Government as a Driver of Innovation? Not with a SHUTDOWN

I cannot help but notice the irony of the timing of the readings for this week, as on the day that the US Government has shutdown, we are set to discuss policies that are meant to nurture social innovation.  The articles that we read discuss initiatives in Brazil, the US, and the UK that seek to fund and spur social innovation, ranging from feeding the poorest of the poor to awarding prizes for innovative solutions to societal ills.  Chief among the policies discussed in the articles were President Obama’s Social Innovation Fund (SIF), Office of Social Innovation and Civil Participation (OSICP) and i3.  All three of these were the result of Obama’s desire to see a government that aided social innovation as a way aid those innovators dedicated to social issues. 

Today, as the Shutdown unfolds on Capitol Hill, I read a Forbes article written by Paul Cartarr, Obama’s first director of the SIF, titled “Why We Aren’t Getting the Full Benefit of Social Innovation—And What the Government Can Do About It.”  In the article (http://www.forbes.com/sites/skollworldforum/2012/11/12/why-we-arent-getting-the-full-benefit-of-social-innovation-and-what-the-government-should-do-about-it/) Cartarr lays out an eloquent argument in favor of robust government support of social innovation.  The primary argument made by Cartarr is that the government has the biggest purse, and can therefore be the primary benefactor of innovation.  He then goes on to say that the government need not increase its funding efforts, but that instead the government needs to fund in a smarter fashion.   Cartarr also gives three detailed suggestions of how the government can achieve this level of smart support. 

Cartarr’s three suggestions for improved government support of social innovation seem like they would help innovation in a productive manner.  The first suggestion is to ensure that the government expands its support of the best solutions to the biggest problems, even if such solutions do not fall in line with political priorities.  The second solution he has is that the government must make sure the evidence-based programs supported by the government are being managed to maximize value to the beneficiary, which is Cartarr’s way of saying that government inefficiency must be kept out of the realm of social innovation.  His third suggestion states that all agencies employing pro-innovation funding and management should be proactive in spreading the benefits of such programs. These suggestions, if followed in a well-managed manner could have vast positive impacts on society. 

I want to like Cartarr’s article and arguments, but I cannot, and I wonder if you can.  The first reason that I have a hard time accepting this article is that the author was already in a position in which he could have helped to enact these changes.  He was the inaugural director of the SIF, so he had a front row view of the government’s role in innovation.  Why didn’t these changes come about when he was in office? Why did he write about them, and the need for government cooperation after he left office? Can we really trust the government to efficiently use tax dollars to spur and support innovation if we don’t have a functioning government?  Before we ask the government to fix the ills of society, we should ask the government to fix itself.  As of 11:59PM September 30^th, the US ceased to have a functioning government.  That was the time that Obama’s director of the OMB sent a memo to all federal agencies ordering them to begin shutting down operations in an orderly manner.

Thinking Socially, Locally

One of my most vivid experiences with poverty stems from a childhood experience in India, where I saw families and kids in tattered clothing and bare feet pushing and pulling themselves through the small town my parents are from.

As a child, I related most to the poverty-stricken children I saw.  Our servant’s daughter, would help serve me and looked after me, moving through her arduous tasks with such ease while I stayed in a cool room watching TV.  Her relaxed and dutiful approach towards her task inadvertently agonized me.  Why was she responsible for such work?  Couldn’t she play with me?  Could we get her shoes?

These are the kinds of questions I would present my family with.  And they explained some permutation--whether it be the caste system or another excuse--that justified her role.  I would often think about ways to help her, and other girls like her.  But as a child in the early 80's, I was at a very nascent point of my understanding of how to do well by doing good.  And, survive off of it!

