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New initiative hopes to drive social innovation to relieve plight of poor

In the final of a four-part series on poverty, Elaine Yau and Andrea Chen look at how a new government initiative hopes to drive social innovation to relieve the plight of the poor

PUBLISHED : Monday, 30 December, 2013, 9:55am
UPDATED : Monday, 30 December, 2013, 9:55am

From food banks to co-operatives providing piece sewing work for new immigrant mothers, a range of anti-poverty ventures have been up and running in Hong Kong for years. Few have made much of a dent in the fight against poverty, however, which afflicts 1.3 million people in the city.

Part of the problem is a lack of innovative ideas, but also little flexibility on the part of the government, observers say. Social enterprises, meanwhile, often lose money. But there could be an array of unexplored ideas out there waiting for the opportunity to receive funding.

The alleviation of poverty is not just the job of government. The business community and everybody else can play a part
Professor Stephen Cheung, Chairman, Fund task force

Francis Ngai Wah-sing, founder and CEO of Social Ventures Hong Kong, which operates more than 10 social enterprise projects, knows how to make them a success. Several of his ventures, such as Dialogue in the Dark - which employs the blind - are among the few social enterprises making money in the city.

His latest idea is a programme to help the poor bypass supermarkets and buy groceries such as oil and rice directly from the source.

"Manufacturers need to pay supermarkets to display products on their shelves. If they could sell them to poor people [directly] for the price they pay supermarkets, it would be cheaper for them."

Such ideas could potentially benefit from the HK$500 million Social Innovation and Entrepreneurship Development Fund. Under stewardship of the Poverty Commission, it is one of the government's measures to help the poor since announcing the official poverty line in September.

The fund is aimed at encouraging people from all walks of life to come up with new ways to alleviate poverty. It will be open for proposals early next year, and has been creating a buzz in the charity and social enterprise community, with academics and poverty experts already offering suggestions.

Professor Stephen Cheung Yan-leung, president of the Hong Kong Institute of Education, who chairs the fund task force, says as well as combating poverty, the fund also could nurture social innovation. He says poverty alleviation is not just the job of government. "The business community and everybody else can play a part, too."

For the time being, the fund is seeking NGOs and social enterprises well versed in anti-poverty work to be intermediaries, and help to select the initiatives. Successful applicants will receive money from the fund and charitable corporations, while professionals such as lawyers and accountants will be roped in to help the young entrepreneurs implement their ideas.

Cheung says he went to Britain this year to study how the country nurtures social innovation and was inspired by UnLtd - a government-run charity that promotes social entrepreneurship by offering cash, networking opportunities and mentorship for young social entrepreneurs.

"More than 90 per cent of proposals eventually fall by the wayside. Just 7 per cent can be turned into real projects," he says. "These get a big boost in funding at a second stage to expand the scope of their work. The Hong Kong fund will adopt a similar approach."

About 70 NGOs have so far expressed an interest in serving as intermediaries, Cheung says, adding that he has an idea for a project.

"Hong Kong has lots of food banks. But there's a lack of communication between them. Sheung Shui's demand for free food might exceed supply, and vice versa in Sham Shui Po. We could set up a platform that informs us of the supply and demand in various districts and minimise wastage by moving the food around. We can get some logistical companies or van operators to transport the meals for us [free of charge]."

While welcoming the launch of the fund, Josephine Lee Yuk-chi, deputy chief executive officer at NGO St James' Settlement, says the government must allow much flexibility for the fund to deliver the greatest benefits.

"It's not just NGOs that need innovation - the government needs it, too," she says. "Government funding schemes lack flexibility. We have a social enterprise called Green Ladies, which employs 20 women part time. People donate clothes to us and we resell them. But when the clothes didn't sell they just accumulated [in the warehouse]. So we changed the business model. Instead of taking all the donors' clothes for free, we now take in only the saleable ones and split the revenue with the donors.

"If you apply for government funding for such a project, you cannot just change the way you operate midway; it takes lots of time for them to approve changes."

Dr Law Chi-kwong, a professor of social work and social administration at University of Hong Kong, says social programmes helping the poor are mostly operated by institutions, government and big NGOs, which can be bureaucratic.

"The social innovation idea is good because it encourages those who are outside the system to think outside the box."

Law has a couple of ideas he would like to see get off the ground with the fund's help. The first would assist some of Hong Kong's 100,000 elderly flat owners living in old private apartments with development potential. Selling their flats today would mean they lose out, despite the high price of the land on which they are built. The value would double if the buildings were redeveloped. So Law suggests NGOs could help them apply for a smaller public housing unit and rent their apartments out. The NGOs could charge the elderly 5 per cent of the rental income as maintenance fees for the old flats in need of repairs. Law says he proposed the programme to Housing Department officials, but it was dismissed because property owners are not eligible for public rental flats.

Law's other idea is also intended to help poor, elderly flat owners. An NGO could help them rent spare rooms to university students. The organisation could serve as a middleman in finding suitable tenants, he says.

"I proposed the idea last year to several NGOs, but all were reluctant to invest money and manpower for fear of financial risk. Now, with the fund, the NGOs can make use of the money to kick off the programme."

Cheung says the fund could shake up the way charities, NGOs and social enterprises operate. A Hong Kong Council of Social Service report last year showed that there are 368 social enterprises in the city. Of the 41 that submitted financial information to the council, only 27 reported earning a profit.

"The reports released by NGOs are often full of pictures of smiling old people and children. Financial reports run to no more than two pages. They don't need to care much about their finances as they get government subventions," Cheung says.

"Many organisations work in the same area. Like child welfare, for example. You need to see which organisation is the most cost-effective. Otherwise, how do you know which organisations to invest resources in?"

The fund could be likened to an investment bank for NGOs, Cheung says. "Investment fund managers will know which social enterprise projects are worth investing in. After the selection process, I wouldn't mind serving as a co-investor in projects."

A charity or social enterprise should be a hybrid model of both service and business, he says. "You need to complement it by providing a good service. If I fall ill after eating in a social enterprise restaurant, I won't go again. But if the quality of food is high, people will definitely choose the restaurant with a charitable bent over a regular one because you feel good after patronising it," Cheung says. "You have to bear in mind everybody is compassionate by nature."

Ngai says being socially conscious can bring in more customers.

"In October a new, 50-room boutique hotel opened in Prince Edward. The boss is a friend of mine. They take a social enterprise approach toward employment and procurement of materials. A floor of the hotel is reserved for us to organise activities at night, and we are offered a rental discount. People coming to Hong Kong to attend conferences on social enterprises can get discounted room rates there."

At the beginning, the hotel boss might have gone into the venture for reasons of conscience, Ngai says. "But later, he discovered that he could increase the profile of his hotel by being socially conscious and diversify the clientele by not predominantly serving mainlanders."

elaine.yau@scmp.com,andrea.chen@scmp.com

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