fast forward launch27th May 2015

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What does social innovation for poverty actually look like?

Social innovation has been described as “new methods to solve social

problems”, but what does that actually mean in the

context of poverty?

1 in 5 people in Hong Kong or ~1.3 million live below the poverty line

We’re all aware of the poverty situation in Hong Kong…

1 in 5 youth are in poverty

1 in 3 elderly are in poverty

Source: Hong Kong Poverty Situation Report 2013

…and that there are unique complexities that make addressing poverty really hard…

Welfare spending in a low tax economy?

Rising housing prices and declining space?

Quality employment opportunities for youth?

Rapid ageing population?

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The first thought that comes to mind is usually job creation

Some local examples… …which target impact through job-creation

1 Identify disadvantaged group

2 Train them in a skill or match them to a job

3 Overcome poverty through increased income

On average, social enterprises with this type of model typically create jobs for < 15 people. This is great, but employment only addresses

a fraction of the problem in a low unemployment (3.2%) city like Hong Kong

Source: http://www.censtatd.gov.hk/hkstat/sub/so30.jsp

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We like teaching people to fish, but what happens when the poor are already fishing and are still unable to escape poverty?

Source: Hong Kong Poverty Situation Report 2013

18,600

211,500

154,700

Poor households in HK fit into 3 categories, and the vast majority are not looking for jobsIn # poor households (post gov. intervention), 2013

Working poor(40%)

Economically inactive(55%)

Unemployed(5%)

“How do we earn/save enough to escape?”Definition: at least one member is workingProblem: stuck in ‘chronic poverty’ – often earning minimum wage in retail, restaurants or cleaning services

“Who will support us?”Definition: all members are economically inactive and dependent e.g. elderly, disabled, home-makers, children Problem: unable to earn a wage due to physical or economic limitation

“How do we find and hold a job?”Definition: all economically active members are unemployedProblem: inability to find or hold a job

100%384,800

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We need to do more than just job creation: for example, how can social innovation decrease the cost of living for the poor?

GOAL: Increase economic livelihood

Increase incomes

Decrease cost of living

1 Job-creation for disadvantaged

2 Models that remove barriers to employment e.g. vocational training, employment matching services or child-care services (to enable home-maker employment)

3 Models that reduce cost of products/services that the poor buy

Let’s look at a case: reducing the cost of food

Three models where social innovation could be applied to improve livelihood of the poor

Source: SOW Asia analysis

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How can so much poverty and so much food waste happen simultaneously in one city?

Focusing on food makes sense: 40% of the poor’s expenses are on meals…

…meanwhile, food waste in Hong Kong is of mind-boggling proportion

Source: Oxfam "Survey on the impact of soaring food prices on poor families in Hong Kong, August 2011”; Food bank alliance; SOW Asia analysis

39.9%

19.6%

13.9%

8.9%

7.9%

7.8%2.0%

Meals

Housing

Utilities

OtherTransportEducationHealthcare

…~50 food banks in Hong Kong work hard to make meals free, but they have limited capacity…

Collectively, food banks collect ~5 tonnes per day, representing a

serving capacity of ~4-6,000 people

Assumptions:• Average collection of players is

conservatively 100kg/day (in reality, 2-3 organisations represent 80% of collections e.g. food angel/food link)

• 0.8kg for every meal• 1-2 meals per day per person

Food banks have capacity to

satisfy ~0.4-0.7% of the poor on any given day

This is on the rise: municipal solid waste

increased 30% from 2000 to 2010

3,600 tonnes of surplus food is discarded in Hong

Kong every day

and to make matters worse, HK’s landfills will reach capacity in

only 3-4 years

If 40-45% of surplus food became meals, no poor person

in HK would go hungry

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There is obviously a lot of room for new models to address food poverty/waste: can we learn from community shop in the UK?

