What is government's role in Social Innovation Funding

Michael Chertok, Jeff Hamaoui and Eliot Jamison, in The Funding GAP, described 5 types of direct investors (Angel investors, philanthropic foundation, endowed nonprofits, international development agencies, pension funds) and 7 types of intermediary investors (social venture capital funds, community development financial institutions, social enterprise and nonprofit loan funds, international small-and-medium-size enterprise development funds, venture philanthropists specialized foundation, socially responsible mutual funds). But I noticed they neglected one important funding organization, that is government. They contract with non-profit and new-born social enterprises, outsourcing their public services and build public-private relationship.

Usually, government don't fund and select applicants directly. They are in favor of a third party, (non-profit incubator organization,etc) to organize and choose the best candidates for their public services. Especially in the emerging economics, government plays a role of supervising everything within the country. However, she can't take care of everything she wants, therefore, government contracting is prevalent these years in countries, like China.

Many new social enterprises in Shanghai will make advantage of these contracts, regarding it as continuous and sufficient source of their funding. On the flip side, government will limit their development regarding to some sensitive issues, which might leads these new social enterprises on the wrong track opposite to their original plan.

I shared two links which I believe government is behind them.

Social Innovation Fund

NPI Venture Philanthropy (I am sorry, this is Chinese version, you may use google translation :P)

My question for today's lecture:

1) How to balance the benefit between your investor and yourself? Since sometimes, we will meet the dilemma that if we got the money from someone, we will scarifie part of our ideas to meet their needs. Especially in public affairs, this leads to a problem Public interests vs. Private interest.