Governments as Buyers of Social Innovation

Government Transformation
Traditionally, governments  are always reluctant to adopt innovative ideas especially when they can make radical changes. However, governments gradually realize that it is time to take the first step on the road of innovation. Factors triggered this innovation may include: 1) tighten financial budget in hard economy period; 2) increased citizens' demand of governmental function; 3) limited internal capability of government to deal with social problems.

In recent years, governments, especially in developing countries, are more award of the importance of their service function. Also, driven by their eagerness to improve efficiency, governments start to transform into a multi-functional and less hierarchical organization.

A Win-win Situation
For most startup social enterprises, it is never easy to get sufficient start funding even though they have a legitimate and intelligent business model. Investors from private sector may not be willing to take risks for ideas that cannot make high financial profits. Thus, public sector become the most suitable investors for social innovation. Governments just need to allocate probably a small amount of funding to the innovative projects, but the results would be tremendous. It is a win-win situation. On one hand, governments use public funding to invest on social innovation would bring creative and effective solutions to social problems. On the other hand, social enterprises would get the supports they need to sustain and expand their organization and innovation.

Main Stakeholder in Impact Investment
Governments can simply purchase products from social enterprises by public funding or budgeting. In other situation, governments can implement the social impact bonds or community bonds, which is a more complicated way to have governments participated in social innovation. However, either of the approaches requires completed policies and regulations before governments get involved in social investment.

Concerns
Governments' purchasing of social innovation may motivate the development of social investment markets, but what if the solution cannot bring big social impacts, who should take the responsibility? The investment failure in social market seems would bring more side-effects.

Programa Oportunidades

            After reading about the cash transfer program I wanted to learn more about it from the Mexico Point of View. Being Mexican and having lived in Texas my whole life I think that I will be able to translate what the “Oportunidades” programs means for the people of Mexico, in a short blog[1].

Recently in Durango, Mexico 1,406 families were initiated into the program. Needless to say the “Duranguenses” were very happy. [2]Initially the program begun in 2002, and  was called “Progresa” today it is called Oportunidades. The main goal is to combat poverty. Not to eradicate or eliminate poverty, but to fight it off. Below is the amount of families that the program helped in 2010, 2011, and 2012.

            The program faces government funding challenges just like any social policy initiative in the states. If a new president does not endorse the program, it is at risk for discontinuing to exist. [3] Mexican economic development must also keep up with the changes the program is developing. More kids are going to school, going to doctors appointments, and staying healthy. The con is that once these kids are graduating from their primary and secondary education but may not be able to offer those grown children, well now adults, an opportunity for a job.

            Although, the program faces these challenges critics do endorse the design and the concept of the program to help reduce poverty. The program overall is doing well and the people of Mexico like it. I could not find criticism on it except that the kids growing up may not be able to find a job. The President Pena Nieto just endorsed a $600 million dollar loan from the Inter-American Development Bank.[4] 
My posing questions is: Would this direct cash transfer program work in the United States? Does it mean this program is a failure if the "educated" kids cannot find a job? What can Mexico do to mitigate for this end result?

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[1] http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/?_r=0

[2] http://www.oem.com.mx/elheraldodechihuahua/notas/n3138029.htm

[3] http://books.google.com/books?hl=en&lr=&id=31zD_hBNs4YC&oi=fnd&pg=PP1&dq=program+oportunidades+mexico&ots=FB9AxeOpip&sig=Mtis9r6o5wrfXtHLIzGD5JrBCSs#v=onepage&q=program%20oportunidades%20mexico&f=false

[4] http://eleconomista.com.mx/finanzas-publicas/2013/09/17/bid-presta-mexico-600-mdd-programa-oportunidades

What are we truly incentivizing?

