Unlocking impact capital in Hong Kong
Hong Kong is unique: it has capital, financial expertise and a strong tradition of philanthropy. It also has a strong social sector with a deep understanding of local needs. The opportunity now is to connect these strengths – and direct more money towards measurable social and environmental impact.
Unlocking impact capital in Hong Kong: Learnings from global ecosystems was developed in partnership with the Institute of Philanthropy and Tri-Sector Associates and our Social Finance Global Network partner, Social Finance US. Hong Kong’s Financial Services Development Council and the Hong Kong Academy for Wealth Legacy also supported this work.
In the report we identify three potential roles for impact capital in Hong Kong:
- Helping existing funding go further through outcomes-based financing and recyclable funding models that reward results and allow capital to be redeployed over time.
- Mobilising additional capital for impact by using catalytic or blended-finance structures to attract private and family-office capital into socially beneficial initiatives.
- Building capabilities, evidence, and networks by strengthening impact measurement, organisational effectiveness, and cross-sector collaboration.
The Hong Kong Jockey Club Charities Trust is the largest charitable donor in Asia and one of the biggest worldwide, while the Hong Kong Jockey Club contributes a total of HK$39.3bn to the Hong Kong community.
The Institute of Philanthropy was established in September 2023 through a seed grant of HK$6.8 billion (US$870 million) from The Hong Kong Jockey Club and its Charities Trust and is dedicated to promoting philanthropic thought leadership and enhancing sector capabilities at local, regional and global levels in collaboration with fellow funders.
A global approach to a local situation
Social Finance brought nearly 20 years of hands-on experience to this work. Across the globe, we have helped governments, philanthropists, investors and social-purpose organisations turn new funding ideas into practical tools.
Alongside Tri-Sector Associates, who led research and stakeholder engagement in Hong Kong, Social Finance took a deep dive into how impact capital markets have developed in the UK, Japan and Singapore. We asked what made them grow, which institutions mattered and what helped promising ideas become reality. We also spoke to people who had helped shape those markets at key moments.
Together, we tested these international lessons against local realities for Hong Kong, with the goal not to copy another market, but to help lay the foundations for Hong Kong to build its own. The research included conversations with more than 50 stakeholders and their teams across four markets, and a poll of 20 Hong Kong-based family offices.
Bringing together this mix of practice, evidence and local knowledge matters. Impact capital markets are not built by launching a single instrument. They grow when people with different goals, resources and risk appetites agree on what needs to change – and build the trust and capability to act, with intention.
Why Hong Kong, why now?
Hong Kong already has strong public, philanthropic and private funding. But these sources often work separately. Impact capital can connect them – matching the right kind of money to the right need, return expectation and level of risk.
Philanthropic funding can take early risks, test ideas and build evidence. Public money can set direction and help effective approaches reach more people. Private capital can bring investment, talent and expertise. This is not about replacing grants or public funding. It is about using every form of capital where it can do the most good.
The report highlights three shifts: from fragmented interest to shared direction; from isolated capability to shared capacity; and from private learning to public knowledge.
Hong Kong is well placed to make those shifts. It has global strengths in finance, wealth and asset management, as well as philanthropic leadership and strong regional links. The prize is significant: a market that is locally rooted, globally relevant and known not only for managing wealth, but for putting it to work with purpose.
The real promise of impact capital is not simply putting more money to work – it is making every dollar work harder. By aligning, recycling and blending philanthropic, public and private capital, we can extend the reach of scarce resources and generate greater impact over time.
Tracy Palandjian, CEO and co-founder, Social Finance US
Different models for different realities
There is no universal playbook – approaches need to adapt to local realities, in particular the role that government can play.
Looking across thre three global ecosystems we chose as case studies, we identified three potential roles for government:
- As an architect, interventing at strategic points to build and grow the market. The UK offers a good example of this: government acted to seed early funds, and passed legislation in 2008 to unlock dormant bank accounts, which capitalised Better Society Capital, a wholesaler that has been central to the market’s core infrastructure.
- As an endorser, validating a model that philanthropy has already proven. Japan is a good example of the endorser. Philanthropy led the way – the Nippon Foundation seeding pilots and establishing many of the key market actors – encouraging government to step in as a track record emerged, including by founding the Office of Pay-for-Success Promotion in 2019.
- As an enabler, shaping the policy environment so capital can flow more easily. Singapore is an example of the enabler. Rather than fund the impact capital market directly, the initial focus has been on making Singapore an attractive base for impact capital and philanthropy, including recent 2022/23 changes to tax rules specifically to let family offices use blended finance and outcomes instruments.
The role of intermediaries
Intermediaries – including organisations like Social Finance and our partner, Tri-Sector Associates – play a vital role in developing social investment markets and helping impact capital to flow. These vital functions include:
- Designing impact capital solutions: structuring and launching new financing approaches, from concept origination through to due diligence, financial modelling, and risk management.
- Mobilising and aligning capital: bringing together partners that have never collaborated before, and helping them to bridge different perspectives, institutional objectives, and constraints.
- Developing pipeline and investment readiness: supporting organisations to strengthen their models, capabilities, and readiness for impact capital.
- Scaling solutions and ecosystem development: sharing evidence and learning, developing common standards, and coordinating activity to help the market grow.
Drawing global conclusions
The opportunity for impact capital highlighted in the report applies far beyond Hong Kong. Governments everywhere face tighter budgets and more complex social challenges. At the same time, families and foundations want to use their wealth more strategically. Philanthropy can play a significant role in funding early experiments, absorbing risk and bringing partners together.
The approach to building impact capital investments in any environment has many consistent features: start with the social need, understand the local system, match capital to purpose and invest in the connections between funders and frontline organisations. Without strong intermediaries, markets do not move.
That is where the experience built up by Social Finance and our partners adds value. We have helped to create impact capital markets across the world, working within them directly and with our partners, and we have seen them change over time. This report turns that experience into a clear vision for Hong Kong – ambitious, practical and grounded in the city’s own unique strengths and societal needs.
For other places, the message is just as clear: impact-capital markets are built, not discovered. They start when the right people, evidence and money come together around the outcomes that matter, and take intentional steps forward together.
