A Little More Transparency at the Social Innovation Fund

During the debate in late August around the Social Innovation Fund, the core of the discussion revolved around the degree of transparency that the Fund should exercise. At the time, I dismissed much of the controversy as a non-scandal. However, I wrote that the one major mistake that the Fund was making was not releasing the applications of all applicants. Now, the Fund has issued a press release stating that beginning in 2011 they will indeed take at least an initial step toward fulfilling this request.

Unlike many supporters of more transparency at the Fund who focus on transparency for the sake of accountability, I’m interested in the way increased transparency can increase impact by sharing information that can inform other grantmakers. Since the Fund makes grants to other grantmakers, specifically grantmakers who engage in the practice of providing growth capital to nonprofits, I believe the applications are a treasure trove of information about the emergent field of growth capital philanthropy. What I’ve called “tactical philanthropy” or what is sometimes referred to as investing in nonprofits.

The press release from the Fund include two items of note:

• The Social Innovation Fund is taking additional steps towards more openness, consistent with the Administration’s commitment to open government.  The NOFO [document detailing the 2011 grant process] indicates that the Corporation plans to make public the names and executive summaries of all applications considered for funding, the names of all expert reviewers, and the reviewer comments for all selected grantees.
• To stimulate the identification of additional high-impact community-based nonprofit organizations throughout the U.S., Social Innovation Fund applicants will not be permitted to include pre-selected subgrantees in their applications. Selected intermediaries will award all of their subgrants through open, competitive processes initiated after receipt of their award.

Transparency: Unfortunately, the Fund has decided to only release executive summaries of each applicant. As I am impact focused rather than accountability focus in my desire to see the application, I wouldn’t mind if much of the details of the applications were suppressed. It is the process described by each applicant that I’m interested in reviewing. Just as investors can learn much by reading about the process used by other great investors, I think that grantmakers, especially those engaged in the emergent practice of growth capital funding, could learn a lot from the applications.

Note that the applications are not simply marketing language that the grantmakers might use to describe what they do on their website, but are statements made in the process of applying for a grant from the federal government.

However, according to the NOFO, while the executive summaries of the applications will include an overview of the program, the measureable outcomes targeted for improvement, an overview of the sub-grantee selection process and a description of the applicants track record of using evidence to select grantees, they will not include the meat of the application which includes items such as:

• key objectives of program, as well as the theory of change and overall approach to selecting and supporting subgrantees
• statistics on the needs related to the identified issue area(s)
• the availability of relevant data and the applicant’s approach to assess whether their investments caused improvement
• the theory of change relevant to the proposed program and the investment strategy to be employ
• the process by which subgrantees will be selected
• the process the applicant uses to incorporate evidence into their grantmaking process.

In short, the releasing of the executive summaries is a nice nod to accountability focused transparency advocates, but does little to advance the interest of impact focused transparency advocates.

Consider that “evidence-based” philanthropy has become a rallying cry for the “smart giving movement”. Yet, there is no widespread agreement on how to practice this sort of funding. The Fund applications constitute a sort of organized anthology of approaches to evidence-based, growth capital philanthropy. Yet the most important bits are left out.

Competitive Grantmaking: In 2011, the Fund will eliminate the practice of having “pre-selected subgrantees” listed in the application. I think this modification is a positive because it maintains better fidelity to the underlying principal of the Fund that private grantmakers are better positioned to select subgrantees than the government. The pre-selected grantee process to me resulted in the potential for the Fund to actually be selecting portfolios of subgrantees rather than truly selecting private grantmakers to manage the process.

As anyone who reads this blog regularly knows, I’m a big fan of the Social Innovation Fund. But while the Fund has navigated the process of launching a major new initiative admirably, I find this newest effort at transparency to be close but no cigar. It looks to me to be a effort to satisfy accountability focused transparency advocates that does little to advance impact.