Generation after generation, a vast majority of Indian families are employed by other Indian families in the role of servants.  It has been a continuous cycle out of acceptance that there is no way to break out of that cycle.  Year after year, visit after visit, I return to the US only to arrive at the same point: something has to change. The Economist article “Let’s hear those ideas” was especially interesting to me because it brought to light the disparity among communities, not just in the developing world.  I always attached poverty to India because that was my initial introduction; however, I see that efforts, even at the federal level here in the US, are aiming to help deliver solutions towards social issues.  Most of these issues appear to stem from funding and the limited resources within the public sector can make it challenging to deliver a holistic solution – they are addressing the symptom, rather than the illness.  The “social innovation” approach has identified a way to create public-private partnerships that will help transform the way public services are provided.

What the social entrepreneurs have identified is a way to re-invest in people and communities that may have experienced some sort of disinvestment.  Whether it be through education like Wendy Kopp or through micro finance like Muhammad Yunus, they have found a way to address an issue that can ultimately help break the cycle that I’ve grown all too familiar with through my India visits.

As these social ventures are created and begin to become scalable models, I also hope the psychology of the poor also shifts and empowers them to uplift themselves.  I recently read “Escaping the Cycle of Scarcity” where an economist and a psychologist propose a way to explain why the poor are less future-oriented than those with more money.  This article made me consider another segment of the poverty-stricken population: what about those professionals who complete graduate school, have large loans as a result of their academic investment and have yet to secure a steady income?  They make similar decisions based on a limited band-with too. 

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

http://opinionator.blogs.nytimes.com/2013/09/25/escaping-the-cycle-of-scarcity/?_r=0

How do we value a social venture?

As we begin to think about a new economy with blurred sector delineations, we also need to consider how those new ventures will be valued. Since social ventures have an element of profitability it is clear that that measure will be one of many in its evaluation. The other measures, those of social benefit are the ones that are much harder to parse out.

When you begin to try to value a social benefit you inevitably run up against the question of personal value versus communal value. Money necessarily removes all differences in personal value of a company by assign a dollar amount to each person’s personal value, this can be compiled to show the demand in the market. How do we develop a similar system for social benefits as opposed to personal benefits?

When try to create a hierarchy of social ails it becomes clear that they are intimately connected. To alleviate hunger you need to grow food, to grow food you need to use water, to use water you need to deplete a natural source, when you deplete that natural source you are denying the allocation of some of water away from simply being consumed. When you try to alleviate one social problem you could easily create another. There has to be some parameter for evaluation which puts a higher value on a social venture which is a closed system, one that does not create externalities which will eventually need to be solved by some other social venture.

Also, once you start a hierarchy of social needs, it becomes clear that there are at least two major categories: physiological and societal. Physiological needs include shelter, food, water, and healthcare. By covering these basic needs we enable people to simply survive and sustain that survival. These basic needs are required to help a person with the societal needs which include safety, education, community, job readiness, and the opportunity to create work for onself. Once these needs are addressed people can begin to provide physiological needs for themselves. Clearly, they are connected. But one does precede the other.

These represent the beginnings of valuing a social venture. At the very least we need to include it’s profitabilty, it’s impact on a greater network of needs, and whether it serves to alleviate an immediate physiological need or a societal need. Where should we go from there? What else is needed to understand the value of a social venture in its context?

Why Not Just Pay the Poor?

Tina Rosenberg’s opinion piece in the New York Times, “To Beat Back Poverty, Pay the Poor” argues in favor of direct payments to poor people as a strategy for reducing income equality. This is a controversial viewpoint, and many arguments can be made for or against this type of system. Supporters argue that giving the poor direct access to discretionary funds results in less money being lost to corrupt governments and middlemen. Additionally, recipients will be able to use the money to attend to their most pressing needs rather than having aid agency make those decisions for them. Each family’s situation is different, and giving them direct access to money will allow them to better their situation in a way that would be impossible for even the most well-intentioned donor to achieve.

It could be argued that without regulation, much of the aid could be misused. While families in the programs mentioned in Rosenberg’s article must meet minimum standards to receive the stipends, there do not seem to be any requirements outlining the way in which the money should be spent. With no regulation on expenditures, questions arise over whether families use their designated funds in an optimal manner or squander them on more nefarious pursuits. To me, this argument is condescending at best. While there are certainly a small subset of individuals who will abuse the money, their initial level of wealth has nothing to do with their ethics. If anything, a poor family will be more inclined to spend the money on the basics—food, education, shelter—than the average individual.

