The Innovation Fund & The Serve America Act

Yesterday I highlight the way that President Obama’s description of the Innovation Fund differed in fundamentally important ways from the policy recommendations of America Forward. The simplest way to understand the distinction is that the way Obama described the Fund would mean that it was making grants to nonprofits, while the American Forward policy recommendation has the Fund making grants to grantmaking organizations.

My sense at this time is that the mismatch is based not on an intentional decision by the President to run the fund in a different way, but by a lack of understanding by the President of the role of the fund (which is understandable since the Innovation Fund can’t be very high on the President’s priority list).

One reason for believing this to be true is that as I understand it, the Edward M. Kennedy Serve America Act that authorizes the Social Innovation Fund requires grants from the Fund to go to grantmaking organizations. The bill clearly states that only “covered entities” may receive funds and it defines “covered entities” as “grantmaking institutions.” So as far as I can tell, the President’s description of how the Fund will be managed that he gave at Tuesday’s press conference runs counter to the bill that authorizes the fund.

Look, just to be clear, I’m not suggesting that any fishy is going on. I’m not saying that the Obama administration is doing anything wrong. I think that we’re operating in a space that few people understand and which even people who understand have a hard time explaining well. I expect that over time administration will figure out how to describe the fund more clearly and accurately.

I think this fund is going to be a big deal. It might end up being a really big deal.

One Comment

  1. Kelly Ward says:

    Thanks Sean for both of your posts and for grounding this discussion in what’s written in the Serve America Act. As you say, the foundation for how the Fund will work is described in the bill. To add to the detail you give above, the Serve America Act requires the Corporation for National and Community Service to administer the Innovation Fund and determine which grantmaking intermediaries will receive money, and with government matching the investments made by the private-sector. (Note that the bill does allow the Corporation to use up to 10% of the money to fund nonprofit organizations directly without going through intermediaries, but that’s a small percentage of the total $50 million.)

    It’s truly astounding to have the President give a speech about the work of social entrepreneurs and how we can identify, invest in, and scale social sector solutions. His speech presented a new vision for the role of government in solving our nation’s social problems, including how government can more effectively partner with nonprofits, philanthropy, the private sector, and citizens. It’s exciting to have leadership for the Innovation Fund at the highest levels of our government, and for President Obama to recognize it not just as another program, but as a model for his vision of how government should partner with the nonprofit, philanthropic and private sectors. We certainly hope you’re right that this Fund ends up being a really big deal!

    I would be remiss if I didn’t mention that none of this will happen if Congress doesn’t appropriate the funding for the Innovation Fund. We hope that supporters of this idea will call the House and Senate appropriations committees to convey their support.

    Kelly Ward, Director of America Forward