash liquidity; thus, they need help from foundations or endowment facilities. Keep reading to understand how philanthropy can assist small businesses to recover.
Capital Infusions Through Lending and Investing
Look for innovative ways of approaching loans and credit extensions. Local endowment institutions and micro-lenders that work on assisting small firms can offer revenue-based funding instead of setting standard amounts.
More advanced options include putting equity investments in firms to prevent them and their employees from permanent closure. Philanthropists can also examine alternatives that possess a multiplier impact such as pooling funds to expand reserves for loan loss, secured debt, or guarantee loans.
Purchase Services and Goods Now
Individuals can pay early for products and services that they need when social distancing is no longer compulsory. These purchases might assist firms in reopening. Gift certificates and other alternatives to be redeemed at a later date infuse money into corporations. Note that altruistic firms provide services and goods like daycare, cultural performances, and education that may be prepaid.
In practical situations, foundations and charities that are lenders and landlords of small-scale companies could allow them to skip premium payments without penalties. They could also forgo payments or extend the lease and loan provisions to allow recouping of costs later.
Implement all the Philanthropic Gear Rather Than Offering Grants
Charities can promulgate their convening power to assist the business leaders and community stakeholders in creating a comprehensive and coordinated response. Charity donors can leverage their influence on supporting small businesses.
Observe the Terms of Philanthropy
Foundations and philanthropic organizations that fund small businesses should do so within legal borders. Donations for programmatic activities that advance humanitarian efforts are acceptable; thus, foundations can utilize program-associated investments to offer no- or low-interest loans to small-scale enterprises that directly advance charitable missions.
Rules that charity corporations should comply with to protect against organizations or people acquiring undue financial merits can be more flexible now since contributions can come from strategic investments.