The one issue I do see with the idea of direct payments is the question of sustainability. Dependency on handouts goes directly against the goals of economic development. If there is no requirement to spend a portion of the allotment on job-training or education, what incentive is there to start building a personal income base rather than rely on automatic payments? Certainly being better off will allow more people to pursue schooling that was otherwise unfeasible, but it is unclear if this gain will be large enough to offset the issue of dependency.

There is no way to accurately determine the potential unforeseen benefits or consequences of a program without actually implementing the program, at least on a trial basis. In a TedTalk, Esther Duflo argues for this type of experimentation to determine a social innovation’s viability. Watch her talk below:

Is this idea of social innovation experimentation feasible? How can we continue to test possible solutions to determine the long-term impact of different policies?

Sources:

http://www.youtube.com/watch?v=0zvrGiPkVcs
http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/

Globalization in the year 2013 is more of a present thought than an afterthought, largely due to how interconnected and globally centered societies are. Being interconnected, has resulted in the smooth diffusion of ideas across lands, especially as it pertains to some social enterprises.  In the last decade or so there has been an increase in the levels of ideas shared by different social enterprises and in this recent trend much of what social entrepreneurs do locally, does have a repelling effect on an international level. Globalization has made it so that there are now networks of social enterprises uniting and collaborating in their efforts for social change.  

Even here in our own back yard, the ideas of American social entrepreneurs whether big or small finds ways to become adopted by other countries. It has been noted by the Stanford Social Innovation Review that “one of the most powerful American exports over the next decade could be successful ideas for social change demonstrated by leaders in the U.S. nonprofit sector.”[i] This is a projection made clear through Teach for All, a replication of Teach for America.

Founded in 2007, Teach for All is a global network of social entrepreneurs that are working to expand educational opportunities globally. Teach for all, social enterprises, aspire to the vision that one day, all children will have the opportunity to attain an excellent education.[ii] Through Teach for All’s methods of recruiting and training their countries most talented young leaders, these social enterprises can offer students a life-changing educational experience. This life-changing educational experience also goes both ways. Many of the recruited young leaders, through this experience now have a conviction as educators to create change and combat systematic educational disadvantages in their respective countries.

Teach for All was created in partnership with Teach for America, Teach First- a replication of Teach for America in the U.K., and significant start-up support from the Michael & Susan Dell Foundation and the Amy and Larry Robbins Foundation.[iii] The exportation of the Teach for America model and approach, which has manifested into Teach for All, is not only an example of globalization allowing for an easy transfer of ideas, it is also an example of how successful social enterprise networks can be developed and sustained based on a proven model- Teach for America.

Wendy Kopp, CEO and founder of Teach for America, explains that “while Teach for America itself remains deeply committed to its own ambitious growth plan in the United States, the creation of Teach for All will enable us to be responsive to those who are working to address educational inequalities in other countries and who deeply believe that our theory of change can have a catalytic impact in their context.[iv] Teach for All comes at a very necessary time, especially when there are countries like Argentina where only 31%[v] of children graduate from high school, and countries like Pakistan where by the time children turn 16, 65%[vi] of children cannot read a simple story in any language. It is these statistics that compels Kopp and partners, to help other countries where there is much need for changes to the education system.

Teach for All is present and active in 30 countries, including the United States, ranging in locations from Chile, Estonia, and the Philippines. All of which highlights how a social change idea created locally, in America, can be applied to different social and cultural contexts within reason. Much of the success in Teach for All’s implementation comes down to the power of globalization that has broken down the walls/barriers that once prevented the sharing of ideas and approaches.

Globalization now allows for much of social change ideas, social innovators, and social entrepreneurs to unite through various networks under a common philosophy of social change that is rapidly casting a wide net around the globe. Long gone are the days of social change being unorganized and difficult to attain. Presently the trading of social ideas are on a rise and the networks for social change are becoming more and more impactful. But the success of Teach for All has left me wondering is the streamlining of social change really a simple process or is this a case of just being one of the lucky ones? If this is a case of Teach for All being one of the lucky ones, what mechanisms can we set in place to make sure that these kinds of networks are present for all social enterprises?

