Korea Social Value Fund Grows 8-Fold in 7 Years, Boosting Social Enterprises

The Korea Social Value Solidarity Fund (KSVSF) celebrated its seventh anniversary, highlighting its success in channeling investment towards social value creation where traditional banks often do not tread. The fund, established in 2019, operates as Korea's first public interest corporation for social finance investment. It collaborates with intermediaries like the Social Solidarity Bank and the Korea Social Housing Association to provide loans to social economy organizations and related projects.

At a recent performance report meeting, KSVSF Chairman Ha Seung-chang emphasized the fund's role in generating social value by supplying capital to areas overlooked by commercial banks. A notable example is 'Geonmaek 1897 Cooperative Pub' in Mokpo, a community pub run by local merchants and residents using Mokpo's dried seafood. The KSVSF supported the cooperative's initial capital through its intermediary, B-Plus Co., Ltd., enabling the growth of a social economy organization and contributing to the local economy.

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Social solidarity finance has created social value by supplying funds to places where commercial banks cannot invest.

The fund's financial achievements are also significant. It has expanded its initial 23.2 billion won investment capital to 188.5 billion won by 2025 through additional contributions and investment returns. Professor Kim Jong-geol of Hanyang University noted that the KSVSF's average annual return of 4.3% over seven years demonstrates that investing in social value can also be profitable. The fund operates with a long-term perspective, with an average investment period of 7.4 years and an average loan period of 5.6 years, allowing social economy organizations time to overcome challenges and generate revenue.

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There is a perception that investing in social value is unprofitable, but the KSVSF's average return of 4.3% over seven years proves that social value investment can also be profitable.

This patient approach was crucial for the 'Tantan Housing Cooperative,' formed by victims of real estate fraud. The cooperative received a loan from the KSVSF after a 2023 fraud incident in Dongtan, Hwaseong. By purchasing affected properties and operating them as rental units, the cooperative recovered over 90% of the victims' losses within two years. This success underscores the power of social solidarity finance built on trust.

Despite its growth, social solidarity finance lacks a legal status. The recent passage of the Social Solidarity Economy Basic Law aims to address this. The law consolidates various social economy organizations under a unified framework, enabling integrated support and establishing a legal basis for social solidarity finance. This legislation is expected to encourage financial institutions to provide support and expand investment funds, with the Ministry of Interior and Safety pledging to actively foster the foundation for social solidarity finance.

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As the lead ministry promoting the social solidarity economy, we will actively strive to build the foundation for social solidarity finance after the enactment of the basic law.