Noteworthy in Chief Secretary Carrie Lam Cheng Yuet-ngor's recent announcement of the re-establishment of the Commission on Poverty is the inclusion of a task force to determine the terms of reference of the previously announced HK$500 million Social Enterprise Development Fund, now called the Social Innovation and Entrepreneurship Development Fund.
Considering that Lam will chair the commission, her announcement effectively shifts control of this fund from the Home Affairs Bureau to the Office of the Chief Secretary. Equally important is the change of the fund's name to one that signals a willingness to embrace change and emphasises a new approach to solving old problems.
Together, these two actions represent important first steps towards the creation of a vibrant, innovative environment to address Hong Kong's social problems.
While Lam is to be applauded for her bold initiative, the inclusion of this fund's task force in the commission introduces a potential concern: Lam needs to be wary of deploying the money solely on measures to directly alleviate poverty.
One potential solution is to use the Community Care Fund, which is also included in the commission's remit, for this purpose while reserving the social development fund for promoting longer-term solutions.
These could include, for example, the funding of intermediary companies that train social entrepreneurs or research companies that test the feasibility of new financial instruments, like social impact bonds, to harness the power of financial markets for positive social impact.
A good model to emulate is Britain's Big Society Capital with its goal of providing catalytic capital to fund intermediaries that would then encourage more capital to enter the arena. Using this approach, the HK$500 million could potentially attract billions more dollars of private capital to fund the growth of innovative companies that are both financially viable and socially worthwhile.
A true innovation development fund also needs to promote changes in mindset, including a readiness to take risks and learn from failure. To do this effectively, the fund would need to be managed by a diverse group of professionals that understand both market risk and social issues.
The road ahead will not be easy for Lam. For the sake of Hong Kong, let's hope she has the fortitude to stay the course and willingness to learn from the experiences of other governments that have already begun their journey to greater sustainability.
Ming Wong is co-convenor of EngageHK and an advisory council member of Impact Investing Policy Collaborative. email@example.com