Beating Innovation to Death

There is a tendency in America of late, or maybe for awhile, to over-analyze to the point of distraction. So too is the case with the Social Innovation Fund, the federal government’s $50+ million experiment in providing growth capital to nonprofits. This great experiment to see whether government can do something pretty different to address social problems is in danger of being railroaded by leaders of the social innovation community who should be the ones most supportive of a new day for government.

The Social Innovation Fund (SIF) was modeled after the idea of venture philanthropy funds who were themselves modeled on venture capital funds. The idea with the SIF is to grant $50 million to private grantors (foundations, venture philanthropy funds, etc) who match the money and then turn around and grant it to promising nonprofits to scale their proven programs. Is the idea really innovative? No. But what is innovative is that the government is  recognizing the concepts of social innovation and scale and is experimenting with becoming a builder instead of just a buyer of nonprofit services.

But this experiment is in danger of failing before it even gets out of the gate. A major controversy developed this week with the announcement of SIF grantees. The controversy centers around whether New Profit, arguably the inventor of the venture philanthropy concept, was given preferential treatment in being awarded a grant.  Paul Light, the Nonprofit Quarterly and others voiced their concerns about the granting process. You can read all the details of the saga here.

Let’s be honest, everyone knew New Profit was going to get a SIF grant. New Profit pioneered the idea of venture philanthropy. And their spin-off organization, America Forward, which works to connect the vast governmental resources to social innovation, was behind getting the Serve America Act,  containing the SIF, formulated and made into law.  Would the SIF make any sense without New Profit? They have been scaling nonprofits for years, and they have unlocked the door between government and social innovation. How could they not be at this table?

And the growing amount of documents being released by the Social Innovation Fund demonstrates the fairness and process behind the grant awards and more than makes up for any of SIF’s initial ignorance of the importance of transparency.

I understand that discussion, transparency, and refining of process are all critical elements to getting change to happen, but too much of that before the actual experiment happens can actually prevent change. Let’s not conduct business as usual by over-analyzing a new project to death. Let’s see where this experiment takes us instead of railroading it before it even begins. It’s not perfect innovation, it’s not a perfect process, but experiments never are. If we don’t give the government some space to actually innovate, they may never go down this road again. Instead of beating innovation to death, let’s get out of our own way and see where this goes.

Tags: America Forward, builder versus buyer, New Profit, Nonprofit Quarterly, Paul Light, Serve America Act, Social Innovation Fund, Venture Philanthropy

Two Weeks to SoCap

Two weeks from today the 2nd annual Social Capital Markets Conference kicks off in San Francisco.  I’m pretty excited about it because I think one of the biggest things standing in the way of social innovation is a social capital market–the financial tools and vehicles necessary to adequately capitalize social innovation.  The speaker’s list for the conference reads like a Who’s Who of the social innovation world.  There are some incredible sessions, too many to choose from.  I wish the conference were longer than 3 days.  I’ll be tweeting (as much as my multi-tasking challenged brain can handle) and blogging from the conference.

Just a few of the topics to be discussed at this year’s conference include:

• The Social Capital Movement Across the Globe
• Social venture funds’ prominent role in the new economy
• The sophistication of social investing pioneers
• Raising money for impact investing in a downturn economy
• The Obama Administration’s focus on social innovation
• Creating effective collaboration between the private sector and development agencies
• Moving beyond Microfinance
• Market based solutions for the base of the pyramid
• New corporate structures, including hybrid businesses and L3C organizations
• Creating metrics and value around social change
• Mobile technology platforms worthy of investment

Are you excited yet?

One of the things I’m particularly excited about at this year’s conference is a movement toward including nonprofits and philanthropy in more of the conference.  Last year’s conference tended to focus a bit more on blended value investing (investing in social impact organizations that provide a social AND a financial return). But we don’t want to neglect those social entrepreneurs that employ a nonprofit model to create their desired social impact.

To that end, SoCap this year has a host of sessions about nonprofit social entrepreneurs  and a social capital market for them.  I am moderating one of these sessions, Growth Capital for Nonprofit Social Entrepreneurs on Wednesday, September 2nd at 1:30pm.  Darell Hammond of KaBoom!, Greg Baldwin of VolunteerMatch and Kelly Ward from America Forward/New Profit will discuss the growth capital that was used to bring some impressive nonprofit organization’s to scale.

If you are going to attend only one conference in the social innovation space this year, I would highly recommend SoCap.  Hope to see you there!

