The Community, the Investment, the Possibility

There was a lot of talk this week in the readings regarding government investments into social innovations and enterprises in order to encourage social change in communities and the greater society. The idea of tax incentives, partnerships with public and private philanthropies, and federal departments were discussed as means to spur much needed change-inducing cash flow.

However, many of these strategies, while absolutely deserving of merit, are still fairly reliant on entities with large piles of money that have the flexibility and incentive to share with others. Yet, the generations that are about to come into power in the world are not typical of these entities. They do not act like the generations before. There was no glory of growing up in during the birth of the Ford era of philanthropy, and their behavior is indicative of that. Even more of note, is that for the first time, they are not expected to be better off than their parents. However, they still are eager to help out friend's and acquaintance's causes. More of this discussion can be found in an interesting article on the Chronicle of Philanthropy.

This fact could be reason in itself to be supportive of government-backed social innovation agencies or strategies. If young people will not have the same donor tendencies as the baby boomers, we should take that into consideration when deciding on policies that affect charitable giving and investment incentives. The younger generation tends to give in smaller amounts and at a more engaged level. While initiatives such as SIF and OSICP are very fruitful and have incredible potential for the future, will they truly create the change in people’s behavior that is sustainable for generations to come? Do they plant the bug within citizens that will create the bond of investing in their communities, or will they still see the money that is creating change, as coming from an outside entity, and thus are disconnected to it?

Is there another focus that also deserves the spotlight? Take for instance the idea of community foundations. These entities allow everyone, individuals, businesses, families, nonprofits, etc. to invest specifically in a geographically defined area, typically one that they reside in, and take actions to improve the community. It encompasses the public and private partnerships that are present in the government programs, but allows a more personalized incentive to what a donor or investor’s money can do. Interestingly enough, the Foundation Center reports that community foundations typically are larger than corporate and private foundations in both assets and grants. So what would happen if these entities that are comprised of geographically focused funds were able to pursue program-related investments (PRIs) for L3Cs, an increasingly popular track for social innovations?

While foundation investments currently can be tricky due to government tax regulations and specifications, it poses an interesting idea, and one that is sparking a lot of buzz in the sector. To encourage a foundation that is supported by the community, for the community, to make targeted investments into social innovations for their towns, cities, and regions, could be a powerful mechanism to influence the behavior of people in philanthropy from the bottom up. This is in no way intended to take away from the work that the SIF or the OSICP do, but simply to provide a partnership with people on a smaller, more engaged level. Would tax regulation changes that make these types of investments create more innovation locally? People give to people, and to play a direct role in the betterment of your immediate society with whatever financial means you are able to contribute, provides an incentive many could find attractive...