Social Innovation: What It is and How to Advance It

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

2. Bottom Line • 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. 2

3. Source: Gary Larson, “The Far Side”

4. Agenda • 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

5. On One Hand…. 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 5

6. On the Other…. There is reason for optimism and resolve: We still have significant resources; We are resourceful peoplewith a long tradition of solving our biggest problems We have manyeffective solutionsalready being deployed in communities 6

7. On the Other…. There is reason for optimism and resolve: We still have significant resources; We are resourceful peoplewith a long tradition of solving our biggest problems We have manyeffective solutions already being deployed in communities IMPERATIVE: get more impact from the resources we invest in social progress 7

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 innovationis adynamic, on-going processin whichsuperior solutionsto social problems aredeveloped, validated and grownto displace prior (inferior) solutions and, thereby, establish amore productive status quo. • Where, • Superior solutionscan be • Of many types, eg devices, practices, programs processes • Incremental or transformational • More productivemeanshigher impactper unit of input 9

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

11. Essence of Social Innovation • Social innovationis not about what’s NEW – it’s about what’s BETTER • Where, • Bettermeans generatinggreater impact per unit of input than current solutions, and • Impactmeansoutcomesthat are actuallyattributable to the action in question, basedonevidence 11

12. Social Innovation Drivers Optimize Status Quo I N V E N T I O N R E S O U R C E S Impact Per Input Develop Alternative Solutions Grow Superior Solutions Validate Superior Solutions E V I D E N C E 12

13. How are we doing? • 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

14. Key Barriers to Growth • Whydosuperior solutions not grow? • Because we lack: • Evidence of what actually is better • Resourcesto support implementation and growth • Funders committed to supporting solutions with evidence of superior impact • Knowledge of how to grow scale and impact • Infrastructureto support growth

15. Evidence as Catalyst Robust evidence is the key catalytic agentfor social innovation, serves two critical roles: • Enables funding of better solutions (what works) • “Better” grow relative to “worse” • Incentives for further innovation • Enables on-going improvement and innovation (how and why things work) Selection Improvement

16. Alternatives to Evidence

17. Who is the “Best that Ever Was?” What does the evidence say?

18. Evidence Caveats • 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

19. Funders • 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 19

20. Agenda • 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 20

21. Segmentation of Approaches • 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

22. Strategic Considerations • Key factors in influencing segment focus, actions • What do youcare aboutand what are you hoping to accomplish? • Issue area • Geographical area • Who are youand what distinctivecapabilitiesmay enable you to drive superior impact? • Service provider • Funder (individual, institutional) • Non-funder intermediary (services, information) • Rule-maker (federal, state, local) • Research institution 22

23. Selected Players by Segment

24. Caveats re “Systems Change” • Allureis 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

25. Key Players: Government • 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

26. Role of Government • 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

27. 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, 2009 27

28. The Social Innovation Fund • The Social Innovation Fund is an initiative intended to achieve three policy goals: • Generate direct impact for people served • Demonstrate a better approach to federal government grant-making • 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

29. Pathways to Impact • Grant Program • Selection of grantees/subs • Growth of capacity/impact • Rigorous evaluation Improve lives of people in need Social Innovation Fund Grow impact of innovative solutions that work • Widespread Impact Program • Assist federal agencies • Share knowledge • Support targeted initiatives 29

30. Innovative Model The SIF model has five key features that address all four major barriers to org. growth, social innovation: Evid-Based Funders Open, competitive, evidence-based grantee selection processes Reliance on experienced grant-making intermediaries Emphasis on rigorous program evaluations Requirement that public money be matched up to 3:1 from private sources Commitment to capture and share knowledge Support Infrastructure Evidence Evid-Based Funders Scaling Knowledge

31. “Subgrantee” Stage Focus SIF Target Area Start-up Nascent Promising Proven Refine the innovation and demonstrate effectiveness Define the innovation Launch the innovation Scale the innovation Pursue limited growth and build org capacity The SIF targets “promising” solutions due to high risks of earlier stages and high funding needs of “proven” stage. 31

32. Grant Program Structure Private philanthropy (matches) • Intermediaries • $1-10 M grants • 3-5 year plans • 1:1 match • Selected to date: • 20/$137M Social Innovation Fund (SIF) Funds granted: $137M • Nonprofits • $100 K + • 3-5 years • 1:1 match • Selected to date: • 240/$220M Capacity-builders and TA providers

33. SIF Participation by Segment

34. Role of Evidence Reliance on valid evidence is a fundamental tenet of the Social Innovation Fund, which employs evidence in three primary ways:. • 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” • To grow the body of evidence about which program models actually work • Rigorous Subgrant Evaluation Plans for each • Strong technical assistance to support improvement • To evaluate the success of the Social Innovation Fund itself • Five-year national evaluation study • Conducted by outside contractor Selection of the Best Proof of What Works Assessment of Success

35. Building the Evidence Base • Innovative models will be provingwhat 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

36. SIF Scorecard Its first 2-1/2 years, the SIF has $137M Awarded in federal funds In open competitions to 20 strong intermediaries Who have committed $350M in matching funds 197 And have selected NGO’s with evidence 35 Operating in states and DC 74 Who have planned rigorous evaluations, and Thus far served 175,000 more people in need 36

38. Agenda • 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 38