Week 6: Creating Policies and Ecosystems for Social Innovation

The articles this week reminded me of a TedX talk I watched awhile ago. Romeo Dallaire—the former UN Force Commander in Rwanda who stayed against UN orders during the Rwandan Genocide—was talking about the role of NGO’s in addressing social ills. He talks about continued growth and change, that governments structures must continue to grow, “there is no way you can sustain status quo—it’s simply not sustainable. You will regress.” He goes on to discuss how NGO’s are the future of solutions to major social issues and I think it aligns beautifully with the readings.

As a whole, social innovation exists at the intersection of the existing sectors, and is emerging as a unique field. It requires dynamic thinking, and I really appreciate that it is taking hold in pockets of our culture.

It makes sense to me that social innovation would draw from the emerging tenants of open innovation. It reminds me of Bill Joy’s famous statement, “No matter who you are, most of the smartest people in the world work for someone else”(Fedscoop.com). I’ve heard Joy speak a number of times, and one of the things that I really appreciate about this statement is it is really discussing the underlying assumption that people with good ideas don’t always end up in the field for which their ideas will have the greatest impact. So, in particular, I appreciate that the White House along with a number of major foundations are willing to outsource brainstorming for it’s major social problems to the general public.

This is a form of flexibility, I will admit when I first heard, that I did not expect from my understanding of government bureaucracy.

Though, I’d like to draw out a specific point—what is the impact on our social value of incentivizing behavior with “prizes”? I appreciate that it allows us to look at issues we wouldn’t otherwise, but how do we then create an effective long term implementation? 

http://www.youtube.com/watch?v=b6q0aA0KiA4

http://www.ssireview.org/articles/entry/innovating_the_white_house

http://opinionator.blogs.nytimes.com/2012/02/29/prizes-with-an-eye-toward-the-future/?_r=0

http://www.economist.com/node/16789766

http://www.americanprogress.org/wp-content/uploads/issues/2007/12/pdf/social_entrepreneurship.pdf

CCT and Innovation Frameworks

Creating frameworks through which government, non-profits, and for-profit businesses can help the poor seems like a good idea, but I keep coming back to the question of how relevant could a top-down distribution of investment, brain power and other such capital be to a target that has so many different variables in its poverty problem. Many social innovation projects are well thought out and deliver excellent results. They encourage self-empowerment and teach techniques for overcoming particular poverty sinks. To what degree their services are accessed and the scope of their ability to help is the bottleneck that I think could be better addressed.

The article on innovating the White House provides some logical, if vague, starting points for fast-tracking the growth of social innovation enterprises. For example: “provide seed capital to create a pipeline of innovation” seems logical, but how long will that take to make its way through the political trenches, and what kind of oversight and control would come attached to the money? Federal regulation is notorious for being cumbersome and bureaucratic. Furthermore, do social innovators have the resources and expertise to deal with the lengthy, expensive and involved process of funding applications? Certainly large social innovators like Teach for America would, but what about something that has come out of our IdeaLab?

In thinking of social innovation and all these vehicles to fund and implement them, I keep coming back to the idea of cash transfers both unconditional and conditional. This is the kind of bottom-up approach that empowers people to prioritize the way that they address their needs. I think the distinction between whether or not the transfers should be conditional must depend on whether or not those receiving aid have the ability to address the stipulations. For example, Bolsa Familia was successful because there was the infrastructure and personnel available to stipulate mandatory schooling. But in cases such as crisis prone or extremely poor regions in Africa? That’s where a group like GiveDirectly comes in. Giving cash without reservation shouldn’t be a radical idea. Really, it is a way to help people help themselves by giving them the direct means to address their most urgent problems. Not only that, but they are able to address them within the context of their culture and environment instead of addressing needs according to a foreign perception of them. Despite many observer reservations, the amount of good they do per dollar seems to be high compared to other organizations.

Sources:

http://opinionator.blogs.nytimes.com/2013/08/28/the-benefits-of-cash-without-conditions/

http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/

http://www.ssireview.org/articles/entry/innovating_the_white_house

Know your government, utilize what they can offer

Not surprisingly, any discussion involving governments always split into opposite directions. Are governments helpful when facilitating and supporting social innovations? It depends on what value that specific government pursues, what are their priorities and what do they do well.