---

[i] Innovating the White House. Jolin, Michele. 2008. Stanford Social Innovation Review. 

[ii] About Teach for All. New Profit Inc.

[iii] Teach for America launches Teach for All to support development of its model in other countries. Teachforall.org.  

[iv] Teach for America launches Teach for All to support development of its model in other countries. Teachforall.org. 

[v] Teach for All Locations & Programs. Teachforall.org

[vi] Teach for All Locations & Programs. Teachforall.org. 

Prizes,Publicity and Problems

In the article Prizes With an Eye Toward the Future Tina Rosenberg glosses over one of her most interesting points.

"More important, prizes work where other methods do not. A lot of problems aren’t new — someone has already solved them or has solved something similar. By casting a very wide net, prizes find these people."

It is hard for newcomers to gain legitimacy when trying to enter the market place. Not only do governments and organizations draw out these solutions with their prize money, but they also give the winner a platform to reach their potential buyers.

Frank WiIlzchek described the effect of winning the Nobel Prize in 2004 to the Boston Globe saying his life "changed a lot! There was a whirlwind of publicity, both for myself and for my work, a great weeklong party in Sweden. And then life continued on a higher plane of self-confidence and self-esteem. Many opportunities opened up."

Prizes can give instant legitimacy to any person or idea, so long as the awarder is credible. In the case of most Nobel Laureates their legitimacy is already a given. By recognizing Social Innovations in this manner, Governments can give an influx of cash to Entrepreneurs not just by the money they award, but by the investors and potential customers they will draw.

I would also argue that while there are obvious benefits of prizes, the main motivator for most individuals will not be the cash, but rather the recognition and the autonomy it creates. Many companies today are moving away from the industrial model and allowing their employees time to create what they want. Prizes are like an international take on Google's famous 20% time model. Offering prizes is essentially providing the small incentive many innovators might need to flesh out that idea they had

The biggest roadblock to the American Government offering prizes is precisely because it is uncertain who the winner will be and where they will come from. Prizes are also more democratic, with no focus on lobbying for additional funds, entrepreneurs and innovators are forced to deliver a product. Unfortunately the way much of government funding is doled out is by Representatives and Senators looking to enable a specific industry or company in their region. It is unlikely to see Congress turn from a method of funding research and development that earns them so much good will among their constituents. Therefore it will be up to government agencies to use their discretionary spending to fund these prizes, much like the example of NASA in the article. This is a hard pill to swallow, offering up the rewards necessary would most likely require many of these agencies to make significant cut backs in the short term, with no actual guarantee of the prize being claimed for many weeks, months or even years.

Encouraging Social Innovation Transparency - using Kiva as a case study

Kiva is a non-profit organization with the mission of connecting people through lending to alleviate poverty.  Kiva accomplishes through microfinance institutions and through leveraging the internet.  On the website, Kiva shows various profiles of borrowers that the lender can choose from.  The lender will receive updates on the progress of the loan and will be repaid when the borrowers have achieved their goals.  After a lender is repaid, s/he can decide to keep this amount or relend it to another Kiva borrower.  Originally appealing because of this person to person lending, Kiva was scrutinized in 2009, by blogger David Roodman, for not maintaining transparency.  Instead of this person to person lending, the borrowers shown on the site were already backed by micro-financers.  He found that less than 5% of Kiva loans were disbursed after these profiles were listed on the site.  Kiva shows all of this information on their website, but it is not clear to most users what all of this means.  On the right of the profile picture is listed when the loans were “pre-disbursed” and directly below that is information on the micro-finance institution or “field partner.”  Kiva is technically not hiding any of this, but is still misrepresenting the way that social good is being achieved.

