Hong Kong social innovation fund should invest in projects to secure its future, not rely on handouts, former chief says
Outgoing head of the Social Innovation and Entrepreneurship Development Fund Professor Stephen Cheung says there must be less dependence on government funding
A government fund that supports innovative projects to fix social problems should not just rely on taxpayers’ money but should work to raise its own capital for the longer term, the former head of the organisation has said.
This could be done by having the fund buy shares in these projects, the former chief of the Social Innovation and Entrepreneurship Development Fund (SIE Fund) Task Force said.
This was just one of the ideas floated by Professor Stephen Cheung Yan-leung on how the fund can move on to its next phase with new leadership.
In an interview before stepping down from his five years in the role last week, Cheung said that instead of just focusing on handing out grants, the fund could consider equity investment, which involves buying shares in promising and innovative projects.
“If the project becomes self-sustaining and can earn money, some of the money can go back into the SIE Fund,” he said.
Cheung, an economist by training and the president of Education University, believed the time was ripe for such a scheme, with there now being more social innovation projects.
He noted that the fund could not keep expecting the government to give it money.
“In terms of social issues, we cannot just depend on the government to solve all the problems,” Cheung, who also recently stepped down as a member of the Commission on Poverty, said.
“Of course the government collects a lot of taxes and will help those in need through [social assistance payments], but I feel that through innovation, we can use more ways to deal with social issues and deliver better results.”
The number of impoverished Hongkongers hit a record high in 2016, with one in five people living below the poverty line, while those aged 80 or above increased by 67 per cent to more than 340,000, taking up a bigger proportion of the city’s total population compared with figures from a decade ago.
Meanwhile, the wait for public housing in Hong Kong is at its highest in almost two decades, with families on hold for more than five years to be allocated a flat.
Set up with a HK$500 million allocation from the Lotteries Fund in 2013, the SIE Fund promotes innovation to meet social needs such as poverty and social exclusion through cross-sector collaboration. It is overseen by a task force chaired by Cheung, under the government’s Commission on Poverty.
The SIE Fund has since funded 117 projects by groups including start-ups and those of a larger scale.
One of the projects supported by the SIE Fund, developed by local company Zunosaki, is an upper limb robotic exo-skeleton system to strengthen the results of rehabilitation training for stroke patients.
While such devices exist around the world, project manager Alvin Cheung Ho-ching explained the innovativeness of the company’s system lay in how it is lighter and uses wireless technology making it something that can be carried around, instead of based in hospitals.
Made with plastics, it is also cost-effective, with the technology priced at HK$80,000 to HK$100,000.
He hoped that 20 pairs of these “rehabilitation gloves” could be produced for NGOs at the end of the year with the product using the SIE Fund. The manager said he hoped the product would be eventually commercialised for home use with more investment.
Stephen Cheung also proposed introducing a “pay for success” scheme to fund social welfare organisations or social enterprises to encourage them to perform better.
“If your project attains certain [key performance indicators], we can invest more,” Cheung, an economist and president of Education University, said, adding that the current practice focused on subvention.
Cheung, also the chair professor of public policy at EdU, said this can be done through introducing “social impact bonds” to the SIE Fund. With a social impact bond format, social welfare services can be measured based on how they help people and the number of successful cases for example, the finance expert who also chairs the chairs the supervisory committee of the Asian Bond Fund Hong Kong Bond Index Fund of the Hong Kong Monetary Authority said.
He noted such an approach existed in other countries, such as a bond in the UK to help people with drug addiction.
The UK government announced last year that it would put in more than £16 million (HK$165.8 million/US$21.1 million) in projects that combat drug and alcohol dependency and support children in care.
The former is intended to help drug and alcohol dependent adults find full-time work, reduce addiction and cut unnecessary hospital admissions. Money is only transferred when projects meet agreed targets.
Cheung added the task force was now exploring how it could move in the direction of the two financing options with stakeholder engagement already ongoing.
He also expressed hopes that there could be more projects to help with ethnic minorities, with only five targeting this group compared with 31 for elderly.