It wasn’t a big line item in the budget, but when the Obama administration introduced the Social Innovation Fund in 2009, it made a splash among nonprofits.
Here was the White House throwing its incomparable endorsement and serious intellectual capital behind ongoing efforts by some foundations and charities to build and expand programs that do objective research and provide data proving they work. So much about federal spending on social programs is about complying with federal regulations. This was going to be about the results social programs deliver.
“The Social Innovation Fund really was a break from the traditional way that the federal government deployed resources to drive impact,” said Paul Carttar, director of the fund from April 2010 to September 2012.
No doubt there is room for improvements, according to those who know the Social Innovation Fund well. Some questioned the fairness and transparency of the grant-application process during the initial cycle of grant awards. Some argue that nonprofits need more flexibility in evaluating programs to prove results. But by and large, the fund has delivered on its mission, according to many.
Now, nearly seven years after it doled out its first grants, the question of whether it will survive the change of leadership in Washington looms large.
The incoming Trump administration did not respond to questions about the future of the Social Innovation Fund. When asked if House Speaker Paul Ryan would support spending to carry on the work, his press secretary said by email that “we are working closely with the incoming administration on this year’s agenda” and that more information would be forthcoming.
The Social Innovation Fund got $50 million in fiscal year 2016, according to the Corporation for National and Community Service, which oversees the fund. Republican members of Congress have taken aim at the fund, including in 2015 when two Republican-led committees voted to eliminate it from the budget.
High-Profile Effort
The effort was a high-profile one for the Obama administration. It was launched under the Edward M. Kennedy Serve America Act and is designed to unearth and support nonprofits and programs that can prove results. The money does not stop with the grantees. They act like conveners and intermediaries, vetting and awarding money to subgrantees that execute the ground-level work.
For every dollar of the initial federal grant, the grantee and subgrantees together are required to match it with a total of an additional $2. The money typically comes from foundations in their regions.
In 2009, Melody Barnes, then director of the White House Domestic Policy Council, was deployed to the Council on Foundation’s annual conference to make the sales pitch and solicit feedback, and Michelle Obama talked about the fund at a Time gala celebrating the magazine’s 100 Most Influential People.
“By focusing on high-impact, results-oriented nonprofits, we will ensure that government dollars are spent in a way that is effective, accountable, and worthy of the public trust,” the first lady said.
The following year, the Obama administration invited nonprofit leaders to the White House, where Michelle Obama that announced foundations had pledged $50 million in matching funds for the first two years of the fund’s grant making.
In 2014, the fund began to move beyond simply asking grantees to measure and report results. It provided its first “pay-for-success” grants, designed to shift the risk in funding social programs to private investors. Those private investors pay into a fund to support a project, and if the project goals are met the government agency administering the grant reimburses the private investors’ money. In the most successful cases, investors are paid a profit.
By the close of fiscal year 2016, the Social Innovation Fund had awarded a total of $341 million in grants, according to a spokesperson for the Corporation for National and Community Service. The federal money spurred $672 million in matching commitments.
Proving Results
Even with the Obama administration’s fingerprints all over it, several people who know the Social Innovation Fund well said they think it may carry on under a GOP administration. (One option for Republicans, they said, might be to rename it.)
The fund’s philosophical underpinnings closely mesh with Republicans’ desire to cut spending and focus on programs that work. Last year, for example, Speaker Ryan established the Commission on Evidence-Based Policymaking to spur the collection and use of data, with the hope that it will be a foundation for new policies and programs to fight poverty.
“We have certainly been in contact with our federal legislators to make sure that they know about our experience and our outcomes,” said Ted Hendry, president of United Way of Greenville County in South Carolina. “If government wants to invest in things that work, I think the Social Innovation Fund is one of those things.”
In 2014, Mr. Hendry’s charity received a $1 million Social Innovation Fund grant to provide intervention services for poor middle-school students. The goal: improve local high-school graduation rates by getting kids help well before they’re at risk of dropping out.
Building Capacity
Drumming up the required $2 million in matching funds was in part a matter of fortuitous timing, Mr. Hendry said. One year earlier, a cadre of local private grant makers formalized a funding consortium they named the Greenville Partnership for Philanthropy, and were on the hunt for good groups to invest in. The partnership put up $1 million. United Way put up the other $1 million and identified its five subgrantees.
“Our experience with Social Innovation Fund has been challenging from the standpoint that we really had to ramp up our capacity to deliver very quickly,” Mr. Hendry said.
But over all, he said, the outcome requirements have been very positive for his charity because they accelerated efforts to implement successful programs and evaluations. United Way is in close contact with its program office at the Social Innovation Fund, and the communication has been good, he said.
Some of the things now being delivered thanks to the grant are in-school medical services designed to keep kids healthy and in classrooms and professional development for teachers to better equip them to serve students who have below grade-level literacy skills, Mr. Hendry said.
“For us it has been just a very positive experience,” he said.
Evaluation Struggles
A 2015 analysis of the Social Innovation Fund conducted by an outside party, the Social Innovation Research Center, found some shortcomings. One of the biggest hurdles is the cost of high-caliber evaluation, which can be hundreds of thousands of dollars. Most nonprofits don’t have that kind of money, and there are limited grant makers and donors interested in paying for it.
Still, Patrick Lester, the author of that analysis, said he found mostly positive results in spurring nonprofits to collect and analyze performance data. And the Social Innovation Fund fits neatly within a poverty-fighting plan introduced by Speaker Ryan last year. In addition to the creation of the Evidence-Based Policy Commission, the plan recommended increased spending on high-quality evaluations of federal social programs and a tiered-funding approach that directs the largest shares of money to expand programs proven to work. The plan also endorsed the pay-for-success model.
“Social Innovation Fund was laying the groundwork, intentionally or not, for what Ryan wants to do,” Mr. Lester said. “Ryan has endorsed this evidence process.”
Michael Smith, director of the fund from July 2013 to October 2014, said that knowing what is working is a good use of government money.
“We don’t have enough money to throw at problems where we don’t have evidence of impact,” said Mr. Smith, who now heads President Obama’s My Brother’s Keeper effort. “There’s a whole lot of heart out there, but sometimes you’re serving kids but those kids aren’t going anywhere.”
It is a conversation started in the Bush administration, he said, and President Obama took it to another level.
“We spend $300 billion a year on nonprofits, 50 percent of which don’t have a theory of change or logic model. One in eight don’t spend any money on research and evaluation. If you’re trying to tighten your belt, I sure want to know that your kids are going off and graduating college or the people in your work-force program are actually getting hired, and not that we had a good photo op at the end of the year.”
Alex Daniels contributed to this article.
