financing social innovations in developed country contexts

I experience a little unease when I consider this issue of financing social innovations. Innovations, of course, are geared to a double bottom line of social and economic return (and in some instances, a triple bottom line including environmental too). Obviously they lend themselves to market based solutions, hence the role of private capital at start up. It is possible to see massive market biases in concepts such as impact investment. In fact, many impact investors presume a particular kind of market: underdeveloped ones where it is possible to extract profit from a mass market shifting huge volumes of product at low cost, often in a developing country context. Whilst I respect any effort to improve social conditions for impoverished populations, I do not wish for social innovation to be defined solely in terms of bottom of pyramid economics. The pyramid that often dominates my thinking is Maslow's: http://www.businessballs.com/images/maslow_hierarchy_sm.gif. The outcomes that I want social innovation to strive for concern top of the pyramid problems like self actualisation and esteem. In my opinion, such concerns are the proper preserve of social innovators in developed country contexts, for decades of welfare state intervention has not improved these indicators (see other posts in this blog about disability and happiness), and they obviously don't lend themselves to base of the pyramid economics. Many argue that this problem represents government and market failure, hence my earlier discomfort. I suspect that this failure is extremely expensive. Yet how do social innovators in developed country contexts attract funding, given the inevitably smaller returns relative to the opportunities presented to investors in developing country contexts? The notion of social impact bonds is quite brilliant in this context (http://www.socialfinance.org.uk/). Whilst private investors bear the investment risk, if the innovation works (e.g. reducing recidivism rates in the UK), government guarantees a return on investment. The pay off for them is that previously intractable social problems are mitigated. I think it is possible that this model might offer my idea a funding source. Like recidivism, I am focussed on an intractable social problem. Across the anglophone world governments are worried about growing populations of people (especially working age men) moving onto disability support pensions, and then never moving off. In a context of increasing health and disability costs connected to an ageing society, this is a huge problem. In addition, I am concerned with some of the most extreme markers of disadvantage in Australia today, i.e. the presence of severe and profound disability. The Australian Bureau of Statistics measures the presence of severe and profound disability in the index of relative socio economic disadvantage, a census based product it publishes every 5 years (with the next edition due in 2013, I think). One of the major measures of severe and profound disability is difficulty accessing community, something my innovation hopes to improve by making it more rewarding.

• People who are more connected to community are having their top of the pyramid needs met.
• People whose sense of agency and self worth is satisfied make fewer demands on the government $.
• Governments can experience improvement in previously intractable social problems (like recidivism), and may experience savings where previously there has only been cost increases.

The Social Finance/Social Investment Bank phenomenon in the UK is quite brilliant in this area of innovation. Lacking an equivalent framework in Aus and the US, where do social innovators go to find institutional and private backers?