Funding Challenges in Grassroots Social Entrepreneurship

Abstract

Community-based innovation Grassroots social entrepreneurship has turned out to be a significant project when responding to localized social, environmental, and economic challenges. Although the grassroots social enterprises would achieve inclusive and sustainable impact, they are plagued by long-term funding challenges, which restrict their growth and sustainability. The paper will address the issue of the complexity of funding among the practitioners of the grassroots social entrepreneurs concerning structural and contextual factors. The article provides a list of the major barriers based on literature review and qualitative data obtained in the past due course of case studies in the developing and emerging economies such as absence of access to formal financial institutions, inadequate collateral, poor support of donors, and absence of custom-made financing tools. It further elaborates the impact of sociocultural process, policy gaps, and lack of good financial literacy that contribute to such constraints. This paper has highlighted that microfinance and crowdfunding have partially addressed the above gap but they are still not sufficient to meet the many capital needs of the grassroots businesses. The results imply that hybrid funding schemes (combining social investment, community-based finance and public-private partnerships) can provide a more sustainable course to financial inclusion. The paper wraps up by recommending a model of inclusive-funding ecosystems bringing together financial innovation with capacity-building programs to allow the growth of impact by the grassroots entrepreneurs without compromising on social mission. This study helps the greater debate on social innovation, inclusive development and fair access to finance by identifying the hidden financial bottlenecks and the solution methodologies that can be put into place.