November 29-30, 2010, Seoul Chull -Young Lee Social Enterprise Network

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Financial Intermediaries For Social Enterprises: Korean Case. Plenary Session 3: Impact Investing and Finance Asian Social Entrepreneurs Summit 2010. November 29-30, 2010, Seoul Chull -Young Lee Social Enterprise Network . Social Enterprise Network. - PowerPoint PPT Presentation

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November 29-30, 2010, Seoul

Chull-Young LeeSocial Enterprise Network Financial IntermediariesFor Social Enterprises: Korean CasePlenary Session 3: Impact Investing and FinanceAsian Social Entrepreneurs Summit 20101Social Enterprise Network2

Purposes: (1) Study & education of Social Enterprise at business school (2) To grow responsible business leaders of the futurePartners: Nine(9) business schools, KDI, Work Together Foundation and some corporations in KoreaPrograms: (1) Social Venture Competition Korea (2) Social Enterprise Forum (3) Impact@Work (Students Internship at Work Places)Related Topics: Social Entrepreneurship, CSR&SRI, Environmental Sustainability, Global Poverty & Emerging Markets(BOP), Social Capital Market, Strategic Philanthropy, Non-Profit Management

Contents3Landscapes of TodaySuggestions for TomorrowI. Landscapes of Today4Social Enterprises in Korea are dominantly(99%) Social Service Providers.

99% of 300 Social Enterprises, certified by Ministry of Employment and Labor, Dec. 2009, are Social Service Providers.

Ex: WeCan [Social Service Provider] WeCan produces cookies to employ forty(40) mentally handicapped youths.

Ex: EcoFaeBrick [Social Innovator] EcoFaeBrick, made by Indonesian business students, uses cow dung to produce high quality, low cost bricks in 22 emerging countries.

No Social Innovator, and accordingly no social venture capital, is existent in Korea.

45 Ministry of Employment and Labor is the leading and dominant financial supporter:For the 300 Certified Social Enterprises (or 1,000 planned by 2012)as Social Service Providers.

By Social Enterprise Promotion Act, 2007[Landscapes of Today]

56Micro-Finance is a Charity in Korea:Under Governments policy guide and funded by business conglomerates and commercial bank groups, eleven(11) Smile Micro-Finance Foundations () were launched in December 2009.

Their interest rates are 2-3% below the average bank loans. Their financial sustainability is a concern.

[Landscapes of Today]6II. Suggestions for Tomorrow7Develop Financial Intermediaries, instead of Governments direct involvement.

Develop Social Innovator Model of Social Enterprise, along with Social Service Provider Model.78Develop Financial Intermediaries, instead of Governments direct involvement.

Social Service Providers[Social Enterprises](Grant, Subsidy & Loan) Micro Finance Institutions Social Banks Social Venture Incubators Social Venture Capital Funds Funding Govt Central Fund Civil Foundations Commercial Banks SRI Mutual Funds Individual Donors

[Financial Intermediaries](Grant, Loan &Equity Investing)[Funders] Social Innovators[Suggestions for Tomorrow](Capacity Building)(Grant, Equity Investing & Loan)89For Development of Financial Intermediaries: Make Governments Central Fund under MOSF(Ministry Of Strategy & Finance).[Suggestions for Tomorrow]

Ex: CDFI Fund(Central Fund) at U.S. Treasury Dept certifies CDFIs (financial intermediaries) and provides funds to them.

910(2) Raise interest rate for Micro Finance to 3%(ex) over average bank loans: [Suggestions for Tomorrow]Globally, interest rates for Micro Finance are 12-24%.

Hope Seed Loan, Korea(): Last twelve(12) months, six(6) commercial banks have successfully provided micro loans to 260,000 micro entrepreneurs on interest rate of 3.5% over average bank loans, with default rates of 1.0-1.3% only.

1011(3) Encourage(ex: tax incentive) SRI mutual funds to deposit or invest 1-5% their net assets in Financial Intermediaries.[Suggestions for Tomorrow]Ex: Pax Worlds Community Investing:Pax World, a SRI Mutual Fund in NY, deposits 5% its net assets in social banks or micro finance institutions.

In Korea, twenty two(22) SRI mutual funds net assets(485 Billion Won) shares 0.24% total mutual funds net assets (Apr, 2009), compared to 12% in U.S.

1112[Suggestions for Tomorrow]Ex: Columbia Business School, NYC, released Social Capital Market Report in 2003 under RISE(The Research Initiative in Social Entrepreneurship) survey project.(4) Survey Philanthropic Funds in Korea to encourage them to behave Strategically.

1213Develop Social Innovator Model of Social Enterprise, along with Social Service Provider Model:To develop and activate Financial Intermediaries andConsequently, to develop Social Enterprises as a whole.[Suggestions for Tomorrow]1314For Development of Social Innovator Model: Include Social Enterprise in Business School Education. Ex: Seminar on Education of Social Enterprise at Business School, May 28, 2010, Seoul

Take Environment & Energy and Health Care as opportunities for Social Enterprise.

Take Global Poverty (ie Emerging Markets) as opportunity for Social Enterprise, as well as for large corporations & MNCs. Ex: Out of Poverty, Paul Polak The Fortune At The Bottom of The Pyramid, C.K. Prahalad[Suggestions for Tomorrow]

Treadle Pump14Conclusion:15Innovation is the key.No Innovations, No Investments.

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