The Corporation for National and Community Service announced today that they have named Paul Carttar as director of the Social Innovation Fund. To my surprise and great honor, Paul called me yesterday to say that he and his team have been reading my commentary on the Fund here at Tactical Philanthropy and to fill me in on his plans as the new leader. Paul noted specifically that he has appreciated the wide range of voices given a platform here at Tactical Philanthropy, so an extra thank you goes out to all of you who have written guest posts and left comments about the Fund.
So who is Paul Carttar? Paul co-founded The Bridgespan Group in 1999, and subsequently worked for New Profit, Inc., The Monitor Group, and the Ewing Marion Kauffman Foundation.
You can get a sense for the way he thinks in an article he co-authored for the Stanford Social Innovation Review titled “Zeroing in on Impact”. You can see him in person in this video interview he did with Nathaniel Whittemore of the Social Entrepreneurship blog at the Skoll World Forum last year.
My interest in the Social Innovation Fund has largely focused on the role the Fund can play in changing the way that philanthropic capital is allocated in the US. While most charitable donations are distributed almost randomly based on personal connections and effective fundraising appeals, the Fund is using an evidence-based approach in an attempt to channel philanthropic capital to top performing nonprofits.
While some people have wondered why a Fund that has a budget of $50 million can have such a big impact. I’ve argued that the Fund provides a set of carrots and sticks to help influence other foundations to funnel money to top performing nonprofits and that the whole exercise helps model a more effective approach to giving with the stamp of the White House legitimizing the concept.
But at various times since the Fund was created, government officials have made comments that are seriously at odds with my view of the Fund. For instance when launching the Fund, president Obama said that his domestic-policy adviser Melody Barnes and members of the very small Office of Social Innovation would “fan out to every region in the country to search for grant candidates.”
I was frankly horrified by this comment because it implied that the main goal of the fund was simply to provide additional funding to great nonprofits. So I was greatly relieved when during my conversation with Paul he emphatically said:
“The goal of the Fund is not just to fund great organizations. What this is really all about is changing how capital is allocated in the philanthropic sector.”
To accomplish this goal, Paul talked to me about the way he intends to use the “learning communities” that the Serve America Act calls on the Fund to create to help spur the creation of a marketplace to connect smart funders and great nonprofits. While philanthropic “marketplaces” are a trendy concept and something that has been attempted in many online formats, the Fund has the opportunity to act as a “market maker” who can inject $50 million+ per year into such a market to create the transactional volume that will draw others to participate.
One of my key questions to Paul was whether the applications to the Fund will be made public. While the Fund expects to only make grants to 5-10 intermediary grantmakers, they have received over 200 letters of intent from funders who plan to apply. These documents are rare and precious insights into the rigor (or lack thereof?) of some of the countries smartest, most cutting edge grantmakers. While Paul was unwilling to commit to making the applications public (he cited legitimate concerns about the grantmakers’ privacy) he did explicitly say “How we leverage this universe of applicants is a key question because they are a real asset.”
At the end of the day, Paul is just one person. He won’t make or break anything. But he’s got the right sort of credentials and the right sort of attitude. At the end of our conversation Paul pointed to what I think is the key to the whole thing when he said:
“I absolutely believe that the key problem we are facing is a capital market problem”
In other words, Paul believes that the fundamental issue on which the Fund can move the needle is improving the way in which philanthropic capital is allocated in our country. And that issue, is what Tactical Philanthropy is all about.
12 Comments
I’d been inspired on learning of the plan for a social entrepreneurship agency and innovation fund. From the outset it appeared to mirror our own advocacy with a $3.5 billion annual budget paid for by ending the war in Iraq.
On a smaller scale our proposition was for $1.5 billion over 5 years, weighing the case for empowering democracy through “soft power” against the weekly cost of that same war.
http://en.for-ua.com/analytics/2007/08/09/110003.html
Where it became disappointing was in the proposed distribution. Whereas we’d identified target social issues and the various social enterprise models which could be applied to them, the SIF was to apply a top down distribution approach through non-profit foundations.
Just recently I’d read an article sent to me by Arthur Wood of Ashoka which identifies the absence of systemic collaboration between non-profit and for-profit approaches to social enterprise.
