Regulation, Evaluation, and Accountability in Social Ventures

Questions about the federal government’s roles in the regulation and evaluation of other sectors are ubiquitous yet rarely correspond to simple answers. Even in areas for which the government has long since assumed responsibility for evaluation, such as education, it meets frequent debate over its size, reach, and duties. For example, many education professionals and policy makers have criticized the framework which structures the ESEA reauthorization “No Child Left Behind,” questioning the wisdom of having states set their own standards while the federal government determines procedure for reaching standards [1]. In the public education sphere, the need to demonstrate performance sometimes leads frontline administrators to alter critical tasks to serve the accountability system’s craving for evidence of success (e.g. increasing testing), while simultaneously undermining the substantive goals that the system’s designers hoped to achieve in the first place. There is certainly a danger in overstating the application of this education-based logic to the arena of social innovation. Nevertheless, the level of the government’s involvement in funding and evaluating ventures which aim to make a positive social impact is a crucial element affecting the future of social innovation, and potential costs/benefits should be considered.

            One factor harkens back to the old federalism question – should the federal government assume the main role of fostering social innovation, or should state/local governments take up the task, using federal funds at their own discretion? The latter would enable the federal government to play a more limited and defined role, as Michele Jolin advocates [2]. It could also ensure that evaluative methods are better tailored to operate in specific contexts, taking into account the restrictions and advantages of local environments. On the other hand, this option could limit the pool of intermediaries and philanthropies with whom social entrepreneurs could form partnerships in the social impact bond system.

            Another important consideration is the potential for the evaluation process to constrain innovators in reaching their full potential. Jolin suggests that the federal government should “invest in tools to determine what works,” but possible outcomes may be extremely varied and difficult to measure. At least part of this process should perhaps fall into the control of local actors, government or otherwise, to support (at a minimum) a slightly higher degree of contextual specificity when appropriate. Additionally, it might be difficult to standardize timeline parameters for social innovations to demonstrate success. Apart from the fact that creating a universal definition of “success” is a near-impossible task, government evaluation processes run the risk of focusing too much on short-term, measurable results. It seems that an unintended consequence of social impact evaluations might be the privileging of social innovation projects that yield greater “impact” in the short-term. Moreover, this short-term yield might peter out eventually, or might not be easily brought to scale even after initial success prompts investment in infrastructure for the organization. If evaluations employ constraining timelines, they can exclude social innovations that slowly generate impact over time, or accidentally promote investment in innovations that produce diminishing returns.

            Bearing all these considerations in mind, is it possible to determine an optimal level of government involvement in the evaluation of social ventures, even in specified locales?

 [1] Ravitch, Diane and John Chubb. “The Future of No Child Left Behind,” Education Next (2009). http://educationnext.org/the-future-of-no-child-left-behind/

[2] Jolin, Michele. “Innovating the White House,” SSIR (2008).