Perhaps it’s the curse of becoming an academic that I am constantly questioning both if things will work as they intended and/or how we actually measure that?
I like many others have been closely following the unveiling of the Social Innovation Fund under Obama’s Administration, not only watching ‘who’ is advocating and supporting this Fund, but also what the process will be like. As someone who is especially interested in better understanding how supply side aspects of grantmakers impact both intended and actual outcomes of grantmaking there are so many reasons that I’m excited about this fund but also extremely cautious. Since many bloggers, practitioners, and academics are writing about this I would love to get some general feedback on perspectives about the process as perhaps this advice could be taken into account in the actual distribution and administration of funds. So please feel free to leave comments or contact me offline.
I’ll start with the positive and really what I’m excited about. . .
1. The explicit recognition by government that real, long term solutions to complex social problems in the United States require collaboration between ALL sectors. This in itself is tremendous and an acknowledgment linking back to Salamon’s theory of nonprofit and government as complementary partners
2. A focus on evaluation (I’ll discuss my extreme hesitation about why I’m cautious about getting excited about this below). However, the fact that this fund will provide monies for nonprofits beyond operations while also having nonprofits COMMIT to data collection and evaluation is HUGE. I hope this has a signaling effect to ALL nonprofits that evaluation is a necessary component of doing ‘good’ work
3. It’s use of intermediary grantmakers instead of using the government to distribute these funds. Not only is there an American distaste for more government involvement in any sort of decisions, but truthfully if these funds were solely distributed by the government, we can all imagine the bureaucratic red tape that would exist. Additionally, it is likely that the intermediary grantmakers who specialize in particular focus areas while also having overall expertise in grant making provide a better conduit to distribute these funds
Everything so far sounds good, but again I’m most excited about the overall signals the social innovation fund creates but extremely concerned about the actual process.
Here are my initial concerns
1. A focus on evaluation =) Yes, I know I mentioned I was excited about this above but when it really comes down to it, several of my favorite evaluation questions emerge. What are you measuring? How? With what resources? Will this fund taken into account already established metrics like The Urban Institute’s Outcome Indicators Project or The United Way’s outcome metrics? Will it consult academics or experts in evaluation about how, why and what to measure within these nonprofit organizations?
2. This idea of growth capital. Plainly stated – I’m confused. I keep reading it but can’t figure out why the Social Innovation Fund is considered growth capital? The fund almost seems like a recognition by government that what most nonprofits need to grow is access to equity capital so they can scale up to size, but still not allowing a legal form that accommodates this within the U.S. (see literature on social enterprise for more info. on this and how successful these legal forms have been internationally, particularly in the U.K.)
Scholars have found that many of the difficulties associated with nonprofit organizations scaling up to size is a lack of access to capital. In fact, many social enterprises and innovative nonprofits are funded by foundation grants, which ultimately ‘expire’ after 3 years of funding. So how is this fund any different?
Why do we continue to think that innovative organizations need more grants, more evaluation, more data? What exactly is innovative about this fund? Is it government working explicitly with philanthropists, because that has been occurring since the beginning of American philanthropy and still occurs to date.
3. Finally, how can we ensure that local, community based organizations who are doing great work CAN actually scale up without risking their mission. Scholars have found that some of the reasons nonprofit organizations work, and work well, is because they are local and community based.
More importantly, for those nonprofit organizations who do receive funds won’t they be the larger, more established, more professionalized nonprofits? These organizations will likely have the capacity to not only go through the administrative process of applying for grants, but also the financial and operational capacity to accept a large grant.
Overall, I fear that without changing the process of awarding these funds to innovative nonprofits, the Social Innovation Fund risks falling into a trap of being just another organization that provides grants – and that my friends, is simply not that innovative after all.
John C. Ronquillo
Sondra Barringer
Jasmine McGinnis
Erica Coslor
Will Corbin
June 22, 2010
Jasmine,
I also believe you have accurately illustrated your concerns about the Social Innovation Fund. I agree with everything you have said here. It is good to see that (finally) a Presidential Administration is at least giving philanthropic, non-profit causes their deserved attention. But alas, upon examining the facts more closely, this is still almost little more than lip-service. Much more needs to be done.
In my opinion, the biggest concerns are:
1) NOT ENOUGH FUNDING IS BEING OFFERED! $50 million, maybe incrementally increased to $100 million? Seriously, they need to do better than that. All things considered, that is a rather paltry amount, and – not to be too pessimistic – unlikely to to make a significant, lasting impact.
2) Perhaps more importantly, THESE FUNDS WILL CERTAINLY NOT GO TO THOSE ORGANIZATIONS WHO NEED IT MOST! In order to make the most impact, the wealth needs to be dispersed better to more of the lesser-known community-based organizations (many of whom arguably just as much, if not more, of an impact and are doing great work). The more organizations that are involved and enabled toward the non-profit cause, the better off society will be.
Of course, Jasmine, you do bring up a very excellent point, about the maintenance of certain evaluation standards. Of course, the White House is going to want to cover its back, and not foolishly give money out to anyone. Obviously, stricter standards mean that much of this funding will end up in the hands of the larger, more well-known organizations. This is the nature of the beast, unfortunately. Certainly, something can be done about this.
Pablo Eisenberg, in a blogpost to onphilanthropy.com (http://tiny.cc/f5ynt) gives some pretty interesting ideas, such as perhaps lobbying congress to increase the five percent minimal payout that foundations are required to distribute annually – and making sure these payouts are all in the form of grants. According to Eisenberg, under current law, foundations can include all their management costs as part of their minimal payout.
As all students and practitioners of policy know, change in the Republic of the United States of America was intended to be, and is, slow. Such is the business of government!
Michael Edwards
June 23, 2010
Good points Jasmine, most of which I share. I hope you’ve seen “Small Change: Why Business Won’t Save the World” which discusses this whole paradigm shift in detail (if that is what it is!).