 

Kiva’s borrowers approach a microfinance institution and tell them what they are trying to accomplish and how much they need.  Lenders become investors only in the sense that they are invested in the stories of the individuals they appear to be lending money to.  Kiva is still achieving what they set out to do, but the lack of true transparency sets them back.  It seems that the tactic for most social innovation is to maintain transparency and to gain an investment from the community. 

Taking this conversation back to SIBs, would it be beneficial to a social entrepreneurs to maintain transparency not only to the government, but to the public?  Will the idea and support for social innovation, as a movement, be strengthened if the public could provide moral support to these projects?  Can an establishment of a new policy achieve this level of transparency with social innovators who apply for Social Impact Bonds?

http://www.kiva.org/

http://www.cgdev.org/blog/kiva-not-quite-what-it-seems

http://www.nytimes.com/2009/11/09/business/global/09kiva.html?_r=0

PPPs--Public Private Partnerships

Earlier yesterday, Forbes published an article called “What’s Driving Demand For Infrastructure and Innovation,” which got me thinking about what kinds of things government can do to actualize real policy changes that foster social innovation. The author Jonathan Refoy argues that governments must focus on creating sound infrastructures first before tackling policy changes to foster social innovation. Should these things be mutually exclusive and ranked against each other in terms of priority? While there are good points in his article such as the need to establish strong Public-private partnerships (PPPs), I disagree with the fact that infrastructure improvement and policies to further innovation cannot happen simultaneously.

We cannot just sit back and wait for traditionally slow governments to get their house in order to fix infrastructure issues. There must be equal efforts by government and the private sector to better progress in the field of social innovation, which can surely be mutually beneficial.

Public-private partnerships is one method to get private business ventures working with a partnership of governments to expediently address public needs—usually infrastructure projects. In the relationship of a PPP, the private party usually assumes financial and/or operational risk in the project. Taxpayer money is not used from the government side; instead the user of the service foots the bill. For example, toll roads are often PPPs.

Plenary Group, a Canadian PPP is one such group. Focusing on privately funding public infrastructure projects, Plenary Group is based in Canada but is expanding world-wide. When businesses like the Plenary Group work with governments to provide solutions for otherwise grid-locked public issues, social innovators and incubators will be more inclined to gravitate towards cities that promote creative problem-solving.

The Hidden Side of Social Innovation Policy from Government

Few weeks ago, I had a very interesting quest lecture by famous CMU alumni Arnold Wasserman who is called as the Master of Design. He gave the lecture and case study about how to improve one country's social system from old brick and mortar economy to innovative economy. Actually, he introduced the case of Singapore, one of wealthy nations around the Asia and he has involved this program.

The outlook of this program seems like very well organized and planned. Unlike other countries' government, The Singapore government have spent enough time as over decade to make, execute and fix the plan for encouraging creative industries and entrepreneurship carefully. Also, it's not plan for industry policy only and it has done with entire society like an education and cultural system. As a result, it looks like a great example for the a government driven social innovation.

However, the response of Singaporeans around CMU campus is quite different. Most of Singaporean students don't want to establish their own company in their country instead of finding a good job as a manager of global companies in US and Singapore. And, even some of strong advocates of entrepreneurship don't want to make a startup in Singapore. Truly, They want to start in US or China. The reason is quite simple. The size of economy and population are too small to start new business and their economy system is already depended on the finance industry and manufacturing as the role of the advance base of global companies.

How can we explain this gap? although there is a big increased rate of entrepreneurship in Singapore, I never meet Singaporean who want to build their company in their country. On the other hands, I know many Korean companies that made office in Singapore for a tax benefit and moved back to Korea after the end of benefit period, but the Singapore government counted these cases into their success cases.

I believe that there is some intention to propose not only a social impact but also political impact. In reality, The Singapore government has faced a lot of demands to require more democracy and equality from people because their political system is based on the dictatorship. Their majority political party has dominated since 1959 and still, there is no rival political party. So, for reducing the political demand from people, the Singapore government has opened the next goal of their nations and suggested significant results which has biased information and data for dispersing people's political interest into other issues.