• Established over 40 years ago• Collects and sells surplus food to members working in

food manufacturing and emergency services• Prevents over 30,000 tonnes of food waste each year

UK’s Social Supermarket Collects surplus food from industry

Sorts and stocks food supplies (not meals) at a members-only discount store (up to

70% off retail prices)

Recruits 400-500 local members per store based on poverty related criteria

Provides training, counselling and mentoring to help members achieve their financial/social goals

Source: companyshop.ltd.uk

An example of social innovation from the UK tackling food poverty/waste:

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This is not about which model is ‘better’; this is about recognising that new approaches need to be built, scaled and replicated

Food bank model

Different model

designs…

• Provides meals for free • Sells groceries at heavy discount (~up to 70%)

• Indirect distribution through intermediaries

• Direct to consumer

…to serve different

purposes, with their pros/cons

• Crisis support for the most needy

• Targets chronic poverty (includes working poor)

• Low cost but low coverage • High coverage but high set-up cost – logistics and space

• Emphasis on long term ownership/dignity

• Emphasis on short-term efficacy

The market opportunity for new models in food poverty/waste is significant:

only an estimated ~0.1% of food waste is being collected today by food banks

Source: SOW Asia analysis

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This is why we launched fast forward: to influence and source new models tackling poverty and help them build toward scale

1 Job-creation for disadvantaged

2 Models that remove barriers to employment e.g. vocational training, employment matching services or child-care services (to free up home-maker employment)

3 Models to reduce cost of products/services that the poor buy

Influence and source models

3 month structured accelerator

Investment / matching fund

• Field research and marketing

• Facilitates model clarity and an executable growth plan

• Provides access to our network and mentors, pitch nights, and workshops

• Access to capital of up to 1m HKD, with matching commitment from SIE fund

OPPORTUNITY AREAS:• Jobs and training for elderly, disabled and home-

makers• Child-care to enable home-makers to work

Our initial research suggests opportunities for social innovation in the following areas:

• New business models to reduce cost of food (poverty/waste); dental; healthcare; child-care; utilities; education

1st cohort of 5 begins July 2015Source: SOW Asia analysis

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Reality check: Given the current state of Hong Kong’s pipeline, building new models to address poverty will take years

Idea Proof of concept

Ready for early scale

Ready for breakout scale

End-game

SE pipeline

Soci

al e

nter

pris

es

Hong Kong’s social innovation pipeline is filled with mostly idea-stage organisations

?

Mile

ston

es

Entrepreneur and/or team has an idea for a business model that addresses a social issue.

The idea is iteratively tested and refined till it is either dropped or finds attractive market demand. A business model is created and refined.

The SE has now succeeded in a few locations with a significant number of users and it is time to replicate the model on a small scale

The SE has proven its ability to replicate and is now ready for mass scaling up.

The SE has achieved scale and it now needs to implement its end-game

The fundamental problem: the lack of a strong ecosystem to deliver an effective pipeline of social enterprises

ILLUSTRATIVE ONLY

Source: SOW Asia analysis

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The missing middle: how to help organisations build self-sustaining, impactful solutions?

Our role in building the ecosystem: the ‘missing middle’ to help good ideas grow and scale their impact

Idea Proof of concept

Ready for early scale

Ready for breakout scale

End-game

Investor interest

SE pipeline

Soci

al e

nter

pris

es

The ‘missing middle’ in Hong Kong’s ecosystem for social innovation

Many impact investors looking for deals that do not exist

Many organisations promoting the ‘idea’ of social entrepreneurship

“low-risk” positions in the ecosystem

Source: SOW Asia analysis

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How we can work together

Entrepreneurs and teams• Got a prototype and a team

addressing poverty in HK?• Want to start a social enterprise

but need good ideas?

Non-profit organisations• Can we learn and work together to explore revenue-

generating models to address poverty in Hong Kong?

Corporations• Want to launch an

intrapreneurship venture to utilise your core competencies toward addressing poverty? (food manufacturing, logistics, utilities, healthcare ,education companies especially)

Sector, function or policy experts• Got expertise and experience

to share in a specific sector (food, education, utilities, healthcare); function (marketing, design, HR, org development, finance/accounting); or policy?

Investors / Philanthropists• Want to source investments

and leverage the matching fund of the SIE Fund for your impact investment or venture philanthropic capital?