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Social Innovation: What It is and How to Advance It

Paul CarttarPrice School of Public Policy

USCDecember 12, 2012

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• Social innovation is powerful and essential force – especially now – that we must exploit.

• There is significant activity now in this space, with many players – including universities – aiming to establish noteworthy roles/positions.

• The challenge of making it work better has many facets/niches, and very little is truly “known” about key workings and questions.

• So, a well-considered, well-executed strategy can still lead to sustainable success.

• I am a practitioner and strategist – not a researcher or scholar – and my input should be viewed accordingly.

Bottom Line

Source:

Gary Larson, “The Far Side”

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• What “social innovation” is­ Context­ Definition and dynamics­ Current state

• What is required to advance it­ Framework­ Role of government­ Case study: the Social Innovation Fund

• Questions and discussion

Agenda

On One Hand….

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The “picture’s pretty bleak”:

There are many people and communities in need

Governments are facing unprecedented fiscal constraints

Community-based organizations are under severe funding pressures

On the Other….

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There is reason for optimism and resolve:

We still have significant resources;

We are resourceful people with a long tradition

of solving our biggest problems

We have many effective solutions already being

deployed in communities

On the Other….

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There is reason for optimism and resolve:

We still have significant resources;

We are resourceful people with a long tradition

of solving our biggest problems

We have many effective solutions already being

deployed in communities

IMPERATIVE: get more impact from the resources we invest in social progress

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The Ultimate Answer

….is INNOVATION.

Not, the typical “go to” approaches:

• Improving “management efficiency” to marginally boost yield, shave costs

• Eliminating “waste, fraud and abuse”

• Cutting budgets and hoping for the best

Utimately, must focus on what we do as much as how we do it.

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Definition of Social Innovation

Social innovation is a dynamic, on-going process in which superior solutions to social problems are developed, validated and grown to displace prior (inferior) solutions and, thereby, establish a more productive status quo.

Where,• Superior solutions can be

­ Of many types, eg devices, practices, programs processes

­ Incremental or transformational• More productive means higher impact per

unit of input 9

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Cycle of Social Innovation

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Improve Status Quo

Grow Superior Solutions

Validate Superior Solutions

Develop Alternative Solutions

ImpactPer

Input

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Essence of Social Innovation

Social innovation is not about what’s NEW – it’s about what’s BETTER

Where,

• Better means generating greater impact per unit of input than current solutions, and

• Impact means outcomes that are actually attributable to the action in question, based on evidence

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Social Innovation Drivers

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Optimize Status Quo

Grow Superior Solutions

Validate Superior Solutions

Develop Alternative Solutions

INVENTION

RESOURCES

E V I D E N C E

ImpactPer

Input

• Good news: we launch 30-50K new nonprofits each year in the US

• Bad news: few inventions grow (Bridgespan)- 200,000 nonprofits registered in the US

between 1970 and 2003

- Only 144 (0.07%) grew to be $50 M or larger in annual revenues

- And we don’t know if these were the best

How are we doing?

Why do superior solutions not grow?

Because we lack:

• Evidence of what actually is better

• Resources to support implementation and growth

Funders committed to supporting solutions with evidence of superior impact

Knowledge of how to grow scale and impact

Infrastructure to support growth

Key Barriers to Growth

Robust evidence is the key catalytic agent for social

innovation, serves two critical roles:

Evidence as Catalyst

Improvement

Selection1. Enables funding of better solutions

(what works)- “Better” grow relative to “worse”- Incentives for further innovation

2. Enables on-going improvement and innovation (how and why things work)

Alternatives to Evidence

Who is the “Best that Ever Was?”

What does the evidence say?