By the way, the government is a main power for social innovation in many countries especially in the Asia because this special organization has most powerful methods to bring a huge impact to society such as a law, money and well trained public organization to execute their plan. So, when the government's direction and intention for innovation and development are decent, the result is excellent like many successful developing economy cases around the Asia.

However, sometimes or many times, the government has made wrong policies and programs. There are many reasons for this unhappy results such as limited resources, uncleared action and too much ambitious plan. Distinguishably and Sadly, unlike the failure of company, the government's fail is more serious and wide and brings huge pain to people. Think about the current status of the Greek. Their out-focused economy policy produces severe suffering not only economic side but entire their society. Greek people have to observe many new regulations from EU like cutting welfare budget and taking high interest rate that make their life more harder.

As a result, figuring out the method for measuring the real impact from social innovation and analyze the real purpose and intention of innovative policy are huge important for us because in the government section, we have to have a method to prevent a wrong policy and program since it has significant impacts to our life in both positive and negative way. So, to prevent this bad situation, for playing a role against the government, we have to measure what is wrong and suggest more logical argument by a measuring tool which has common sense to ordinary people.

Preference list :

http://sroi.london.edu/Measuring-Social-Impact.pdf
http://www.iesingapore.gov.sg/Media-Centre/News/2013/7/Encouraging-entrepreneurship
http://www.mansfieldfdn.org/backup/programs/program_pdfs/ent_singapore.pdf
http://www.gemconsortium.org/docs/download/587

Flaws of Social Impact Bonds

This week I ran to a write up by Jon Pratt about the flaws of Social Impact Bonds (SIB). Holding a MPA degree from Harvard University, Jon Pratt is the executive director of the Minnesota Council of Nonprofits and he has consulted with nongovernmental organizations on the development of NGO associations and services in Canada, Costa Rica, Czech Republic, Hungary, Poland, Serbia and Turkey.

To Jon, SIB is a good supporter (e.g. Rockefeller Foundation, Kennedy School of Government, McKinsey, New York’s Mayor Bloomberg, Goldman Sachs) and is attractive for public officials, taxpayers and nonprofits. However, he has two claims about the flaws of SIBs:

1. Your ability to get legislative approval is almost certainly a displacement from other funding and you will have to compute with existing programs. In other words, this legislative approval would probably not generate any new funding.

2. SIB financed services aim at producing better outcomes using advanced discipline. However, there is no guarantee of getting funded as the payments are tied to results. Like in the example of “No Child Left Behind” education legislation where school administrators cheated in order to show good results, this carrot-and-stick approach would probably not work.

So, why do we not consider applying milestones to the programs and monitoring the whole implementation of the social innovation/program from the beginning to the end? By doing this, we can intervene in the intermediate steps so that the program is implemented as intended. We should also remember that sometimes the program might not result in good outcomes as a whole. However, in my opinion, intermediate steps might make differences in people’s lives and the program might still worth getting funded.

You can reach the whole write up from the link below:

http://thegoodcounsel.com/2013/02/01/flaws-in-the-social-impact-bond-craze/

Modifying Bolsa Familia for the US

This week's reading was not the first time I'd heard about the Bolsa Familiar program in Brazil--I've

come across it numerous times before, in classes and through jobs/internship assignments. But every time I come back to it, I'm still astonished by the levels of success it has attained. It appears to be, far and away, the most successful program to combat poverty established to date. Reading again about its effectiveness, and how governments have been able to scale it up thus far, got me to thinking about its structure and whether or not its underlying principle--using individualized economic incentives to modify behavior in order to address social problems--can be applied to other societal issues.

The concept that most quickly jumped to my mind as a potential application was unemployment benefits. There are plenty of economic analyses of why unemployment as it works now often provides a disincentive to work. Furthermore, while unemployment benefits can sustain an individual financially while they are out of work, as the system stands now it provides little support to regaining and furthering employment options. Once an individual has been out of work 6, 7, 8 months, their skills have stagnated and the hole on their resume has grown too large to ignore.

