Helping Them Help Us

The government’s role in the development of the social innovation market is crucial. Indeed, the public sector is one of the major stakeholders in all the sectors where social innovation is needed. As a fund provider or as a regulator, it is in its very essence to be present in critical sectors like healthcare or energy to provide general welfare to its citizens. Private innovative initiatives in this area can and have emerged successfully but their impact can only be scaled and spread if there is a willingness of the public sector to work together towards delivering public service more efficiently.

To do so, governments can initiate several initiative in order to provide a more favorable environment for social innovation to thrive:

       ·         Developing an ecosystem: as it has been shown in many other areas, there are undeniable benefits to cooperation between individuals and organizations across diverse disciplines. We can take the example of Silicon Valley where hundreds of start-ups and thousands of innovations are made continuously. Indeed, building communities and fostering a sense of identity and a common culture has a very positive effect on growth. Ecosystems also facilitate meeting supply with demand which results in sustainable and fluid collaboration. Some initiatives in this direction are starting to emerge, one of them being an extensive project being undertaken in Europe aiming at growing its digital social innovation ecosystem.

      ·         Social Innovation Funds: Another way of developing the social innovation sector is by merely injecting funds in it. This straightforward initiative can quickly unlock the potential of this sector and kick-start its development and scaling. As we have seen, social entrepreneurs have unlimited brilliant ideas but very limited access to financing because of the ambiguity in measuring their impact and returns. Providing money to push these ideas forward gives a very strong signal of the governments’ strong will to engage in a productive and innovative cooperation effort with the private sector. It also enables social entrepreneurs to show that their model can be very successful and fulfilling which will inspire more people and organizations to follow the same path. Barack Obama’s Social Innovation Fund, introduced in 2009, is a great example on how the public sector can commit to growing innovative initiatives through funding.

     ·         Legislation: Providing a clear and well-defined legislative framework for social innovation is a strong steps towards normalizing this sector and easing access to it. Recognizing social companies as standalone entities with their own taxation status and regulation, in the crossroads of for-profit and nonprofit, can be a first step towards finding the right tools to help this sector grow. B Lab, an independent non-profit founded in 2006 to facilitate private enterprise for public benefit, identified legislation as one of the pillars of social innovation growth and have been successful in passing laws in 2 states in the USA. A broader adoption of this legislation would certainly help attract even more investors and innovators and make cooperation nationwide much more simple. Canada has also created a ministry of social development and social innovation which help facilitates the discussion around the topic and the adoption of new measures.

     ·         Incentives to the private sector: One thing we know for sure, in the middle of social innovation uncertainties, is that the private sector responds well to money. Tax breaks have been very successful in attracting investors and stimulating industries worldwide. Take the example of the ICT sector in Ireland. The tax scheme designed was so competitive (12.5% corporation tax rate, 25% tax credit on R&D) that it transformed the country into a global technological hub called sometimes "Europe's Silicon Valley'. This can certainly be applied to the social sector as the loss in tax money for the government will be compensated by a decrease in expenditures thanks to a higher efficiency in delivering public services. The UK is one of the pioneers in this field with its social investment tax relief scheme for social enterprise but an even broader scheme that includes all private companies that make social investments could help scale social innovation.

More than the right environment and the right incentives, the government’s most important role will be to provide a clear vision for social innovation and to nurture a culture where individuals and companies are active actors in providing general welfare and work together to transform the way public service is delivered. But is this something that has to be done on a national level first or can we directly leapfrog to a global model to scale the effort faster?