"Wait, we have to pay for this?" Social Innovation and Sustainability

An important defining feature social innovation and entrepreneurship is the ability to be sustainable and transformational.  As anybody starting up a business knows, this takes money... and people and time and resources... People and time can be found fairly easily, however, its that darn money that often gets in the way from many of these amazing organizations getting their feet off the ground. Fortunately, many philanthropist and capital investment firms have begun to realize the benefit that many of these social innovators bring to the table, as well as the potential for many of these project to become sustainable on their own. This appears to be one of the greatest shifts in the field. What use to be primarily the work of charities in providing for the less fortunate, has continued to shift towards organizations with business models that reach towards sustainability in their own delivery of services and goods. 


One of these firms providing capital to startup social ventures is New Profit who defines their organizations as "a national venture philanthropy fund that seeks to harness America's spirit of innovation and entrepreneurship to help solve our country's biggest social problems."  They seek to provide social entrepreneurs the necessary strategic and financial resources to grow their solutions to scale and achieve sustainable, transformative social impact in education, public health, poverty alleviation, and workforce development right here in the US. 


The process of partnering with New Profit requires going through a rigorous selection process that averages 6 months, in which the board at New Profit narrows down their investments to three organizations. The process from their website is as follows: 

Once these organizations have been chosen, New Profit makes a four to six year commitment to helping these start ups get off the ground. Among the criteria:

• Meet demands of a true social entrepreneur (ability to attract resources and channel them to greater, more efficient social purpose)
• Ability to have both a direct and system impact
• A strong capacity for growth
• Clear fit for the mission of New Profit and the potential for growth

Instead of treating these ventures simply like projects with a noble cause (which they all are), New Profit treats them like business partners who have the potential to provide a return on their investment and can strengthen the organization on the whole. Pretty awesome I would say. 

New Profit own funding and their ability to provide capital comes from their own web of investors who have generally receive a 2:1 return on their investment. With the stringent selection process, New Profit insure their own sustainability and continues to draw in more investors, allowing them to expand their goals and mission. For the investors, they are able to give to projects they feel passionate about, while knowing that their investment will go towards what they intend. 

Here is a page of some of New Profits current projects. 

Firms such as New Profit should certainly continue to expand, but we should continue to be cautious that the culture of social change does not slip into a realm where investment return become a necessary feature of the structure. While many of these project do have great potential for increasing their own sustainability, there will continue to be segments of society that cannot meet their basic demands and we should continue looking for ways to make this side of social innovation sustainable not simply based on the returns that can be gained from their service or products. 

A few questions to be left with: 

• What other investment strategies have potential for reaching into the realm of social innovation: a charity stock market? 
• Are there dangers on focusing too much on the business side of social innovation? Does this have the potential of clouding the mission of these organizations?