But what if we applied the principle behind Bolsa Familia to unemployment benefits and paid the unemployed to change their behavior in order to become more employable--namely, by taking online classes and finding volunteer opportunities to sharpen skills. Just as Bolsa familia encourages families to send their children to school and ward off malnutrition and disease by conditioning cash transfers to school attendance and doctors visits, we could encourage individuals to take more productive steps to becoming employed by tying unemployment benefits to completion of online courses and fulfilling a certain number of volunteer hours at local nonprofits.

There are a plethora of open-enrollment online courses available today--starting with the massive collection offered via iTunes U--and plenty can offer new skills and knowledge for individuals to become more competitive in the job market. We could require the completion of a certain number of credits, or the documentation of a required number of hours put towards coursework, in order for an individual to receive unemployment benefits. A senior analyst at the Heritage Foundation proposed this exact idea in February, in writing that "the rapid growth of online education offers a better alternative to traditional government job training programs, which are expensive and of dubious effectiveness." 

Similarly, we could require the unemployed to find a volunteer position that allows the to exercise and perfect skills necessary in the workplace--such as working as an office assistant, or managing the inventory at a food bank. These positions, albeit unpaid, could help fill the gap that unemployment leaves on an individuals resume. Combining these voluntary work experiences with required online coursework would be an efficient way to retrain the workforce and guide the unemployed back into productive careers.

Such a model follows closely to the framework established by Bolsa Familia and Opportunitades--two tremendously successful program. Obviously, the cultural and economic atmosphere of the United States differs greatly from that of Brazil or Mexico, but the concept still seems to be of merit, particularly when the alternative is a system that tends to provide disincentives to rejoin the work place.


Source:
http://www.heritage.org/research/reports/2013/02/returning-the-unemployed-to-work-adding-online-education-to-unemployment-insurance

Governments are working hard on Social Innovation

In the past weeks, we have talked about ideas and models of social innovation and enterprises, mainly focusing on the entity itself. However, even though we can devise a perfect system of social enterprise, without an appropriate environment and beneficial public policies,we can't obtain a robust and healthy social innovation ecosystem in the long term.That's why governments should enter into the picture.

So what should government do to incubate social innovations? With this question in mind, I read about a report called "A Strategy for American Innovation" proposed by the white house, which demonstrates a systematical plan of American government.

The report has embedded president Obama's vision of achieving long term economic growth and international competitiveness while sustaining high quality life of Americans, mainly through education, innovation and jobs creation.The Obama administration proposed a " Wireless Initiative" aiming at ensuring businesses to reach 98% Americans with high-speed wireless access by the year of 2016.What's more, Patent Reform is also put on agenda to reduce enormous backlog of patent applications at U.S.Patent and Trademark Office, known as USPTO. The office has proposed a three-track model which will allow applicants to prioritize applications, enabling the most valuable patents to be applied to markets with a year.

In addition, Obama administration put forward an initiative about K-12 education, in order to make every high school student eligible for college or a career upon graduation. The most promising plan is called " Startup America", this plan will facilitate entrepreneurship across the country and especially encourage high-growth startups that can create economic growth and quality jobs.Apart from that, the plan also create 2 billion initiatives for impact investing and early-stage seed financing, which is closely related to social innovation topic.

To support innovative entrepreneurs, Affordable Care Act is passed in America, which makes it easier for Americans to start or join new businesses without giving up health coverage.President Obama also called for a simplified and permanent Research and Experimentation Tax Credit to create incentives for social innovation, and he also proposed to catalyze innovation hubs where scientists and entrepreneurs are brought together to come up with social innovations. What's more, the US secretary of State Hillary Clinton included "the global impact of economy" into foreign policy in 2012, encouraging a convergence of government, private sector and civil society.

To explore this topic from a global scale, I searched for some data about related governmental actions in other countries. According to an article, in the past 3 years, governments in U.S.,Europe and Australia have put more than 5 billion dollars for impact investment. In November 2011, the Europe Union launched the Social Business Initiative. The Big Social Capital(BSC) program in UK has raised 900 million dollars for investment in financial intermediaries to support social innovation and enterprises.And the government of Australia has allocated more than 20 million dollars for Social Enterprise Development and Investment Fund(SEDIF), in an effort to encourage financial products and method for social enterprises to receive fund support from private sectors and philanthropic areas.

