Jimmy Chen, back row, fifth from right, with the Propel team
What do the Coronavirus pandemic and the stock market plunge mean for social enterprises and impact investors? Not Only for Profit is talking to a variety of key players for their insights.
First up is Jimmy Chen, the founder of 28-employee, New York City-based Propel. Why Chen? Low-income workers employed in service industries are likely to be among the hardest hit economically by this crisis and that’s the population his company targets. Started in 2014, Propel’s app helps food stamp recipients check their balance using their Electronic Benefit Transfer (EBT) payment card, save money through access to grocery store discount coupons and apply for jobs. More than 2 million low-income Americans use the app each month, according to Chen, who figures that his users have saved over $30 million thanks to the coupons they tapped through the app.
How is the crisis affecting your customers?
Our belief is low-income Americans are the most vulnerable and the first to feel the impact of things like this. They don’t have a buffer. When they have to take a week off from work because, say, the children are home, they lack the resources to absorb the shock. It’s challenging to afford stocking up on canned food, for one example. Many people take for granted they have the ability to go to the store and purchase soap. For many of our users, they wish they could participate in those precautionary measures, but they don’t have the financial ability.
We recently surveyed our users to see what their needs are in this crisis. Overwhelmingly, the top one is more money to pay for food. That’s been true outside of this pandemic also. For a lot of our users, putting food on the table and making ends meet—food stamps are insufficient to meet those needs. This is a monthly challenge, now exacerbated by the fact that our users have to stock up and spend more at one time. We found that 30% of our users have functionally spent all of their benefits for the month. The average for this time of the month usually is 20%. We expect that to get worse in the next few days.
The combination of closing of public schools and employers giving fewer shifts and work opportunities—it will put our users in a really tough spot. Our users are disproportionately employed in industries like retail and food service and those are the areas that are going to be hard hit.
We saw the government shut down as a time of disruption causing many challenges for our users. But it was different. That was a situation where people’s food stamps schedule changed. Now, the combination of the need for childcare and lower employment opportunities, as well as potential changes in food stamp programs being debated, are all going to come to a head.
Our role is two-fold. First we can help amplify the voice of our users. And second, we can communicate back to our users and be a trusted source of information. So, if local food banks are available, we can communicate who’s offering what. Or if certain states are pausing on evictions. Things like that.
There’s no way any one company could solve this challenge. It has to be a team effort. The needs we’re going to see over the next months will be be pretty unprecedented. I think a lot of social enterprises are going to be in a position where they can contribute. It’s hard to say exactly how now. My hope is we can work with a variety of other programs to help our users navigate these times. We’re in early discussions. We have to figure out what other organizations’ strengths are.
What do you see as the role of social enterprise is in this crisis? And impact investing?
The silver lining is a lot of entrepreneurs are born in a time of crisis. A lot of social enterprises can start to solve the needs they identify, in the same way that some organizations started during the 2008 financial crisis. There’s an opportunity for people to step up and solve some of these underlying problems that are on the horizon for so many Americans.
My hope is that impact investing can rise to the challenge of supporting entrepreneurs who are looking to meet these needs.