1 Social Innovation: What It is and How to Advance It Paul Carttar Price School of Public Policy USC December 12, 2012

2 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

4 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…. 5 Thepictures 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…. 6 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…. 7 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

8 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. 8

9 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

10 Cycle of Social Innovation 10 Improve Status Quo Grow Superior Solutions Validate Superior Solutions Develop Alternative Solutions Impact Per Input

11 Essence of Social Innovation Social innovation is not about whats NEW – its about whats 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 11

12 Social Innovation Drivers 12 Optimize Status Quo Grow Superior Solutions Validate Superior Solutions Develop Alternative Solutions INVENTIONINVENTION RESOURCESRESOURCES E V I D E N C E Impact Per 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 Only 144 (0.07%) grew to be $50 M or larger in annual revenues -And we dont 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 Selection 1.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 ?

18 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

19 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

20 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

21 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

22 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

23 Selected Players by Segment Robust Evidence Evid.-Based Funders Scaling Knowledge Support Infra-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

24 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

25 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

26 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 $100s of billions; Gates US <$1 billion -Share of funds to nonprofits -Estimate: govt. support to NPOs 10X total of all institutional funders Role of Government

27 The Big Idea The bottom line is clear: solutions to Americas challenges are being developed every day at the grass roots – and government shouldnt 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,

28 The Social Innovation Fund is an initiative intended to achieve three policy goals: 1.Generate direct impact for people served 2.Demonstrate a better approach to federal government grant-making 3.Strengthen the nonprofit sector Its 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 29 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

30 The SIF model has five key features that address all four major barriers to org. growth, social innovation: Innovative Model Evidence Evid-Based Funders Scaling Knowledge Support Infrastructure 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-Based Funders

The SIF targets promising solutions due to high risks of earlier stages and high funding needs of proven stage. 31 Launch the innovation Scale the innovation SIF Target Area Start-upProven 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 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

33 SIF Participation by Segment Robust Evidence Evid.-Based Funders Scaling Knowledge Support Infra-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 of What Works Assessment of Success Selection of 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 2 nd -5 th 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 ofpromotores program for disconnected youths ages 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

36 SIF Scorecard 36 Awarded Who have committed And have selected states and DC Thus far served Its first 2-1/2 years, the SIF has $350M $137M , in federal funds strong intermediaries in matching funds more people in need NGOs with evidence Operating in In open competitions to Who have planned 74 rigorous evaluations, and

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38 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