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Can evidence retard innovation? Many risks must be managed:

• Flawed studies – lead to wrong conclusions

• Excessive cost – creates disincentive, drains resources from program execution

• Excessive emphasis on rigor – can - Create competitive barriers- Discourage on-going improvement

Evidence Caveats

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• Funders – especially large-scale ones – play uniquely influential role in nonprofit sector­ Dearth of paying customers/beneficiaries­ Fragmentation of “social capital market”­ Lack of clear performance standards, accountability

• Relatively few large-scale funders allocate resources mainly based on evidence of results­ Foundations: small, short, new and programs­ Federal government: “tiered evidence” programs­ State, local governments: Youth Villages debacle­ Individuals: education and healthcare

Funders

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• What “social innovation” is and why it matters­ Context­ Definition and dynamics­ Current state

• What is required to advance it­ Framework for action­ Role of government­ Case study: the Social Innovation Fund

• Questions and discussion

Agenda

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• Barrier: evidence; evidence-based funders; knowledge of scaling; support infrastructure

• Level of focus:- Direct: aimed at specific organizations or

programs

- Macro: aimed at the broader context in which multiple organizations function (field, ecosystem, “systems change”)

• Life stage: start-up, nascent, promising, proven

Segmentation of Approaches

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Key factors in influencing segment focus, actions

1. What do you care about and what are you hoping to accomplish?- Issue area- Geographical area

2.Who are you and what distinctive capabilities may enable you to drive superior impact?- Service provider- Funder (individual, institutional)- Non-funder intermediary (services, information)- Rule-maker (federal, state, local)- Research institution

Strategic Considerations

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Selected Players by Segment

Robust Evidence

Evid.-BasedFunders

Scaling Knowledge

SupportInfra-str.

Direct • MDRC• Child Trends• U. of Cincinnati• EM Clark Fdn.• NYC Center for Econ. Oppy.

• Bridgespan• Fdn. Stategy Group• EM Clark Fdn.• Gates Fdn.

• Bridgespan• EM Clark Fdn.• Fdn. Strategy Group

• New Profit• REDF• Venture Philan. Partners

Macro • Urban Institute• Coalition for Evid-Based Pol.• Lisbeth Schorr• Mario Morino: Leap of Reason

• Social Impact Exchange• GEO• Center for Eff. Philanthropy

• Bridgespan• Fdn. Strategy Group• GEO• Stanford CSI• Duke CASE

• Social Impact Exchange• European VP Association• Asian VP Network

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• Allure is clear­ Potential leverage, “bang for the buck”­ Glamor, excitement, visibility

• But solid grounds for skepticism ­ Abstract, conceptual nature, disconnected to reality­ Absence of progress measures – potential for

enormous waste

• Implication: be careful, apply strategic discipline­ Clear intended impact, theory of change­ Clear budget, action plans, metrics

Caveats re “Systems Change”

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While “just another player,” government is different, due to several factors:

• Scale• Politics• Ability to make rules• Need for transparency• Culture of distrust, fear of scandal

Key Players: Government

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• Most tempting: “regulator-in-chief”- Incentives to set rules- Glamour of policy-making- Short-term results, action bias

• Most powerful, efficient: responsible, mission-seeking “funder-in-chief”- Amount of social spending

- Feds $100’s of billions; Gates US <$1 billion- Share of funds to nonprofits

- Estimate: govt. support to NPO’s 10X total of all institutional funders

Role of Government

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The Big Idea

“The bottom line is clear: solutions to America’s challenges are being developed every day at the grass roots – and government shouldn’t be supplanting those efforts, it should be supporting those efforts.

“Instead of wasting taxpayer money on programs that are obsolete or ineffective, government should be seeking out creative, results-oriented programs … and helping them replicate their efforts across America.”

- President Obama, June 30, 200927

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The Social Innovation Fund is an initiative intended to achieve three policy goals:1. Generate direct impact for people served2. Demonstrate a better approach to federal

government grant-making3. Strengthen the nonprofit sector

It’s function is to leverage a limited federal investment by:• Mobilizing public and private resources to• Find, evaluate and grow promising community

solutions with evidence of compelling results

- in youth development, economic opportunity and health

The Social Innovation Fund

Pathways to Impact

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Improve

lives

of

people

in

need

Grant Program• Selection of grantees/subs • Growth of capacity/impact• Rigorous evaluation

