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Entrepreneurs, Meet Social Challenges

Arguing that while government may not be the answer, it can be part of the answer, the newish Office of Social Innovation leverages issue-oriented entrepreneurship with federal dollars.

Government has been in the business of working with nonprofits for decades. It has long bought from them something it didn’t want (or know how) to produce on its own — the services of taking care of poor people, the homeless, drug addicts, the mentally ill.

Government specified the details. Nonprofits bid for the contracts. Much paperwork was exchanged.

“It was very retail,” said Steven Goldberg, a nonprofit consultant and the author of Billions of Drops in Millions of Buckets: Why Philanthropy Doesn’t Advance Social Progress.

As to whether or not the system worked — that was never really the question.

“The whole notion of something working implies that we’re looking for a solution to a problem, and that’s not what they were doing,” Goldberg said. Government and nonprofits were trying to mitigate the effects of joblessness or chronic illness. “Nobody was trying to cure those things or even substantially eradicate them. Therefore, there was no innovation. It was really a question of cost control: How can we provide services to as many people as possible at the lowest possible cost?

THE IDEA LOBBYMiller-McCune's Washington correspondent Emily Badger follows the ideas informing, explaining and influencing government, from the local think tank circuit to academic research that shapes D.C. policy from afar.

Miller-McCune's Washington correspondent Emily Badger follows the ideas informing, explaining and influencing government, from the local think tank circuit to academic research that shapes D.C. policy from afar.

“Basically,” he said, “it was a system to hold a finger in the dyke of social failure.”

For the last year, however, social entrepreneurs and the federal government have been working on a paradigm shift in confronting social ills, a project of the new (and largely unknown) White House Office of Social Innovation. At the effort’s core is the Social Innovation Fund, a $50 million matching sum now being funneled to tested nonprofit innovations around economic opportunity, public health and youth development, in the hopes they may one day scale up to real impact.

“The SIF has the potential to transform how our nation tackles social challenges,” Patrick Corvington, CEO of the Corporation for National and Community Service that is administering the program, wrote in a White House blog post over the summer.

The aim is ambitious, and Washington’s initial investment looks skimpy in comparison. But Goldberg, who helped vet the first round of grant recipients, says the concept has big potential, despite some early controversy.

The way the fund has been set up, the $50 million will not go directly from the government to the nonprofits working in the targeted areas. Intermediary organizations applied for the grants, and this summer, 11 winners were announced.

Those organizations are now in the process of dispensing the money to sub-grantees on individual projects. Each organization — both the intermediary and the sub-grantee — is responsible for matching the government’s contribution, tripling the investment. The intermediaries also will provide the managerial expertise smaller nonprofits need to expand their operations.

The nonprofit field was torn over whether the government should throw its weight behind scaling proven ideas, or seeding new ones that might not otherwise get off the ground. But SIF has defined its philosophy around the former goal, dividing some of its supporters. The first grant round was also bumpy, with critics complaining the process lacked transparency and produced conflicts of interest.

Goldberg believes the logistics can be fixed. Most important is the project’s central premise. Within the past 20 years, social entrepreneurs who have never been part of the government contract world have been testing a more transformational approach to social challenges, through programs like Share Our Strength, City Year, the Harlem Children’s Zone. Chances are, if someone walks into a soup kitchen, he needs more than a meal. He needs access to job training, health services, family counseling. Programs that solve problems — and don’t just mitigate their effects — address all of those dimensions.

These same social entrepreneurs, Goldberg says, realized that to really expand their impact, they’d now have to engage government. Government, meanwhile — starting with the equally receptive Obama and McCain campaigns during the 2008 election — was ready, too.

“This is to me the big idea of the SIF,” Goldberg said. “The government realizes that ‘we can’t replicate these kinds of interventions for a lot of bureaucratic and budgetary reasons, and we can’t simply buy them the same way we used to buy social services. But we can fund their development and expansion the same way that the government provides R&D funding for technology innovation, energy innovation.’”

Such big plans, he said, are not necessarily inconsistent with the small government budget.

“I wish it could be bigger, I think everybody does,” he said. “But the fact of the matter is that the essential thing is proving the proposition that by partnering government and social entrepreneurs and private foundations, we can demonstrably expand the availability of these innovative solutions far beyond what would otherwise be possible without that framework. That’s the only thing that matters at this point.”