Big G and SI: Expanding the Social Innovation Fund for For-Profit Social Ventures

The Social Innovation Fund is a government supported funding source for social non-profits to gain the necessary capital they need to get their feet off the ground and the ability to replicate their model around the country. One issue that has been highlighted surrounding this program, however, is the lack of start-up resources for social venture that are based under a for-profit model. Getting initial funding to get off the ground can be a daunting tasks for these organizations as well, however, they do not have the same access to governmental funding as do their non-profit counterpart. They do, on the other hand, have the potential to pay back money that they have received and may even have the ability to give an even greater return.

In a recent article, Harvard Business Professor Clayton Christensen argues that the government is losing out on great potential by not funding social venture based on performance and sustainability. He argues:

"This Office (White House) can use its convening power to help break though some of the toughest barriers that have long prevented marketplaces that can grow social innovations from taking hold, like the lack of metrics that enable us to know what works and the need to invest in "bottom up" versus "top down" solutions. It can help catalyze a shift in the social sector that would better guide funding and support towards social enterprises that have impact."

In his argument, Christensen creates three priorities for the Office of Social Innovation:

1. It must demonstrate a new way to solve social problems where government serves as an investor in innovations that are developed and identified by citizens outside of government.



2.  It should guide more social innovators towards "bottom-up" initiatives, in preference to "trickle-down" philanthropy.


3.  It should use the convening power of the White House to initiate a focus on impact and metrics.


With the creation of the Social Innovation Fund, it has become clear that government policy recognizes the influence and importance of Social Innovation in shaping how we should tackle some of the most daunting challenge facing society today. However, unlike the field itself,  the Social Innovation Fund seems caught in the old ways of doing things. Christensen continues his argument by describing the need for the government to evolve in order to spur a new wave of innovation and philanthropy that does not have to be incompatible with profit and business.

One of the primary ways of accomplishing this task will be the shifting of the metrics used to value impact and sustainability as we discussed last week. This reiterates the points that like innovation itself, we must continue to look for new ideas (many by giving a new face to proven techniques) to handle the opportunities that this movement of social innovation has brought forth.

While the merit of providing impactful non-profits with funding to expand their missions has huge value, the government should not limit its scope. The government should perhaps not blend the Social Innovation Fund into something that makes investments in for-profit social ventures, but create a source of funding for hybrid ventures that would provide a return on the government's money. With the resources available to the government, huge opportunity to generate lasting social change can be found.

I leave you with a few questions:

Does government even have a role in for-profit social ventures as they already have access to investor in the business world and can grow like any other business?

If the government did fund for-profit social ventures, how should it balance metrics for measuring financial success with social impact?