When the UK introduced their own prescription for a Social Enterprise Investment Fund to the National Health Service, it was much the same, in spite of for-profit models like the Community Interest Company having been enshrined in law since 2005.
Althought the rhetoric sounds very good, if the real problem is identified as a “capital markets” problem – perhaps the problem can be solved by enabling “whole” capital markets. Whole capital markets would avail every type of capital instrument; loans, bonds and stocks. We stop half-way when we do not allow equity investment and the increase in philanthropic capital that it could make available and “market discipline”. An inability to “trade” philanthropic capital instruments means that we cannot value firms and their activities; thus providing us with an indicator of which firms and activities are valued (and presumably working well or heading in the right direction). This lack of trading information (price and volume) deprives the philanthropic capital community of strong signals of success and failure.
Kevin, I do think that a “whole capital market” is important. Which is why I’m involved with the Social Capital Markets conference this year. But I think the SIF is making very good progress. Don’t let the good be the enemy of the great.
Sean, what I read about Social Capital Markets is this:
“Today a new form of capitalism is arising that recognizes both the power and efficiency of market systems and the ability to direct them toward social and environmental issues leading to a more balanced set of “returns.” Early efforts by social entrepreneurs and enlightened investors have given rise to “Social Capital Markets” that include affordable housing, clean technology, microfinance, fair trade and many other socially focused enterprises. We will be the convener to bring the major players and emerging thought leaders in the field to discuss innovative ways to expand those markets and bring socially responsible investing and the channeling of capital to SME’s and grassroots business organizations into the mainstream.”
As I’ve often written, this in an area in which P-CED can lay reasonable claim to being global pioneers, with a founding paper on the subject and proof of concept in Russia.
http://en.wikipedia.org/wiki/Inclusive_capitalism#People-Centered_Economic_Development
Here among what appear to be largely traditional nonprofit leaning philanthropists, I see little evidence of any interest in this approach.
Care to share your thoughts about this?
Sean,
We’re so glad you had a chance to visit with Paul Carttar. We know him well in Kansas City! What a perfect fit for the Social Innovation Fund. Wonderful news, and wonderful of you to cover this development in your blog posts.
Laura
I thought about you Laura when I read about Paul’s work at Kauffman. Glad to know you like him!
Perfect paragraph, Sean:
“My interest in the Social Innovation Fund has largely focused on the role the Fund can play in changing the way that philanthropic capital is allocated in the US. While most charitable donations are distributed almost randomly based on personal connections and effective fundraising appeals, the Fund is using an evidence-based approach in an attempt to channel philanthropic capital to top performing nonprofits.”
Sean thanks for your thoughtful coveage of the announcement that Paul Carttar to head the Social Innovation Fund. Over this past decade I had the pleasure of getting to know Paul and gain an understanding of his thought process. I think hs is an excellent selection. I believe this is less about his current views, that you highlight and comment on well, and much more about how I believe Paul will listen to various views, learn as this new role will require, and adapt how he looks at SIF and its role. He comes to this role with an informed point of view, but it is how he will shape these views as he assumes this role, is where his greatest value will come.
Thanks Mario. Interesting comment. I’m enthusiastic about his current views because it provides a starting place for thinking about the role of the SIF that fits with my own. So I have reason to hope that Paul will make decisions in line (to a degree) with my hopes for the SIF.
But your comment implies that there are views at odds with Paul’s that he will need to listen to and which you believe he will adapt his own views towards. May I ask in what ways you expect him to shift or adapt his stated views after listening to others?
Great post Sean. I’m hopeful that Paul’s appointment means that the Corporation will be more proactive in using the SIF as an opportunity positively affect the philanthropic sector. It’s missed a few opportunities so far, but the opportunities still exist.
By the way, in my own conversations with Corporation staff, I’ve been told that only applications for actual grantees will be accessible to the public (which has been the practice for the agency for other initiatives as well). I would hope that Paul can change that approach in this case as well.
-Adin
Adin, what are some of the opportunities that you think they’ve missed?
The big one for me was the decision not to release the letter of intent submitters. I recognize that the process was voluntary, but it was a great opportunity help funders identify possible collaborators. Instead, most of them worked blindly I suspect.
I think they also should have published the list of expert reviewers (which they could still do) and should really make an effort to provide data on all the applications not just the eventual grantees.