How innovative is the Social Innovation Fund?

Breakfast with Barack, originally uploaded by jurvetson.

Cross-published on JustMeans:

Recently President Obama signed into law the Serve America Act, which, among other things, established a Social Innovation Fund. The aim: to identify innovative & effective nonprofit social ventures and to take them to scale. As set forth in the statute, the Fund will accomplish this by giving money to "eligible entities" (i.e., existing grantmaking institutions or government partnerships) that will then in turn make grants to suitable "community organizations," provided the subgrantee is able to secure the requisite matching funds from government, nonprofit or commercial sources.

The initiative has generated considerable excitement in the social enterprise community. Judging from the language, I can see why: the new law speaks of "national leveraging capital," "investments," "institutional capacity," "measurable outcomes" and a host of other things that pretty much spell "win" for anyone playing social enterprise buzzword bingo.

Yet for the life of me, I don't see how any of this is innovative.

At its core, the program follows a model that's all too familiar from comparative administrative law--a government program that gives money to subgrantees who in turn give money to other subgrantees, managed through the relentless documentation of how stated program goals were met. For example, Russia moved to precisely this model recently, channeling social funds through grantmaking intermediaries, and USAID has been doing it for years.

Yes, I know that on the surface this is different--SIF isn't just making grants to grantmaking subgrantees for nonprofit subgrantees under the rubric of statutorily mandated reporting standards, it's leveraging investment in social entrepreneurs and building capacity for measured outcomes. However, this is not a distinction I could repeat with a straight face. When it comes to interpreting a statute I'm a stone cold pragmatist, and it seems to me that when you cut through all the jargon the two structures are essentially the same.

I don't say this merely to be contrary--studying existing institutions can provide invaluable insight into how SIF could spin out. If you have experience, say, with USAID, you know the culture that tends to grow up around such programs. The reality tends not to match the rhetoric--lift the rock of civil society & social change and you'll find a swarming mass of professional intermediaries, stultifying standardization and the awarding of spoils to the usual suspects with marginal scraps for unorthodox unconnected outsiders.

The potential for this in SIF is quite real--the requirement of matching funds alone will skew the grants to nonprofits that are already established, particularly groups that have substantial support from governments and major funders. Moreover, the statutory requirements for measured effectiveness, evidence-based decision-making and so forth may sound good, but in practice this provides an institutional mandate for centralized regulation and extensive paperwork.

I know the people who promoted SIF had a much more enthralling vision, but that train has left the station--the new law puts us on the cross-country Amtrak. In the immortal words of T.S. Eliot, "this is the way the world ends/not with a bang, but Corporation Monitoring Planning Assessments."