To Grow the Asian Social Sector, Fail Forward and Get Over Overhead

Ming Wong is co-founder of Asia Community Ventures, a Hong Kong-based nonprofit organization that promotes social investing and collaboration in Asia. Ming recently sat down with us so we could pick his brains on all things social sector and impact investing in Asia. We talked about social impact careers in the first part of our conversation. In this second part, we turn to the Asian social sector itself.

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APF: I think it’s fair to say that the social sector in Asia is not as developed as the ones in Western countries. What are your thoughts?

Ming Wong is the co-founder of Asia Community Ventures.

Well, first I’ll talk about the sector in the country I know best, Hong Kong, and then give my impression of the overall social space in Asia.

Most of the nonprofits in Hong Kong are offshoots of social welfare service providers that used to be part of the government, spun off in last 30 years. They still receive a lot of funding, probably more than half, from the government.

APF: That’s interesting.

MW: Right, but that’s why the term “NGO” is a bit of a misnomer—you can’t be nongovernmental and truly independent if the bulk of your funding comes from the government. This is pretty true of most Asian countries. But keep in mind I’m referring to indigenous, domestic NGOs; I’m not talking about large international NGOs like the Red Cross or Oxfam. These INGOs are like large corporations in many ways. They are well established with a track record, and they view Hong Kong more as a fundraising location.

For other Asian countries, I think the NGO space is more closely linked to social advocacy. Outside of a few countries, Asia doesn’t really have many thriving democracies in the U.S. sense of the word, so NGOs in other Asian countries tend to be associated with actors trying to fight human rights abuses and promote civil rights. This is important, but my work with Asian Community Ventures is not directly linked to that. I’m not necessarily looking for regime change; I’m looking to address issues.

APF: Is that why you’ve said that you’re hesitant to use the term nonprofit to describe Asia Community Ventures?

MW: Well, I look at “nonprofit” as a legal entity. Asia Community Ventures is a nonprofit in the sense that we enjoy full charitable status in Hong Kong and can offer tax deductions if people were to donate money. But the work that we are doing often goes beyond the usual scope of a nonprofit.

I’ll be the first to say that a lot of the work of nonprofits is fabulous, but there’s a continuum, and if we are going to have a larger and system-wide impact then there is room for the sector to improve.  I chose to apply myself in an intermediary space because I see that there are many smart, passionate people that don’t quite understand how the world of money works. In other words, I believe that some of the tools and discipline on the business side can be applied in this sector, third sector, civil sector — whatever you like to call it. This is the area where I have the potential to add the most value.

APF: You mentioned that you see yourself as the connector, but how else are you applying your knowledge and skills to the social sector?

MW: The good news is that with the internet, the ability to learn from each other has never been easier. Global best practices are nothing more than an internet click away. But because the government is still a big player in almost every country in Asia, the policy aspects that support impact investing and social innovation are quite important.

This is one reason Asia Community Venture is research focused. Policy research is the area that we are targeting. There are many entities doing research on elderly, ageing populations, air quality, water, waste and so on, but that’s not an area where we think we can add a whole lot. My co-founder, Philo Alto, has a background in policy, and I look at what other people are doing and ask, ‘Well, if crowd funding is working in other countries and these are the concerns the regulators there have addressed, why can’t we do it in Hong Kong?’ I try to move the dialogue forward by writing in my blog, by talking to any government officials that will listen to me, and contributing to the South China Morning Post, which has been very supportive of my work.

APF: What are some recommendations you have for moving the social impact space forward at this point then?

MW: First, there’s the matter of getting corporations on board. What do corporations care about besides making money? They care about retention and having a good brand. When we talk to CEOs or CSR departments, we emphasize that it’s important to understand that your brand and what you do in the areas of sustainability matters to your employees. To younger people, if you exhibit good values, the sense of loyalty and engagement is significantly higher.

The other big area that we’re trying to promote is within government. In Hong Kong’s case, the government is not actually elected—it’s a very strange system where civil servants are also involved in doing policy work, unlike other countries where politicians do the policy and civil servants just execute. A lot of civil servants are going straight to civil service without much relevant business experience. And historically it’s always been an I’m the government and I’m here to help you mentality; we’re trying to change it to I’m the government and I’m here to create the enabling environment that makes it easier for you to help yourself and give you opportunities.

So in regards to social impact, we’re asking the people in government, ‘What are the levers you can control? You have access to funding and policy, but can you also take policy further and make it into legislation? Can you make it easier for people to launch start-ups? Can you make more affordable spaces available? Can you tweak the tax policy? Can you change financial regulations to permit crowdfunding?’

We’re trying to encourage people in government and in the corporate sector to open up their minds and see what other countries are doing. The good news is that the UK, US, and other countries have been doing the impact investing/social enterprise approach to solving social problems for at least ten years. There are a lot of good examples to draw on; I’m just finding ways to adapt it to local settings to roll it out.

APF: What’s your vision for the social innovation sector in the near future?

I am not a social innovation expert, not by a long stretch of the imagination.

But I will say this again: It relates to mindset change. If we look at California, the reason that the brightest people flock to California is because the enabling environment, the risk-taking mindset, is here. It applies not just to the entrepreneur willing to start a business in the garage, but to the group of investors prepared to risk real money to back entrepreneurs knowing that more will fail then succeed. Because the upside is that the ones that succeed will do so spectacularly that you can make back the money you lose. You wear failure as a badge—nobody looks down on you; they recognize that failure is part of the learning. Some people refer to it as failing forward. We unfortunately do not have that mindset in Hong Kong or Asia. If we start thinking more like that, that is the beginning of innovation.

APF: What’s something people aren’t really talking about but you think should be discussed more? In other words, given the chance, where would you shift the conversations on social impact?

It’s the elephant in the room—overhead and compensation. I’m a firm believer that if you want something to be sustainable, you cannot rely solely on volunteers. A willingness to pay people for their time is a recognition that that person generates value. The fact that someone makes money while doing good is not a bad thing. Why is it okay for a government minister make 500K, 600K, 1 million a year from public coffers, but suddenly because you’re the head of nonprofit, you can’t? Why is it okay for people to design violent video games and make a lot of money, but someone who is actually thinking of a new way to deliver education or healthcare is not allowed to make money? They have to be nonprofit. Has any social entrepreneur really gotten super rich out of anything?

Having said that, is it possible to abuse the system? Yes, of course, but you can put safeguards in there. You can’t always say that overhead is bad. It depends on the entity. If you’re looking at a tsunami relief organization, overhead should be as minimal as possible, that’s true. But if you’re looking at a research organization that tries to alert people to tsunamis before they happen, of course money given to such an organization goes to paying salaries and equipment. If you’re a donor you need to understand that.

It’s wonderful for people to give money away, but the people who give money away as grants need to do so in a more strategic and educated way. Get away from the notion that all overhead is bad. There has to be the right balance.

 

 

The last part of our conversation, on impact investing, will be up soon!

Images courtesy of Ming Wong and Ryanne Lai (Creative Commons).