Grow

impact of

innovative

solutions

that work

Widespread Impact Program

• Assist federal agencies• Share knowledge • Support targeted

initiatives

Social Innovation

Fund

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The SIF model has five key features that address all four

major barriers to org. growth, social innovation:

Innovative Model

Evidence

Evid-Based Funders

ScalingKnowledge

SupportInfrastructure

1. Open, competitive, evidence-based grantee selection processes

2. Reliance on experienced grant-making intermediaries

3. Emphasis on rigorous program evaluations

4. Requirement that public money be matched up to 3:1 from private sources

5. Commitment to capture and share knowledge

Evid-BasedFunders

The SIF targets “promising” solutions due to high risks of earlier stages and high funding needs of “proven” stage.

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Launch the innovation

Scale the innovation

SIF Target Area

Start-up Proven

Refine the innovation and demonstrate effectiveness

Pursue limited growth and build org capacity

Nascent

Define the innovation

Promising

“Subgrantee” Stage Focus

Capacity-builders and TA providers

Private philanthropy (matches)

Nonprofits• $100 K +• 3-5 years• 1:1 match

Selected to date:

240/$220M

Social Innovation

Fund(SIF)

Funds granted:

$137M

Intermediaries• $1-10 M grants• 3-5 year plans• 1:1 match

Selected to date:

20/$137M

Grant Program Structure

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SIF Participation by Segment

Robust Evidence

Evid.-BasedFunders

Scaling Knowledge

SupportInfra-str.

Direct • MDRC• Child Trends• U. of Cincinnati• EM Clark Fdn.• NYC Center for Econ. Oppy.• SIF

• Bridgespan• Fdn. Stategy Group• EM Clark Fdn.• Gates Fdn.• SIF

• Bridgespan• EM Clark Fdn.• Fdn. Strategy Group• SIF

• New Profit• REDF• Venture Philan. Partners• SIF

Macro • Urban Institute• Coalition for Evid-Based Pol.• Lisbeth Schorr• Mario Morino• SIF

• Social Impact Exchange• GEO• Center for Eff. Philanthropy• SIF

• Bridgespan• Fdn. Strategy Group• GEO• Stanford CSI• Duke CASE• SIF

• Social Impact Exchange• European VP Association• Asian VP Network• SIF

Reliance on valid evidence is a fundamental tenet of the Social Innovation Fund, which employs evidence in three primary ways:.

Role of Evidence

Proof ofWhat Works

Assessmentof Success

Selectionof the Best

1. To select the best intermediaries and nonprofits– Intermediaries: track records of using evidence to

drive impact; rigorous evaluation plans– Nonprofits: at least “preliminary” evidence of results;

commitment to achieve “moderate” or “strong”

2. To grow the body of evidence about which program models actually work– Rigorous Subgrant Evaluation Plans for each– Strong technical assistance to support improvement

3. To evaluate the success of the Social Innovation Fund itself– Five-year national evaluation study– Conducted by outside contractor

Innovative models will be proving what works• BELL Summer Program (Clark): short-term and long-term

impact on reading and math achievement and grade promotion of 5-week summer program for children in 2nd-5th grades

• iMentor (New Profit): 4-year impact on high-school graduation and college readiness for technology-based 1:1 mentoring program for high-school students

• Latin American Youth Center (VPP): 18-month impact on post-secondary enrollment, job retention and life skills of “promotores” program for disconnected youths ages 14-24

• Reading Partners (Clark): 1-year impact on reading proficiency and academic behavior of in-school, volunteer tutor model for struggling readers in grades K-5

Building the Evidence Base

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SIF Scorecard

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Awarded

Who have committed

And have selected

states and DC

Thus far served

Its first 2-1/2 years, the SIF has

$350M

$137M

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197

175,000

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in federal funds

strong intermediaries

in matching funds

more people in need

NGO’s with evidence

Operating in

In open competitions to

Who have planned 74 rigorous evaluations, and

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• What “social innovation” is and why it matters­ Context­ Definition and dynamics­ Current state

• What is required to advance it­ Framework for action­ Role of government­ Case study: the Social Innovation Fund

• Questions and discussion

Agenda