My point here is, utilize what they can offer and find what you need elsewhere if they don't care. Typically  some governments don't care, some seem to care but have done little. Some can work great as an incubator or supporter.

I agree with what Tina Rosenberg wrote in her article: government programs sometimes work better then you imagine when you want to make things work on a bigger scale. But be careful, even when governments  show a nice attitude in helping social enterprises and social innovations, they are not completely helpful.

I read through Sean's blog and find something worth a discussion. He mentioned a program in Singapore that seems to be well-planned and successful. But Singaporeans normally find the harsh regulations and  clear-cut role of their government is hampering their willing to start a business. That probably is true when we're talking about entrepreneurship in business, but is somehow different when the discussion moves to social innovation. From what I know and my previous experience living in Singapore, it's true that the government tends to be paternalistic, in a way that it regulates, forbids, guides, and punishes in details to make sure nothing goes wrong. But it's doesn't necessarily mean social innovation has no where to play in Singapore. A stronger government somehow means social innovations are easier to be implemented and have no obstruction from the gov once it is put into place. Sure they have a small population and market, but their government reveals high efficiency and integrity. From what I saw, the society thrives and rapidly improves due to their government: no thefts, no homeless, high average income. Their business scope is rather outward-facing and industry-limited, but the impact of social innovation go far beyond what industry can cover.

When we're looking at the role of government in social innovation, see what their attitude is, and focus on how we can utilize the resource and opportunities they offer.

http://www.concern.sg/SocialInnovation

This is a website concerning social innovation in Singapore. A brief description on the website kind of summarizes the picture of social innovation in Asian countries.

The biggest social innovator in Singapore has long been the Singapore government itself – innovations such as Central Provident Fund (a social security savings plan), Electronic Road Pricing (for the Central Business District) and the Marina Bay Reservoir(originally a confluence of several river systems) are a few examples of how it has addressed some of the long term social, urban and environmental challenges that this small country with no natural resources faces. The Singapore Economic Development Board itself has also been cited by Volans as a pioneer in social innovation in their report on The Phoenix Economy.
But the picture of social innovation in Singapore is a fast evolving one. The past 4 years have seen a number of civil society and non-profit organisations enter into the social innovation space. The language of social innovation is embedded in the people sector, although the practice of it less so.

In Singapore, really there's no need to draw a line between civil society and government, as long as necessary functions are carried out and people benefit from it. When I was an undergrad, I was involved in a project funded by Lien Foundation mentioned in the website, which is a big participant in social innovation in Singapore, called Lien Service-Oriented Government Index in China. So it's intuitive to me that Singapore has foundations dealing both with government  and with social innovation.

Here's an example for an environmental project called "Greenroof", which is designed to make major buildings' roofs covered by greenery.
http://www.greenroofs.com/blog/tag/singapore/
In social innovations related to environment or large scale efforts, governments are a key role to play.

It is true what Sean said, though, that governments are driving forces for a lot of major changes especially in Asian countries.Not only because they dominate power, money and resources, but also because its civil society is less autonomous and needs further education to be trained to master their own society. So at this particular stage of development, when citizens are starting to realize their own power and the government still holds bigger power and most of the resources, seek a way to collaborate with them and utilize what they can offer. Probably programs and innovations of larger scale can harvest unexpected outcomes.

Question here:
Can we generalize what governments typically can benefit or hamper social innovation in a nutshell? That way social entrepreneurs can have a general idea of where to seek help and what to avoid, and it may help social innovations to spread world-wide.

questions for a social stock market

Thinking about Social Impact Bonds led us to a long discussion that essentially tried to describe a new stock market in which investors tried to choose between these bonds. The hurdle implicit in this is trying to find a way to measure the amount of social impact of one bond versus another when the two social bonds are for completely different types of social benefit.