Growth Capital for Nonprofit Social Entrepreneurs

Date: Wednesday, September 2nd
Time: 1:30pm

Moderator: Nell Edgington, Social Velocity
Greg Baldwin, VolunteerMatch
Darell Hammond, KaBOOM!
Kelly Ward, New Profit and America Forward

Nonprofit social entrepreneurs like Volunteer Match and KaBoom! have become, over the past decade, very successful, national, multi-million dollar nonprofit organizations working to solve critical social problems. They’ve achieved this impressive scale through growth capital from individuals, foundations and venture philanthropy funds. Greg Baldwin from Volunteer Match and Darell Hammond from Kaboom will be joined by Kelly Ward from America Forward and New Profit, a pioneer venture philanthropy fund in Boston, to discuss the various financial tools available and necessary to scale nonprofit social entrepreneurs.

Tags: America Forward, KaBoom!, microfinance, New Profit, nonprofit, scale, SoCap, social capital market, social entrepreneurs, Venture Philanthropy, Volunteer Match

An Historic Day

Changing Administration

Today marks the much-anticipated inauguration of our next President.  And to a country in the middle of two wars and a deepening recession, it is a moment of hope.  There is much speculation about what this new President will do for our country.  Particularly in the nonprofit sector, which always bears the brunt of any economic downturn, there is much anticipation about what tomorrow will bring for the sector.  As we watch the ceremony and festivities today, here are some thoughts about what the new administration might mean for the social sector.

Obama made many plans and promises about national service and social innovation during his campaign.  I wrote about that here.  Basically his ideas were:

1. Growth of current national service programs like AmeriCorps and the Peace Corps
2. $4,000 tax credits to college students in exchange for 100 hours of community service
3. Expanded programs for engaging retirees in community service
4. 50 hours of required community service from middle and high school students each year
5. Expansion of YouthBuild
6. Allocation of 25% of college work study funds to community service projects

And, indeed, many of these ideas are contained in the economic stimulus package currently in front of Congress.  The Chronicle of Philanthropy gives a great summary of the implications of that plan on the nonprofit sector.  But in essence, the plan includes:

• $200 million to expand AmeriCorps by 16,000 members
• $50 million to the National Endowment for the Arts for grants to arts groups
• $50 million to Youth Build USA, a social entrepreneurial organization putting low-income young people to work building affordable housing.  You can see a video clip about this organization here.
• $87 billion to temporarily increase the federal portion of Medicaid
• $2.1 billion to Head Start to serve 110,000 additional children and create 50,000 jobs
• $1 billion for Community Services Block Grants, and $1 billion for Community Development Block Grants which help states provide social services and housing to low-income residents
• $1 billion for Child Care and Development Block Grants
• $1 billion to the Low-Income Home Energy Assistance Program
• $1 billion to help community health centers renovate their facilities, and $500-million to help them provide care to uninsured and underinsured patients
• $120 million to the Community Service Employment for Older Americans program, which would allow charities and other groups to add 24,000 participants
• $100 million to the Compassion Capital Fund, which provides grants to religious and other charities to provide social services

However, these changes don’t go as far as many in the sector would like.  A coalition of several social entreprenurial groups, including America Forward, America’s Promise Alliance, Be the Change, and Citizen Schools, are urging Obama to create a “nonprofit stimulus package.”  The package would include a Social Investment Fund Network, a government and private venture philanthropy fund that invests growth capital in social entrepreneurs.

But before Obama has even been inaugurated, he has made a grand gesture towards the sector. Yesterday Colin Powell, founder of America’s Promise Alliance, lead Obama’s Renew America Together Initiative where unprecedented numbers of Americans spent MLK Day doing volunteer service.  Obama has pledged to make service a key part of his plan for getting America back on track.

This is an historic, exciting time.

Tags: America Forward, America's Promise Alliance, AmeriCorps, Be the Change, Citizen Schools, Colin Powell, Head Start, Obama, Renew America Together, social entrepreneur, YouthBuild

Leading the Charge

At the forefront of the movement for bringing new ideas to bear on the social sector is America Forward. Launched earlier this year by New Profit, a 10-year old venture philanthropy fund in Boston, America Forward seeks to make the social and the government sectors work more closely together.  America Forward is a coalition of 70+ social entrepreneurial organizations that are solving the toughest issues facing America today.  The coalition seeks to harness the enormous resource of government (city, county, state and federal) to scale their effective programs.  America Forward worked with all presidential candidates in this election cycle to encourage them to put ideas like citizen service for all Americans and a government-funded social innovation fund, among other ideas, into their platforms.  You can read about America Forward’s policy ideas and what they are doing to bring them to fruition.  It is a really exciting organization that has, I think, the potential to revolutionize how government and nonprofits work together to solve the unprecendented challenges facing our country.

Tags: America Forward, coalition, innovation, Philanthropy, social, Social Entrepreneurship, social innovation