EXCLUSIVE-Political jitters drive U.S. to biggest fall in global social entrepreneurs poll

by Ellen Wulfhorst | @EJWulfhorst | Thomson Reuters Foundation
Tuesday, 22 October 2019 11:00 GMT

ARCHIVE PHOTO: People take the ferry to visit the Liberty State Island in New York, U.S., August 17, 2017. REUTERS/Eduardo Munoz

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United States dives to 32nd place from the top ranking in the inaugural survey three years ago

By Ellen Wulfhorst

NEW YORK, Oct 22 (Thomson Reuters Foundation) - Opportunities to build businesses with a mission to do good in the United States have plummeted since 2016 due largely to a decline in government support, according to the second global poll on the best countries for social entrepreneurs on Tuesday.

The United States fell the most out of 45 countries in the Thomson Reuters Foundation survey of about 900 social enterprise experts, diving to 32nd place from the top ranking in the inaugural survey three years ago.

The poll found the United States fell the most of all nations when respondents were asked if government policy supported social entrepreneurs, and came last in a combined ranking about women's leading role in running such businesses.

It also suffered the biggest drop of all countries when asked if social entrepreneurs could access investment, plummeting 38 places to be ranked third last.

Richard Parker, a professor of economics and expert in social entrepreneurship at Harvard's Kennedy School of Government, said while any number of factors could be responsible, the nation's political climate stands out.

He said the "shock of the Trump administration" had rattled the view that small and mid-sized businesses can do good and tackle social problems.

"For lots of liberals who are going to be associated with social entrepreneurship, the sense is that the sky is falling," Parker told the Thomson Reuters Foundation.

"It's not a time to talk about the green shoots when the sky is falling."

A social entrepreneur is typically someone who uses commercial strategies to tackle social and environmental problems, combining social good and financial gain.

TRADE TENSIONS

The United States was previously cited as a leader for promoting social enterprise, with President Barack Obama setting up a global entrepreneurship summit and bringing in a law allowing crowdfunding used by small investors with social aims.

But Obama also promoted social entrepreneurship as a form of foreign policy and that did not extend into the Trump administration, said Jennifer Kushell, founder of EYP Ventures that creates online learning programs about youth employment.

"The funding dried up, the focus on international dried up," she said. "We lost a lot of momentum."

When Donald Trump took office in 2017, a list of social entrepreneurs opposed a travel ban that blocked people from seven majority-Muslim nations - Iran, Chad, Libya, North Korea, Somalia, Syria and Yemen - from entering the United States.

The ban "will make our work to foster peace, sustainability, opportunity and inclusiveness much harder ... giving our organizations still more challenges to overcome," the social entrepreneurs wrote in a public letter.

Trump's administration also moved to undo a program - the International Entrepreneur Rule - designed to encourage entrepreneurs to move to the United States to start businesses.

Immigrants are nearly twice as likely to start businesses as native-born Americans, according the Kauffman Foundation, a non-profit focused on education and entrepreneurship.

Trump's decision to cut cash to the U.N.-backed Green Climate Fund and pull out of the Paris climate agreement have also been widely criticized and seen as withdrawing support for businesses focusing on clean energy and zero carbon.

Representatives at the U.S. Department of Commerce, which oversees entrepreneurial programs, did not respond to requests for comment on the Thomson Reuters Foundation's poll findings.

But the department pointed to a program giving grants totalling $23 million to several dozen groups to boost entrepreneurship and increase access to capital.

The United States fell the most of all nations surveyed when respondents were asked if conditions were favorable for social entrepreneurs, dropping to 22nd place from top slot in 2016.

They reported it had become more difficult to sell to governments and to businesses.

Parker said brewing trade tensions between the United States and China have also created uncertainty.

The United States and China, the world's top two economies, have been in a 15-month trade war that the IMF said is partly to blame for a sharp slowdown in global growth.

"A lot of people are going to the sidelines," said Parker. "They just aren't sure where this is all going to end up."

But the United States came in fifth place for seeing more young people getting involved in the sector.

"If you can get into the right room and capture the right attention and have the right people advocating for you, the possibilities are endless," said Thomas Brennan, who launched The War Horse in 2016, a non-profit newsroom focused on the human impact of war.

But he said: "People are becoming a lot more risk averse.

"There's so much vitriol that's floating in the air. That has a direct impact on who and how much of a commitment a person might be willing to make."

The poll of social entrepreneurs, academics, investors and support agencies, supported by Deutsche Bank, found Canada was the best country for business leaders seeking to tackle social problems, then Australia and France. (Reporting by Ellen Wulfhorst, Editing by Belinda Goldsmith Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's and LGBT+ rights, human trafficking, property rights and climate change. Visit http://news.trust.org)

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