This is my most recent column in the Chronicle of Philanthropy. You can find a full archive of my columns here.
Lessons in Social Innovation: a Call to Action
August 23, 2010 | Chronicle of Philanthropy
Over the past few days, debate among nonprofit experts about transparency at the Social Innovation Fund has mushroomed into speculative second guessing that risks undermining this critically important philanthropic experiment.
The fund, while making some early strategic mistakes in the degree to which it made public information about applicants, has moved quickly to rectify the situation and deserves full credit for delivering on its promise to supply growth capital to high-performing nonprofits.
At the heart of the Social Innovation Fund is an exploration of an underappreciated approach to philanthropy.
Rather than simply paying nonprofits to carry out their programs, as the government and most large foundations typically do, the fund focuses on expanding high-performing nonprofit organizations. This type of growth capital is largely absent from the philanthropic marketplace, a primary reason why proven approaches are so rarely able to reach their potential.
Some nonprofit commentators have criticized the Social Innovation Fund’s budget as too meager, but it is important to note that the fund’s budget—a combination of government and private dollars totaling $123-million—makes it a significant grant-making entity. Many foundations give more than that in a year, but most foundations earmark only a minority of their grants to spread good ideas and build the capacity of nonprofits.
If the Social Innovation Fund is in fact a revolutionary experiment in providing growth capital, why has there been so much consternation about the fund’s transparency of its grant making?
I am a big believer in the idea that the fund should push the envelope on transparency in an effort to help the nonprofit world learn as much as possible from this audacious experiment.
While I have been a vocal supporter of the fund, I have advocated for it to make public all of the applications. My reasoning for this was not so much about ensuring that the fund played by the appropriate rules as it was about my belief that these applications represent a treasure trove of detailed information about the practices of grant makers providing growth capital. However, the fund decided early not to release the applicants’ proposals.
Marta Urquilla, a senior adviser to the fund, told me that the decision came out of public comments received from nonprofits.
According to Ms. Urquilla, numerous potential applicants told the fund that a policy of publication of applications would reduce the likelihood that they would indeed apply. Therefore, in an effort to maximize the number of applications and ensure the highest possible talent pool from which to select grantees, the fund made a strategic decision to promise applicants that their applications would not be made public.
That was a mistake.
One of the primary goals of the Social Innovation Fund is to identify more effective approaches to solving critical social problems and broadly share this knowledge. The best way to accomplish this is to make public all of the applications detailing the existing approaches to solving critical social problems deployed by the applicants.
A secondary reason for publishing all applications is to preemptively discourage second guessing and speculation as to which organizations applied, which ones did not receive a grant, and why. Unfortunately, it is this second category that risks curtailing the Social Innovation Fund experiment before it can even get started.
On Thursday, Paul Light, a prominent nonprofit scholar and an application reviewer for the Social Innovation Fund, wrote in a Washington Post column that his panel had issued the lowest possible rating to one of the Fund’s 11 winning grantees.
Mr. Light wrote, "I have no idea how this applicant reached the winner’s circle. … I can only surmise that this applicant was invited to revise and resubmit. … Given the applicant’s impressive lobbying effort on behalf of SIF, its success raises inevitable questions about fairness, conflicts of interest, and undue pressure."
While Mr. Light’s concerns are valid, and I share his interest in the fund publishing more information about the applicants, it appears his speculation of conflicts of interest and undue pressure is without merit.
According to the Social Innovation Fund, each application was reviewed by two groups of reviewers. Out of the 54 applications reviewed by two committees, only 12 received identical scores from each committee.
In nine instances the scoring differed significantly and in three of those cases one panel assigned the highest rating while the other assigned the lowest rating.
Mr. Light’s post hit a nerve because it was widely assumed that his reference to an "impressive lobbying effort" referred to New Profit, a grantee at which Paul Carttar, director of the Social Innovation Fund, once worked.
While Mr. Light never named New Profit, an analysis of the distribution of ratings published by the fund after he published his column shows that New Profit was the only grantee to receive the lowest possible rating from one of the panels.
This does not, however, mean that conflicts of interest marred the process.
Paul Carttar has had a varied career at some of the country’s most prestigious nonprofit organizations. When he was named director of the fund, he was issued a detailed four-page letter explaining the process for selecting grantees and identifying situations in which he would be required to recuse himself.
Most important, as director of the fund, Paul Carttar was not in charge of selecting grantees.
Paul Light was not the only person asking questions. The Nonprofit Quarterly, The New York Times and others—including me—all published articles and blog posts questioning the fund’s rationale for not making more information about the applicants public.
By Sunday night the fund had published explanatory matrixes laying out reviewer ratings from each phase of the process, finalist applications, and the comments of application reviewers.
The fund has now made public as much information as might possibly be asked about the winning applications.
While it is impossible to prove a negative and state definitively that no conflicts of interest or undue pressure marred the process, there is no evidence to suggest that the process was anything but fair.
As we put to rest the second guessing and speculation about the process, let us not forget that the primary reason for the fund to make public information about all applications is because doing so can best help the fund achieve its goal of broadly sharing knowledge about effective approaches to solving social problems.
