Philanthropic Freedom & the Social Innovation Fund

Let’s set aside the specific issues that have been debated regarding the Social Innovation Fund and for a moment simply reflect on existence of the public debate. One thing that the Social Innovation Fund is highlighting in stark relief is the broad freedom that private foundations have to conduct their activities as they see fit.

While the Social Innovation Fund is, at the very least, attempting to “do good”, there has been fierce public debate about the process they are using, their responsiveness to public input, the likely degree of success they will have, and whether they should focus on “innovation” or “effectiveness”. All of these issues could be debated about the activities of any private foundation.

But private foundations enjoy a large degree of protection from such debates.

  • The Social Innovation Fund may lose funding if public opinion turns against them. Private foundations are endowed with a perpetual asset base.
  • The SIF is subject to extensive government laws about the degree to which they must make information public. Private foundations have little disclosure requirements other than filing their 990 form which reveals little beyond their finances and their grantees.
  • Unanswered public criticism of the SIF puts their very existence at stake. Public criticism of private foundations might hurt the feelings of foundation staff and board members.

Personally, I think that the large degree of freedom that foundations enjoy is their biggest asset and their biggest liability. It is an asset because it allows them to explore unproven territories, take risks and engage in creative deviance without concern that they will be “voted out of office”, “have their customers abandon them”, “lose market share to competitors”, or “test the patience of investors.”

But this freedom is a liability as well. It means that foundations need to adapt to changes by choice (and nobody likes change), it allows foundations to repeat activities that are useless literally forever, it means that foundations only need to “comply” with limited requirements rather than optimizing their actions for maximum impact.

Aggressive competitors, the need to secure votes and the requirement to please customers are all positive forces for good. They force people to try new things, to double down on what works instead of what feels good and push everyone continually forward. Yet these same forces are forces of “the crowd” which can be wise or can descend into madness.

There is a great need for the independent social good actors that foundations represent. They exist outside the normal forces and pressures of the world and give breathing room for highly risky, unpopular or very long term activities to take root and grown.

But this special asset that private foundations enjoy can just as easily be squandered.

In a world with limited external pressures, many of us would never push ourselves to be the best. We might never embrace the unappealing task of moving outside our comfort zone.

The Social Innovation Fund is a government funded, public effort that is rightly required to satisfy the public. But given the similarities between the goals of the SIF and private foundations, it is also a wonderful example of the constraints that private foundations do not face.

In a world without constraints, how would you drive yourself to achieve?