Digging Deeper on the Social Innovation Fund: An Interview with America Forward Coalition

by Nathaniel Whittemore

category: Government and Social Entrepreneurship

Published May 08, 2009 @ 10:21AM PT

Signing the Serve America Act

How can the government play a better role aligning resources in order to help dynamic, proven nonprofits scale their impact? That was the question that launched what would become the Social Innovation Fund.

Signed into law as part of the Edward M. Kennedy Serve America Act, the Social Innovation Fund will help innovative and demonstrably successful nonprofits access the growth capital without which they can't achieve their full poetntial for impact. Initially, the Fund will allocate $50 million and harness a series of matching requirements in order to more effectively leverage that capital.

Conversations about this type of fund have been floating around for a few years. In 2007, America Forward, a coalition group designed to help scale and translate the work of social entrepreneurs into policy, wrote a briefing book about how the next administration could help spur social innovation. Since then, they've been helping advise the development of the Fund.

While there are many still many questions facing those who will administer the fund - ranging from the size of individual grants to the nature of the intermediary partners who will be in charge of disbursing and matching the funds - America Forward's Executive Director Kelly Ward sat down with us to give us of a better sense of where the fund came from and what it could accomplish.

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Change.org: To start, could you just provide a little bit of background about the Social Innovation Fund?

America Forward: Sure. As you've talked about extensively on your blog, there are fabulous solutions to social problems that currently exist in communities, but, for a variety of reasons, financial capital in the social sector does not systematically flow to the organizations with great results --- especially at the levels in which they need to bring their ideas to scale. The idea for a Social Innovation Fund came from a series of conversations about how to address that challenge. How do we identify what works and invest in those solutions? And can we invest in them at a level that will start to address the scope at which the problems exist?

To truly impact the problems at the scale in which they occur, government funding must be part of the equation. There simply isn't enough money from private and philanthropic capital to address the challenges we face in education, health care, workforce development, poverty, climate change, etc

Change.org: I want to come back to the money question, but for the sake of moving, what has been America Forward's involvement?

America Forward: So the Social Innovation Fund was meant to bring these two dynamics together... partnering government, nonprofits, and philanthropy together to provide growth capital for innovative, proven solutions. America Forward's involvement has been to help facilitate this discussion and get people working together to develop ideas that can address these larger dynamics. We helped bring people together to think about a Social Innovation Fund --- what's its purpose, how would it work, what would be the ideal design, etc. This included organizations in the America Forward coalition, other thought partners, people involved in this work in the field, etc. Moving forward, the Corporation for National and Community Service will make decisions about how to design and implement the Fund.

Change.org: How long has this process been going on? And was it happening before there were specific relationships with Administration officials?

America Forward: Yes. We put together the America Forward briefing book around the summer of 2007, and the idea is included in the book, along with a series of other policy ideas government could implement that would help foster and invest in social innovation. The Social Innovation Fund has gone through many iterations since that time --- informed by a lot of conversations with a lot of people. Also, then-Senator Barack Obama first expressed support of a Social Innovation Fund in December of 2007, so his staff have been leading thinkers on the Fund for a long time.

Change.org: Back then, what did you see as the government's best role in the funding side of supporting social innovation, and has that changed?

America Forward: Overall, we think the best role for government is as an investor in what works and a catalyst for positive change. The Social Innovation Fund is one way for government to play this role --- find solutions that have a proven impact, and use government dollars to catalyze philanthropic and private dollars to invest in what works.

Change.org: Do you think that government funding is an essential part of the equation? My understanding is that the Fund will invest $50 million (at least to start) through a process that involves a couple matches. The total amount of philanthropic dollars donated in America each year is over $300 billion. What makes it essential to have the Administration involved in this side of the equation?

America Forward: It's important to remember that the Fund is just a pilot program. $50 million in FY2010 is just a start. Part of the idea is leverage --- the $50million has several match requirements, so it's a much larger impact than just the $50 million invested by government. And in the Serve America Act, the Fund scales each year -- $60 million in FY2011, $70 million in FY2012, $80 million in FY2013, and $100 million in FY2014, all with the same leveraged match requirements.

So the Fund has it stands now has great potential to have impact as a pilot program. If we---and by we I mean the larger community of people and organizations committed to social innovation----can prove this model works, perhaps we can expand the model.

Change.org: Gotcha. So maybe let's get into what people are hoping for out of this pilot. Where is the current thinking about where to focus efforts? For example, is there a set type of grant? What scale and focus will organizations be required to have? How diversified will the portfolio be? And if that's information you don't know, perhaps you could shed light on some of the debates around those questions that have come up in the planning and advising process?

America Forward: These decisions are really going to be made by CNCS. They are responsible for implementing the Fund, and there are a lot of implementation details that still need to be figured out by them. They're getting ready to do a series of listening tours around the country to get input. If people are interested in contributing to this discussion, they should definitely attend the listening tours and share their ideas with CNCS. The schedule for the listening tours is on their website.

Additionally, there are some perimeters in the Serve America Act. For example, the SAA specifices the issue areas in which the Fund must focus, although the language is broad.

