KUCHING: Malaysia is the only country in the Asian region which has embarked on the Social Outcome Fund (SOF), an innovative approach in helping to address social issues in the country, save government spending and achieve high social impact on the society at large.
SOF, which was launched in March this year, with RM3-million fund, is managed by the Malaysia Innovation Agency (AIM), a statutory body under the Prime Minister’s Department.
Minister in the Prime Minister’s Department Dato Sri Nancy Shukri pointed out that AIM has identified 40 social issues classified to seven areas in the country.
“Amongst them is teenage pregnancy. If we calculate (the social impact cost), one teenage pregnancy would cost the government RM200,000. And if we do not solve this problem, then the cost will continue to escalate,” she said.
For teenage pregnancy issue alone, she explained that multiple parties will be involved including Women, Family and Community Ministry, the police, prison, shelter homes and baby hatchers, which all cost money.
“Hence the SOF was created to help government save money particularly on spending for (to address) social problems.
We try to identify and work with the stakeholders in collective effort to help government save money and at the same time boost financing and creativity in delivering social services in the country,” she added.
Nancy was met at the International Biomass Conference Malaysia 2017 (IBCM 2017) at the Borneo Convention Centre (BCCK) here yesterday.
The fund encourages social purpose organisations (SPO) including foundations and non-governmental organisations (NGOs) to invest in ventures or projects with social impact that go beyond corporate social responsibility and help individuals and communities, as part of a social economy, achieve more complete interaction with public and private sectors.
Since the launch, AIM has received 35 applications from SPO and they are now shortlisting seven projects to be kicked off next year.
AIM chief executive officer (CEO) Naser Jaafar pointed out that the SOF was created to jumpstart wealth creation through knowledge, technology and innovation to stimulate and develop the innovation ecosystem in Malaysia.
“This is about creating a sustainable business model which if successfully implemented can become the mainstream financing for social intervention,” he said.
“We want to be proactive and innovative in solving our social issues, unlike a one-time-off CSR in which the government has pretty much up to this point acts reactively by giving money,” he added.
On how it works, Naser explained that SPO targets a social intervention project with the amount needed and AIM will go find the impact investor to fund the project.
“Let’s say an investor pays RM1 million to the SPO, if the project is successful in addressing the issue and helps the government save money 1.5 times or more, the government through AIM will pay back RM1 million to the investor,” he said.
“We will measure the results. If results are achieved, government pays your money back but if not achieved, the investment becomes a donation. It is a win-win situation,” he added.
In brief, investments made by corporate investors may be entitled to a reimbursement from the SOF if their investments result is 1.5 times or more of the value in terms of cost savings for the government.
“The money goes back to the system and can be reinvested in other issues. Most importantly, we find the investors and let the SPO focus in real work of addressing the social issues,” he emphasised.
Naser reminded that Malaysia will need more money to solve more social problems as it strives to become a developed nation.