Social Innovation – A new Model?

Whenever the economy begins to take a nose-dive government debt begins to rise, the business sector ceases to expand and unemployment increases. Calls are heard from the private sector to downsize the public service, implement wage freezes, and cut government waste followed by strong opposition from the labour sector. It is then that we see a move to get the non-profit sector involved in the hope that with a little financial nudge community-based agencies with volunteers or lower wages paid to non-unionized workers can take up the slack. Non-profit agencies are provided limited funding in the form of grants to take over social programs but eventually cuts to various government services (health, education, income assistance, etc.) result in more people in need. While demands for more services increase, funding for community-based programs tends to decrease due to government budget cutting leaving the burden of maintaining the programs on the non-profit sector. This attempt to divert social services away from government budgets and to find new ways to provide services is known as "social innovation". Each time this public-private partnership has surfaced over the past decade it is interpreted as a way to reduce deficits and to cut back on government expenditures.

A social entrepreneur is someone who develops an innovative answer to a social problem. According to Stephen Goldsmith, a professor at Harvard University, there are four stages that society has used in the past to address the most difficult of social problems. Stage one was seen at the start of the 20th century, caring for people was largely left to families and charities. Stage two was marked by the welfare state in the United Kingdom and the Great Society in the United States that saw the government taking on the job of ending poverty. In stage three, the government tried to foster partnerships with the private sector and although this had some success, too much emphasis was placed on cost cutting at the expense of measuring successful outcomes. In the fourth stage government will tap the ability of the private and the non-profit sectors to deliver more "transformative innovations". Projects are selected by competition after being scrutinized by government bureaucrats for risk. The aim is to search for social innovations that have succeeded on a small scale and help them have a far bigger impact i.e., "investing in what works". Government funding together with private funding (both private capital and philanthropy) is the basis for supporting social projects that work.

However, how do you measure what works? The private sector has the profit yardstick. The social sector lacks a similar measure and the challenge here is to work out an effective measure of success. The number of people coming through the door of a social centre, or the number of volunteers or the number of hours they work tells you nothing about the program's effectiveness. The challenge will be to develop an evaluation process that will effectively measure success. One way to be effective is to require private capital to ensure a rigorous cost-based evaluation and another is for funding from a new group of philantophic foundations who take a personal interest in the growth of these social innovation groups by investing in a portfolio of non-profit groups and following their performance closely.

To ensure that social innovation projects continue it will be necessary for government departments to divert some of their budgets to a social innovation fund. There is usually resistance from the bureaucratic rule-bound public sector making it difficult to shift funds from old budgets to new ones. To overcome this tendency one suggestion is for every government agency to put aside 1% of their budgets into a social innovation fund thus making it easier to participate in innovative projects.

The evolution of the partnership between the public, private, and non-profit sectors continues. We need to continue to explore innovative ways to develop programs that are shown to be effective and fill unmet needs in our communities.