However, the fund did make oral statements of assurances to the applicants that their applications would not be made public. Therefore, the fund should announce immediately that next year’s process will include an explicit notice to applicants that all applications considered for grants will be made public.
The Chronicle and I have started a public repository for all applications to get the conversation out in the open. We urged all applicants to submit their proposals. Social Venture Partners, one of the organizations that did not win a grant, has already agreed to publish its application, and we will make it available soon.
The repository is not meant in the least to shine negative light on any of the applicants. Fully 70 percent of the applications were rated "strong," the second highest rating, or better by at least one committee that did the first round of reviews.
Many of the proposals, winning or losing, reflect years of experience deploying growth capital in support of high-performing nonprofits and will help to advance the field of knowledge.
We are at a critical juncture.
The Social Innovation Fund is an extremely ambitious attempt to help create a philanthropic capital market for supplying growth capital to high performing nonprofits.
The effort was almost derailed over the past few days, but quick action by the Social Innovation Fund has got things back on the right track.
Now it is up to the unsuccessful applicants to keep things moving in the right direction. They were promised that their applications would not be made public. But voluntarily doing so now, with the encouragement of the Fund, will cement the Social Innovation Fund’s commitment to transparency and help it reach its goal of broadly sharing knowledge about what works.
To submit a Social Innovation Fund application to the repository, please e-mail it to email@example.com. If you’d like to discuss your submission, please e-mail me at firstname.lastname@example.org.
Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.
What a great thing to do! All of these applicants have approaches to funding and social problems that are valuable. Who knows what bit of data might be just the spark to set another nonprofit or funder alight? By sharing information, we save ourselves the wasted energy of reinventing the wheel.
As one of the SIF reviewers, I know there is
much to be learned in all the applications.
I hope applicants respond to the Tactical Philanthropy offer and post their applications. Where reviews were negative, perhaps they’ll get some positive suggestions to improve. As to SIF, I suspect it, too, has learned what for-profits (BP, Toyota) have so painfully realized: Being forthright from the start is better in the long-run.
Thanks for your support Geri. Since the list of applicants is not public, we can’t do proactive outreach out this. So I hope everyone who happens to know who applied with forward this to them.
I’ve been on every side of the grant process… applicant, reviewer (gov & private), grantmaker(private) and though I understand the Fund’s thought that they are responding to nonprofit comments, when you are funding innovation, perhaps you should think about how the process supports innovation.
First and foremost, I will not begrudge any applicant that chooses not to share their application. Why? Because their ideas will be “stolen” and their applications plagiarized. IMHO, there is no nuance in this fact.
As a funder, however, (especially one like SIF) if a good idea is “stolen” and an application plagiarized, then more social impact is coming from that original idea — from the funders perspective, this isn’t necessarily a bad thing. Overall social impact is better when the originator of a good idea doesn’t have the opportunity to withhold it from society in the hopes of out-competing their peers for grant dollars.
The bottom line for me is that yes, fewer people will apply to an open process… but SIF is to achieve its goals, an open process is more likely to get them to their destination.
PS: I have been on a number of review committees where particularly good, outside-the-box ideas got both the highest and lowest scores from reviewers. Innovation tends to run against the grain– some reviewers add points for that, some deduct points. This is the nature of grant review and a positive indicator of the quality of a grant process.
Thanks for your comment David. I’ve been thinking the same thing about the dual panel structure. It may very well make the process less clear, but result in better grantees.
While I get why an applicant might want to “protect” their idea, doing so puts their organization’s priorities above the goal of serving their beneficiaries. I think it is a rationale but morally bankrupt position.
That being said, applicants were told going in that the applications would be private (at least according to the SIF, there is no written record of such a promise) and I think that changing the rules midstream would not be fair. That’s why I’ve called on the SIF to explicitly state an expectation of publication for next year and applicants to voluntarily submit applications this year.
One other tidbit. I was involved in a grant program that processed over 10,000 applications via independent readers. In the end we had 5 scores per application. For the resulting 500 or so grants that were awarded and my team managed, the single largest predictor of innovation (i.e. grants that we perceived as innovative) was the variance in the application scores. Interestingly, variance was not positively or negatively related to grantee success.
Sean – I am glad you wrote about this in the Chronicle and reposted on your blog. I am really on the fence about whether or not the full applications should be released. I might be able to go along with making public an overview or summary of the innovative and proven-effective service. I am not so sure that it is necessary to make public and essentially “give away” all the specifics of one’s plan.
In the comment above you seem to be implying that self-preservation is an “organizational priority.” I do not think it is fair to assume that just because someone wants to “protect” their idea means they are not trying to serve their beneficiaries. They likely have a lot of potential beneficiaries who are not benefitting because the organization does not have enough resources to provide for them.
I think this is a discussion that really needs to be explored further. I posted an article about this on my blog sector3report(dot)com. I would love it if you would read it and give me feedback. Thanks, Beth
Important point you raise. I think this tension between growing and preserving the organization vs focusing only on the beneficiaries is an important one. “Tension” means that there are real pros and cons and real issues at stake. I think this issue is so important so often ignored or glossed over that one of the sessions I’m hosting at SoCap addresses it (see Scaling Social Impact in this post>/a>)
thanks for your response, Sean. I called out for your response directly on my blog. will you repost there?