Government Intervention for Social Innovation

Should government be responsible for fostering innovation in the social sector through grants and subsidies, or should social entrepreneurs rely on the private sector for raising capital?   This question was brought to mind while reading the Economist article, Lets Hear those Ideas. This article concentrates on the United States' $50 million endowment to the advancement of social innovation. Furthermore, the UK has established a $390 million fund in the form of a social investment bank. With this week's theme of Creating Policies and Ecosystems for Social Innovation, I began thinking of the government's role in the promotion of social innovation.

Broken down by funding dollars by population, the UK government is allocating over $6.00 per capita. The U.S. on the other hand has allocated a mere $0.16 per capita.  However, the fundamental makeup of the government and its intervention with their citizens varies greatly between these two countries. One only has to look at the healthcare system in the UK to realize that the government believes that it is a fundamental right to provide universal healthcare to its citizens.  The United States primarily relies on the private sector for financing healthcare for a majority of its citizens.  Is this the reason why the United States is lagging in delivering financing options to its citizens to spur social innovation in relation to the UK?

How does the rest of Europe fair in terms of fostering social innovation?  Social Innovation Europe is an organization setup by the European Commission and is overlooked by the Social Innovation Exchange (SIE).  Social Innovation Europe is designed to assist social entrepreneurs connect with one another as well as issue reports to educate the public on opportunities for social innovation.

Taken from Social Innovation Europe's "Financing Social Innovation" report (which can be found here)

"Across the world millions of people are creating better ways to tackle some of the most challenging social problems of our times: climate change, chronic disease, social exclusion, and material poverty. Often their ideas come to life through collaborations that cut across the public and private sectors, civil society, and the household. Frequently they make use of new technologies including broadband and mobile communication. Some of their successes are now part of everyday life, from microcredit in rural communities to web platforms linking teachers and learners, as well as banking services using mobile phones, community land trusts, restorative justice programmes, and more. The field of social innovation is now beginning to gather momentum, with significant investment from governments, foundations and business. Over the next few years, it is possible that the ability to support, manage and grow innovations of this kind will become a core competence within governments, businesses, NGOs and foundations."

This report also highlights the various funding platforms established throughout the European market solely for financing social innovation programs. Furthermore, this report states that over $100 million is being allocated specifically for micro-financing efforts.

Even small countries such as Serbia has set up a fund for social innovation. Although it has only allocated $6 million to this social innovation fund, the Serbian government has taken on the responsibility to foster such growth.

Should the United States' government start taking hints from Europe in order to set up a robust social innovation fund? In my opinion, the answer is a resounding YES. Social innovation is often times cost prohibitive, with the rewards not always being financial.  Helping citizens to lead healthy, productive lives should be the role of government. Why not allocate a small percentage of GDP to set up a fund so that social entrepreneurs can start doing the work where government is failing to do so?