Change.org: Along those lines, what were some of the major challenges in getting approval for the Fund?

America Forward: We had a lot of really fascinating conversations with policymakers on Capitol Hill. Their input was really valuable --- those conversations helped improve it in the final version of the SAA. Some of the big questions from policymakers were about making sure this would help rural communities (which may find it more difficult to raise the match requirements), how to make sure it stays focused on social service issues, etc. Language was added into the bill to address those types of concerns, which was great.

Change.org: Could you clarify for people what those matching requirements are, and just explain a little bit more about the role of philanthropic intermediaries?

America Forward: Sure, just to the extent that it's written in the bill. Essentially, the design of the Fund is a 1:1 match requirement for intermediaries, and also a 1:1 match requirement for subgrantees. So for every $1 of government funding an intermediary receives they have to raise $1, and for every $1 a subgrantee receives from an intermediary they have to raise $1. There is also language in the bill that softens the match requirement under certain circumstances.

Change.org: I know they're still figuring out precisely who those Intermediaries are, but can you shed some light on the type of institution that the Fund had in mind?

America Forward: In general, remember the intent of the Fund is to identify and invest in proven solutions to help them scale their impact. So presumably the intermediaries will be organizations with experience in that. The SAA provides a general outline for intermediaries and subgrantees. CNCS will now decide the regulations on how to implement what's in the bill. There's also language in the bill about partnerships at the intermediary level ---grantmaking institutions, state commissions, mayors, local government CEOs, etc coming together to focus on particular problems in their communities which is an important aspect of the Fund --- providing funding for communities to focus on the problems they face.

Change.org: I guess the real question for me and the one that I still don't feel I have a good answer too (and it's not your job to know this answer) is what unique value the government brings getting involved with this funding. At ASE2009, when that question came up, the answer was "well the Fund is in government so the potential for grantee's innovations to impact policy is huge." But it seems to me there's a real missed (or at least unarticulated) step in logic there. What are the ways that innovation can flow up into policy? Are there formal relationships between Social Innovation Fund and other bodies or funds that have a stake in similar issues? What is the path between an innovative nonprofit and policy shops? I think the listening campaign is great, but it also seems to me that these are questions that the people pushing and administering this Fund have to have their own working answers to. Particularly when it comes to the interrelationships between government offices, which even informed citizens just don't necessarily understand.

Like I said, I know this isn't stuff that you have any control over, it's just the set of things that makes me nevous and perhaps even a bit skeptical of things as I've seen them explained so far.

America Forward: All great insight and great questions. I'm with you in hoping the listening tours help clarify some of this. I hope it has a larger impact that just having the innovations influence government and policy that would be great, but I think the potential is bigger. For example, it could provide a model for how to leverage government dollars more effectively, including how government, philanthropy and the social sector can partner together to solve problems at scale. It could also release a lot of energy around the country for people to partner together to invest in proven ideas, and create and fund new ideas.

Change.org: Perhaps an interesting place to take the conversation would be to bring it back to the level of things you do with - which is help align and improve the work of a set of high-impact social entrepreneurs. What have been there reactions? What are they most excited about and where do they still have questions?

America Forward: The Fund could really help release energy around investing in new solutions to solve big problems. And I think that's how a lot of people, America Forward and others, are thinking about it. I think there is cautious optimism and great interest in seeing if this can really work. It's up to all of us to help make it work --- provide feedback, share information, raise concerns, attend the listening tours, share best practices, etc.

The Obama Administration has clearly made it a priority, and I think that's because it's indicative of their governing philosophy --- invest in citizens, partner with other sectors to solve problems, government has a role to play but can't and shouldn't do it alone, etc. I think they really want to invest in the great work that's been done to solve problems --- by citizens, social entrepreneurs, foundations, etc. They want to invest in those solutions and bring others to the table to support them, not reinvent the wheel.

Change.org: Makes sense, and is definitely an evolving expression of progressive sentiment. It seems to me that part of the increasing political pragmatism is a sense that a set of principles can be distinct from an orthodoxy about how to achieve them. No compromising on closing the achievement gap in schools, for example, and an absolute fervor that it is government's job to lead that fight, but an openness to how to get there.

America Forward: Exactly. I think that's exactly right.

Change.org: Maybe one last question. If President Obama called you tomorrow and gave you the first million to invest, where do you put it?

America Forward: Yikes, that is a tough question. I would tell him to make it a competitive process for the $1 million, because a competitive process is bound to attract really innovative ideas, and set a goal for what he wants to accomplish, so the competition for good ideas is driving toward the same overall goal. And finally, invest that money in the ideas with the greatest potential for impact, with a match requirement.

Change.org: Do you have resources to point people to to learn more?

America Forward: Yes, definitely. We have a briefing document about how the Fund works in the SAA. It's on the America Forward website, www.AmericaForward.org.

Change.org: Do you have you the original 2007 briefing book you talked about online?

America Forward: Yes, it's on the America Forward website. Here's the link where people can either download the electronic version or request a hard copy.

Change.org: Thanks for your time Kelly!

America Forward: Thank you!