A very interesting idea put forward by Singapore Government is that building a wider network with social enterprises to share Population Query and Machine-readable data, which can spur social innovation and public values.The Singapore Government is also implementing E-government system and Government Cloud Computing to improve efficiency and data services.

So what about developing countries? In 2010, the National Innovation Council was formed in India to build a base of pyramid fund for social innovation with the ultimate goal of raising 1 billion dollars.In Colombia, there is a Department of Social Prosperity which is devoted to compensating victims in social conflict, reducing poverty and introducing concepts of social innovation.What's more, there is also a Micro-Credit Company Pilot Program in China, aiming at improving lending regulations and financial services for social entrepreneurs in rural areas.

As can be seen from the Four Stages of Society theory, the fourth stage, society should tap ability of private, for-profit and non profit sectors to create most efficient and influential social impact.And it seems to me that government is doing more and more jobs behind the stage or acting as intermediaries, and the main roles in the front line will be played by private sectors,philanthropy and social enterprises. Is it the sign of social development if the government is playing a smaller and smaller role in society? If one day, social enterprises can work together with other forces to build a strong social ecosystem, do we still need a government with strong power?

Another question I'm thinking about is the differences of governmental actions in encouraging social innovations. There is a paradox for developing countries: they are in more desperate need of social innovation to tackle social problems, however, they don't have enough ability or resources to invest in social innovation like developed countries. What's more, cultural,historical, and political factors in developing countries are also making the problem more complicated.So how should developing countries balance their resources in different social need? According to their specific situations, what kind of different measures can they take to advocate social innovation?


SOURCE:


http://www.weforum.org/content/global-agenda-council-social-innovation-2013
http://www.socialvelocity.net/2009/07/the-significance-of-the-social-innovation-fund/
http://reports.weforum.org/social-innovation-2013/view/a-framework-for-government-action/
http://www.innovation.gov.au/innovation/policy/AustralianInnovationSystemReport/AISR2011/chapter-5-public-sector-and-social-innovation/government-initiatives-that-support-social-innovation-and-entrepreneurship/index.html
https://www.ida.gov.sg/About-Us/Newsroom/Media-Releases/2013/More-Government-Data-to-be-Made-Available-to-Spur-Social-Innovation-and-Create-Greater-Public-Value

Public policy that works

Since 2009, about nine states have created a legal business entity called a low-profit limited liability company (L3C). L3Cs merge the concepts of for-profit and non-profit. They provide social benefit in a for-profit manner that also encourages investing from the private and philanthropic worlds.

L3Cs are in compliance with the standards for program-related investments (PRIs), which are the types of investments foundations are allowed to make. Under the Tax Reform Act of 1969, foundations are required to give 5% of their assets each year. Rather than give all of their money in the form of grants, foundations now have an investing option that produces a return. L3Cs may also be attractive to the private sector as an opportunity for return and social good.

L3Cs and the corresponding ‘program-related investments’ represent some recent creations in public policy that support both business and social cause. While these policies are moving forward and allow more flexibility for organizations, they are organized on a state-by-state basis. These policies are certainly not nationwide or common. Many social entrepreneurs and innovators feel restricted by the law.

Personally, I am not at all fluent in public policy so I wonder why there is such slow movement in these areas. What will it take to spread the legality of L3Cs and similar designations? Citizens want them, they provide benefit to society, and they just makes sense. CEO Mitch Schneider of Kauzu, an L3C, stated “But we don’t think helping people and making money are mutually exclusive. In fact, we believe helping people is the best way to make money.”

Resources:

How Social Entrepreneurship is changing Chicago

http://technori.com/2012/10/2591-feel-good-do-good/

Low-profit limited liability company

http://en.wikipedia.org/wiki/Low-profit_limited_liability_company

interSector Partners, L3C – Tally

http://www.intersectorl3c.com/l3c_tally.html