The Role of the Public Sector and an Exit Strategy for the Social Solidarity Economy Ecosystem (Part 2)

 In my previous post, I examined how deeply the frontline of South Korea’s social solidarity economy is impacted by the ebb and flow of public budgets. Having spent years reporting on the social solidarity economy and social impact sectors, I have witnessed firsthand how the ecosystem rapidly expands or abruptly contracts depending on the budget climate. Looking at this reality, some criticize the sector for being overly reliant on public funding. At the same time, others argue just as strongly that public priming support remains essential, as these organizations tackle social challenges overlooked by the conventional market through business models.

 

In this piece, I want to outline the legitimate role of public budgets and explore the necessary exit strategies for building a truly sustainable social solidarity economy ecosystem.

 

👉👉Read 1 First Part

When the Budget Changes, the Field Changes: The Reality of South Korea’s Social Solidarity Economy (Part 1)

 

Before diving deeper into the discussion, there is a fundamental question we must address: "How should we view the public budgets allocated to social solidarity economy organizations?"

 

As emphasized numerous times on this blog, social solidarity economy organizations and social impact enterprises pursue two goals simultaneously: social value and business viability. Simply put, they are organizations that use business activity as an instrument to fulfill social missions. Consequently, they belong neither entirely to the private market nor wholly to public administration. They operate right on the border between the market and the public sector, serving as an independent bridge.

 

This unique positioning clearly explains why a reasonable level of public funding is necessary for the social solidarity economy. Generating profits solely through commercial enterprise is challenging enough in a standard market economy. When the primary purpose of a venture is anchored in the public good and social value, creating short-term financial returns becomes far more demanding. In particular, projects with substantial social ripple effects often struggle to achieve financial self-sufficiency through market mechanisms alone. In this structural gap, public funding serves as critical catalytic capital that compensates for the social value unrewarded by the market. It fosters an enabling environment where enterprises can broaden social safety nets and generate multifaceted value.

 

Of course, relying indefinitely on public budgets presents clear limitations. As noted in Part 1, complete reliance on public funds leaves organizations perpetually vulnerable to shifts in central or local government policy directions, changes in leadership inclinations, or municipal fiscal constraints. This makes long-term project planning virtually impossible and undermines stable employment for practitioners on the ground. This is why calls for self-reliance continue to resonate within and beyond the field. Ultimately, the core issue is not simply whether organizations receive public funds, but rather how stable and predictable that support actually is.

 

Now is the time to design a sustainable structure for public support. When the public sector allocates budgets to the social solidarity economy, it must move beyond short-term, single-year patchworks and establish mid- to long-term roadmaps spanning at least three to five years. If programs must be scaled back or budgets restructured, there must be thorough communication and a grace period for the frontline field. Instead of one-dimensional metrics like short-term job creation numbers, budgets should be evaluated based on genuine community needs and long-term public value. Moreover, we must build a multi-tiered funding framework that clearly delineates the distinct roles of the public and private sectors.

 

Simultaneously, social solidarity economy enterprises must step out from the shadow of public budgets and build their own operational stamina. To this end, the ecosystem must cultivate "patient capital" circulating within its own bounds—through social finance, local mutual aid funds, and civic equity investments. (Indeed, meaningful movements toward building this independent foundation are emerging in South Korea, such as efforts to establish a "Value Finance Credit Union" envisioned as a dedicated social values bank.) Using this community-rooted capital as a stepping stone, organizations must prove their core operational competitiveness in delivering essential services—such as caregiving, housing, and resource circulation—without being tethered to public subsidies.

 

The true fruit of the social solidarity economy cannot be measured by short-term program indicators alone. Trust, solidarity, and localized problem-solving capabilities are collective assets accumulated over extended horizons. Accordingly, budgets and policies must be formulated and executed with a long-term perspective. The most pressing priority is ensuring that unpredictable shifts in public budgets do not repeatedly shake the foundations of the field, achieved by erecting both a resilient policy safety net and robust, independent self-reliance side by side.

🌿🍀🌴🌵🌲🌳