Decreasing Taxes to Spur Social Innovation

The articles this week highlighted the importance of finding ways to fund social innovation and enterprise. The "funding gap," as discussed in the article by Michael Chertok, Jeff Hamaoui, and Eliot Jamison, could be ameliorated by leveraging government power. The government determines tax regulations and policies, and one way in which it could potentially mitigate this funding gap is by lowering taxes on corporations. The government often does not have the money that the private sector has for investment. Innovation is high-risk, and it may not seem fair to have all taxpayers bear the burden of these risks. Moreover, because lots of money is involved in innovation, private investors must choose projects that they feel are likely to succeed. This fact may lead to the creation of more successful social innovations that can spur similar projects. Moreover, private investors have the ability to work with bottom-up approaches in ways that the government cannot. These private investors can look for solutions that are relevant in their communities as opposed to the government telling them which policies to abide by.

Despite some of the positives that come out of decreased taxes for corporations, can mechanisms be put in place to ensure that they follow through with projects that are socially conscious? Are these mechanisms even needed in the first place?