Social Innovation Fund: Next Steps

This is my latest column in the Chronicle of Philanthropy. The Chronicle ran a longer version of this column with more details just after the story broke in late August. I’m running the column here for the benefit of the many people who sanely took a vacation in late August.

Next Steps: Let’s Learn From Innovation Fund’s Applicants
September 6, 2010 | Chronicle of Philanthropy

A critically important philanthropic experiment nearly got derailed last month by rounds of second-guessing and speculation.

The Social Innovation Fund, a federal effort to spread good nonprofit efforts nationwide, got into hot water in part by bowing to requests from potential grantees to keep their applications confidential when publishing them would in fact lead to more social impact.

In an age when Web tools make it easy to provide reams of information quickly and effortlessly, many people expected the Social Innovation Fund to push the envelope of transparency. The Social Innovation Fund’s policy not to release grantee applications or the ratings and reviews of the experts who judged the proposals generated significant criticism.

The issue mushroomed from a somewhat academic debate into national news when a prominent nonprofit expert, who served as a reviewer, wondered in The Washington Post why an organization his review committee rated poorly had ended up a winner. What’s more, he said, the group with bad reviews had lobbied the government to create the Social Innovation Fund, adding yet more fuel to the demands to release the applications and evaluations from reviewers.

To its credit, the Social Innovation Fund moved fast to recover from its missteps—working feverishly over one weekend to get everything online as a controversy erupted on a quiet Thursday in August—and has now made public all the application materials of the organizations that won grants as well as the ratings and comments of reviewers. It also clearly described the fund’s process for selecting grantees in a way that explained how the group that got a poor review in one round did very well with other experts and ended up a finalist.

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?

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. When the fund didn’t want to release the proposals, it raised questions about its commitment to spreading the smartest approaches across the country.

A secondary reason the fund should have published all the applications right from the start was to discourage second-guessing and speculation as to which organizations applied, which ones did not receive a grant, and why.

Now that the fund has made additional information available, nobody has uncovered any conflicts of interest or undue pressure. All the evidence suggests that the process was fair.

The fund needs to show it learned from its mistakes. It erred when it first promised grant seekers that it would not make public their applications. It should announce immediately that next year’s process will include an explicit notice to grant seekers that all applications will be made public.

As we put to rest the second-guessing and speculation about the process, let us not forget the fund’s goal of sharing knowledge about effective approaches to solving social problems.

To jump-start the sharing of ideas, The Chronicle and I have started a public repository for all applications.

We urge applicants that did not win grants to submit their proposals. Social Venture Partners, one of the organizations that did not receive a grant, has already done so. It can be viewed here.

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 of the two committees 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.

The Social Innovation Fund almost lost crucial momentum over the debate about its openness. Now it is up to the unsuccessful applicants to keep things moving in the right direction. By voluntarily posting their applications, they will help to cement the Social Innovation Fund’s commitment to transparency and help it reach its goal of broadly sharing knowledge about what works.

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.