In South Korea, Policy Determines the Expansion and Contraction of the Social Impact Ecosystem

 When I first started working as a journalist in the social impact field, I thought—based only on what I saw on the surface—that social impact organizations such as social economy enterprises and social innovation companies had grown this much because of their unique ideas, their passion for contributing to solving social problems, and their horizontal and innovative ways of doing business rather than traditional top-down approaches.

 

However, once I actually started reporting and looked into materials about the social impact ecosystem, I realized that was not everything. Even with the same values and business, depending on how policies are applied, they could expand or shrink. They are also heavily influenced by the government in power, and at the local level, they are affected by ordinances.

 

In today’s post, I will write about how policy plays a role in the expansion and development of Korea’s social impact ecosystem.

 

🐶Policy plays a role in expanding the social impact ecosystem

 

Organizations can exist only when there are laws and institutions. Social impact enterprises such as cooperatives, social enterprises, self-sufficiency enterprises, and social ventures can exist within a legal framework.

 

Even if a business starts as a general startup, in order to be recognized as a social impact enterprise such as a social enterprise, it must apply according to legal grounds and go through a review process to receive certification. In the case of cooperatives, they must be reported and established according to legal requirements from the beginning. If they are not applied under the law, they cannot be classified as social impact enterprises.

 

For example, after the Social Enterprise Promotion Act was enacted, the number of social enterprises gradually increased, and after the Framework Act on Cooperatives was enacted, the number of cooperatives also increased.

 

According to the Korea Social Enterprise Promotion Agency, as of April 7, 2026, there are 3,766 social enterprises (1,031 preliminary social enterprises), and 32,197 cooperatives are in operation. This is the result of legal and institutional mechanisms, and laws and policies are not simply legal grounds to support these social impact enterprises, but rather the foundation that allows them to exist.

 

🐷Policy changes the flow of money (budget)

 

A representative example is the previous 20th government (May 2022 – April 2025), which emphasized self-reliance for social economy enterprises. At the same time, the budget was significantly reduced. As a result, social economy enterprises and other social impact enterprises inevitably shrank significantly. This is because it is never easy for small organizations to create both value and profit at the same time.

 

However, the current 21st government (June 2025 – present) emphasizes self-reliance for social impact enterprises while also allocating some public funds for them. I was able to directly confirm that the flow of money changes depending on how policy direction is set.

 

🐸Policy changes the way problems are solved

 

Policy determines who solves social problems and how. Even if it is the same problem, the subject and method of solving it can be completely different.

 

For example, to solve a particular social problem, different actors can take the lead:

 

👉Government-centered: public institutions directly provide services

👉Company-centered: leave it to the market and let private companies operate it for profit

👉Social impact participation: social economy enterprises and social innovation companies participate in solving the problem

 

For issues that are not meant to be solved only by the market but are classified as social problems that require government involvement, the authority to decide who will take the lead lies with the government.

 

In particular, since social impact enterprises do not only pursue profit but also aim to solve social problems, they are in an environment where they are inevitably deeply affected by policy.

 

🐼Why policy influence is strong in Korea

 

Korea’s social economy began to expand in earnest as an alternative to overcome the 1997 IMF financial crisis. As a result, it grew rapidly centered on government policy, and the ecosystem was quickly formed as laws and systems were established and organized. At the same time, policy dependency inevitably became high.

 

Therefore, in Korea, policy has functioned as a tool that designs the ecosystem. This is also the reason why Korea’s social impact ecosystem is greatly influenced by policy.

 

In particular, the social problems that the social impact sector tries to solve are actually difficult to solve only through the market. They also cannot be solved by a single organization alone. Policy inevitably plays a major role in creating structures that can solve social problems and making them work.

 

🐰Conclusion: Policy is strategy

 

In Korea’s social impact sector, if you do not understand policy, it is difficult to understand the ecosystem. This is because policy is not just an external variable. In Korean society, policy functions as both a strategy and a foundation for growth.

 

Therefore, in Korea, it can be said that policy determines the expansion and contraction of the social impact ecosystem.

 

What kind of role does policy play in shaping the social impact ecosystem in the country you live in? And how much influence does it have?

 

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