Measuring social impact can be very subjective, but our interests are just as subjective, so perhaps that doesn't matter. Presumably, everyone interested in social change has a particular area to which they are partial. Social innovators don't go into social innovation for the money, they go into it because they've chosen an area in which they'd like to see social change. The same may be true for investors in the social stock market. It may not be necessary to find an overarching way to compare all types of social impact. We talked about the possibility of different categories for different types of impact, like perhaps environmental, housing, poverty, etc. Wouldn't this be enough, since people will choose what they are partial to, or what they have a personal interest in anyway?

Even trying to compare social value within one social problem is problematic. We tried to discuss it through an economic perspective, seeing the value in terms of the supply and demand. But how can you quantitatively determine the demand for a given social problem? We can say there is a large or small demand, but can we pinpoint the demand precisely enough to be able to form an equation that will give us the amount of social value a social project can achieve? And given that we could, do we even want to think of social value economically?

It's hard to believe that a social stock market would ever turn into a cutthroat market where investors were in it just for the returns, so perhaps we shouldn't treat it as such. Or maybe it's the other way around, maybe we shouldn't treat it as a cutthroat market to prevent it from becoming one. Either way, perhaps it's in our best interest to allow a bit of subjectivity by limiting our comparisons of social impact to projects that deal with the same social problem.

The Role of Government in Social Entrepreneurship

This week’s social innovation topic is “Creating Policies and Ecosystems for Social Innovation”. The articles written by Tina Rosenberg and Michele Jolin serve as a strong base for discussing whether governments should foster social innovation through social programs that provide subsidies and grants, or if social entrepreneurs should lean on the private sector to raise capital for their ventures.

I think that governments and large corporations, particularly multinational organizations, are increasingly in a place where their impact on society is closely monitored and evaluated. With the advent of a number of tools including social media, governments and corporations are becoming increasingly transparent. One reason may be that business is facing more regulatory oversight, and another may be that the public is demanding government and business to play a more central role in creating a more equitable society. In this case, social media has played the role of a regulatory agency. What I am getting at here is that the paradigm in which governments, large corporations, and social entrepreneurs exist has greatly changed over the course of the past decade, and the public has had an increased and stronger voice.

The social programs we have seen in Brail and Mexico, and now in many other countries around the world, are an additional element in this new landscape. The conditional cash transfer programs implemented by government are changing societies for the better, bringing down Gini coefficients, and providing real opportunity now only for today’s generation, but for future generations to come. Government does play an important factor in sustaining these programs and for the growth of new programs in countries around the world. But, as Jolin outlines in her article, we need to “do more to create a pipeline for future entrepreneurial efforts”, and that includes here in the United States.

In his Forbes Magazine article “Three Things Governments Should Do for Social Entrepreneurship”[1], Felix Oldenberg suggests that government has a more important role to play. Oldenberg suggests – like the authors of our readings had – that each country has its own conditions, and as such, there needs to be a hybrid approach to fostering social innovation. That is to say, government needs to support private enterprise, and private enterprise needs to support social entrepreneurs, and social entrepreneurs – through their programming and ventures – can have the opportunity to improve inequality in the same ways as those have in Brazil and Mexico. Oldenberg suggests that “governments need to create regulation-free special social development zones” and “help drive a culture of recognizing and celebrating change-makers.” Do you think there are adequate policy support systems in place here in the United States to support social innovation? Does social innovation financing allow government to partner with innovative social entrepreneurs who help to supply the needs of the people? Or, will government budgets constraints pose an imminent threat to any collaboration with social entrepreneurs?

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[1] Oldenberg, Felix. Contributor. Forbes Magazine. “Three Things Governments Should Do For Social Entrepreneurship.” November 23, 2012. http://www.forbes.com/sites/ashoka/2012/11/23/three-things-governments-should-do-for-social-entrepreneurship/