Hong Kong’s Community Resilience Fund: An example of flexibility of social investment for COVID-19


Philo Alto


Since the start of the year, the evolving global pandemic situation has continued to batter economies, organisations, and local communities alike. In response, governments and policymakers have unleashed unprecedented financial and policy support measures to both priority and vulnerable sectors. However, such responses have typically been reactive, blunt, and broad in impacts that have not kept pace with the warp-speed and disruptive nature of the pandemic’s onslaught.

One such sector that has borne the brunt of sweeping policy and financial support measures are social enterprises serving public benefit and generating earned revenues. Many of these enterprises – which otherwise have viable business models pre-pandemic – are currently facing liquidity crunches due to the pandemic. Meanwhile, existing philanthropic grants and SME loans are not fit for purpose relative to the hybrid nature of their businesses.

Looking to Hong Kong

An example from Hong Kong, the Community Resilience Fund (CRF), may be worth examining for insights on how philanthropic funders and investors pool their resources to tackle community challenges. The CRF seeks to provide liquidity support for social enterprises to help them adapt to the new normal and continue their critical roles in supporting Hong Kong’s local communities.

Foundations and family offices in Hong Kong have typically framed their support for local communities or social issues either as impact investments or philanthropic grants/charitable donations. Post-Covid-19, as the city’s economic situation turned for the worse, the economic and public health crises have had mixed impacts on philanthropic funders, foundation investments, and their funding approaches.

For some, the deterioration has resulted in the drastic scaling back of operating businesses (including layoffs and operation retrenchments) that fund their foundation activities. For others, it may have compelled them to ‘double down’ their efforts to support the broader community as part of their shared value ethos or foundations’ remit. And for some others, it may have catalysed collaboration via pooling of resources among like-minded family offices, foundations and individuals who already have bought into the idea of providing philanthropic support for community resilience via social enterprises. This last category of philanthropic funders in Hong Kong have collectively been inspired by similar initiatives from the Open Road Alliance and Big Society Capital in the U.S. and U.K., respectively.

Beginnings of the Community Resilience Fund (CRF)

The CRF was conceptualised in early March 2020 as the resurgence of Covid-19 hit Hong Kong. It was quickly rolled out within a few weeks with the collective support of five other local nomination partners that have worked closely with Hong Kong social enterprises, professional pro-bono support partners, as well as a separate selection committee and advisory board.

The CRF is jointly operated by Sustainable Finance Initiative (SFi), an investor-supported community seeking to mobilise capital towards sustainable finance; and Social Ventures Hong Kong (SVhk), an impact purpose organisation committed to social innovation for Hong Kong’s urban challenges.

Post-Covid-19, as the city’s economic situation turned for the worse, the economic and public health crises have had mixed impacts on philanthropic funders, foundation investments, and their funding approaches.

A key challenge identified was the lack of flexible and affordable social finance for social enterprises in Hong Kong which otherwise have viable impact business models but whose liquidity positions have been severely hampered by the pandemic.

At the same time, their earned income streams which had previously made them less dependent on philanthropic grants have now become a liability in the new normal even as they continue to serve critical social needs and public benefit.

On the other end of the spectrum, the appetite for impact investments has dampened with the steep economic downturn. Finally, existing government subsidy schemes for emergency relief, SME and other commercially-focused loans have either been too expensive, restrictive, or not fit for purpose for these social enterprises.

Zero-interest loans

The CRF consortium decided that a zero-interest loan serving as bridge financing would be a timely and appropriate structure to help viable social enterprises survive and adapt to the new normal.

Along with in-kind support including mentorship, training and upscaling support to measure and manage their impacts, the CRF has a two-fold objective: first, to pilot a new social finance option in a previously underserved market segment; and second, to build longer-term relationships with these SEs including any business pivots to foster resilience post-pandemic. The impacts of both goals, it is hoped, could last beyond COVID-19 pandemic. 

Initial observations and lessons learned

As this structure has been around for just a few months, it is still too early to derive conclusive lessons on its impacts. That said, a few lessons and observations can be made:

  1. Embed agility and adaptability to disruptions in the new normal – with the third wave firmly in progress, many social enterprises are back to survival mode. Flexibility in repayment terms and non-financial support are needed even more.
  2. Foster nimble expectations management amidst changing conditions – by constantly asking tough questions to both funders and investees as to the ongoing sustainability of the operations whilst serving social or public benefits – and adjusting investment expectations accordingly. As baseline, expectations need to constantly be referenced with the (more costly) alternative of not having this funding in the first place.
  3. Engage the local community being impacted throughout the investment process – from the nomination and vetting process, to the stakeholder interviews, impact measurement training and mentorship support all the way to investment exit or renewal. The  collective public health, economic, social and personal tolls of the pandemic require us to engage with each other as humans firstly, and investors, secondly.
  4. Build CRF track record as an adaptive initiative – the pandemic situation is evolving much faster than how businesses are used to planning, responding, and adapting. In this new normal, building a track record consists of quickly learning from the current CRF and adapting any future CRF structures to changing needs and market conditions, with expectations dynamically aligned for current and future funders and investees.
  5. Pool resources and tap into community expertise – while it is always tempting to do it alone for efficiency purposes, pooling resources for shared goals and tapping into community expertise can potentially go much further in creating collective impacts. Not worrying too much as to who gets the credit helps too.

Time will tell how the social enterprises will fare in adapting to the new normal, in the coming months. It is hoped that the example of the CRF in Hong Kong can inspire further ideas exchange and forge potential collaboration opportunities amongst foundations and philanthropic institutions globally during these difficult times.

*As a matter of disclosure, the author is an advisor to both the SFi and SVhk.

Philo Alto is the Founder of Asia Value Advisors in Hong Kong and a member of Alliance magazine’s Editorial Advisory Board.

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The philanthropic world is facing mounting challenges from the impacts of climate change to inequality, global pandemics and authoritarian populism increase. At the heart of sector debates is the question of how foundations use their resources: not just the small amount for grantmaking and other charitable spending but the totality – most of which is invested in global capital markets in sectors such as aviation and pharma, through vehicles such as hedge funds and private equity and managed by discrete investment houses, many of whom are unknown to philanthropy practitioners let alone the wider public.

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Comments (1)

Florence Cheng

The Community Resilience Fund is a collaborative effort which would not have been made possible without all the supporting impact partners, including Dream Impact, Foundation for Shared Impact, Social Investors Club, HKCSS Social Enterprise Business Centre, Hong Kong General Chamber of Social Enterprises, Social Enterprise Summit, Vivien Teu & Co LLP, Uprise Credit, as well as professional volunteers on our Selection Committee and Advisory Board.

Our impact partners:

Dream Impact: https://dreamimpacthk.com/

Foundation for Shared Impact: https://www.shared-impact.com/

Social Investors Club: http://www.hk-sic.com/

HKCSS Social Enterprise Business Centre: https://socialenterprise.org.hk/

Hong Kong General Chamber of Social Enterprises: https://sechamber.hk/home/

Social Enterprise Summit: https://www.ses.org.hk/

Vivien Teu & Co LLP: https://www.vteu.co/

Uprise Credit: https://uprise.hk/en

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