A World of Opportunity

When you hear the word ‘innovation,’ what is the first thing you think of? Amongst images of lightbulbs, smart phones, and Steve Jobs, individuals involved in public administration are probably near the bottom of the list. But in terms of social innovation — the ideas, concepts, and strategies applied to addressing social needs and problems — public administrators are proving themselves to be incredibly effective agents of change. In the following article, we detail how public administrators from mayors, to venture philanthropists and policy makers could very well be the future of social innovation.

Figure 1: A simple model for social return on investment (SROI). Source: Social Return on Investment: CHAHA Programme, Biswas et al.


Social Capital Markets and the Emergence of the Impact Economy

One idea gaining strong momentum in the social innovation movement is the concept that social problems can be addressed with greater efficacy in the private sector.  Quietly winning adherents and the attention of notable social entrepreneurs such as Vikram Akula, Vanessa Kirsch, and Nobel Peace Prize recipient Mohammad Yunus, the social innovation movement has gained extraordinary power in recent years, especially in the realm of social capital markets.  Said to be the intersection of money and meaning, social capital markets are the point where impact investors and social entrepreneurs meet to engineer socially beneficial and financially prosperous projects.  Indeed, projects like the Grameen Bank and SKS Microfinance have achieved far-reaching good while generating profit for the core enterprise. Their efforts, along with various social enterprises popping up daily, continue to demonstrate the near limitless potential of impact investing and social capital markets to affect widespread change and jumpstart the engine of job creation.  Current estimates value the market for impact investing, including venture philanthropy, near $50 billion, but experts place the market’s potential value between $500 billion and $1 trillion.

Social entrepreneurs of the private sector currently dominate the who, what, why, where and how of social innovation, but the game is evolving. Attuned to the nascent power of social capital markets in times when budget purse strings are tight and job creation languid, the Federal government is launching itself into an effort to construct a full-fledged impact economy in the United States. The impact economy is the quasi-institutionalized partnership between impact investors, social entrepreneurs, philanthropists, executives – both business and non-profit – and government policymakers. The goal: to harness the power of social capital markets as a massive force of community improvement and job creation. The list of problems that social innovators are addressing is vast. It includes: economic opportunity, affordable housing, health care, education, clean energy, environmental improvement, and much more. As the government increases its role in the impact economy and adds to the development of smaller social impact markets, public administrators – from nonprofits to public policy – will play a huge role in architecting, engineering, and constructing social innovation in America.

Within the continuing advancement of the impact economy in America, public administrators will function as social innovators in three broad capacities. Firstly, they will serve as enablers and players in the development of social impact markets. Secondly, as policy makers, they will act as enablers and facilitators in the construction of institutions and of the legal framework within which all parties involved in the impact economy will operate. A large part of this will include fostering new markets and opportunities for investors and entrepreneurs to pursue.  Thirdly, public administrators will hearken a new era of innovation in government.


Social Impact Markets and Public Administrators

In 2009 President Obama signed into law the Edward M. Kennedy Serve America Act, establishing the Social Innovation Fund as a means of incentivizing social innovation. Housed at the Corporation for National and Community Service, the Fund fosters social impact markets by funneling money to grantees that are actively investing in high-impact solutions for a given problem. For instance, impact markets have emerged around economic opportunity, healthy futures, and youth development, as the Fund chose to prioritize those three areas. The Federal government also established the Department of Education’s Investing In Innovation (i3) Fund in 2009 to create an impact market in education and spur innovation in its ailing system.

Social impact markets are emerging elsewhere, too. Charitable and philanthropic foundations are establishing their own innovation funds while private sector impact investors free up capital for socially beneficial for-profit ventures.

Within such an opportunistic environment, public administrators will play an integral role. As the federal government doles out more funds to worthy grantees, these non-profits – who are investors in their own right – will decide to whom the money goes. Those working with the non-profit will be working directly with the recipients of their funds, implementing the creative solutions to enormously complicated problems. Intermediaries (the grantee organizations receiving the federal funds to disperse) like the Corporation for Supportive Housing, NCB Capital Impact and Venture Philanthropy Partners, are working with collaborative funding charities to dish out millions of dollars to such partners as the City of Los Angeles, CA, Habitat for Humanity, and Child Trends. As non-profit managers or city government officials and employees, public administrators will be on the front lines of social innovation developing initiatives and carrying them out.


Public Policy and the Impact Economy

As the impact economy takes shape, public policy will play a pivotal role in accelerating is evolution. Indeed, this infant institutionalized impact economy is a product of national legislation. Public policy makers will and must deepen the legal framework born from the Serve America Act to ensure the impact economy can realize its full potential. It is up to policy makers to pave the clearest path possible for the private sector to work as efficiently as possible. This will include writing clear, efficient policy that removes hampering barriers to the process of social innovation.

Policy makers will also have the opportunity to add programs into the mix. Since its birth in 2009, the Social Innovation Fund (SIF) has expanded yearly, tackling more and more problems. Through reliance on data and results driven approaches, policy makers can identify problems and their potential solutions made available by impact markets.  In this way, policy makers can expand the umbrella of the SIF and create new social impact markets. http://www.aspeninstitute.org/policy-work/nonprofit-philanthropy/Im...


Innovation in Government

Government on the local, state, and national scale is starved of innovation, especially when it comes to social endeavors. Perhaps it’s no surprise then that the nation is straining beneath the weight of its social issues, from unemployment and poverty to environmental degradation. As the social innovation movement races forward, it is time that public officials became reinvigorated with the spirit of innovation and invention. This calls for a new class of public administrator who brings the private sector’s ‘how can I make it better’ motto to every problem faced. A pioneering member of this new class is Mayor Michael Bloomberg of New York City. He has leveraged the Mayors Fund to affect much celebrated change in obesity reduction in schools, betterment of the environment, and more. One recent study found that as a result of efforts executed by present and past mayors, New York City has one of the highest life expectancies in the country. Other mayors across the country have been working hard towards creative solutions, such as Mayor Annise Parker of Houston.

The results of their innovative approaches and pioneering attitudes is twofold. First: the spotlight of innovation in government has turned to city governments everywhere. Second: They show that local government innovation is amazingly powerful and possible. It takes but one innovator to make such change.

Public Administrators — whether non-profit executives, or policymakers — have the power to open the door, pave the way, and drive the car of social innovation in America.  Social entrepreneurs will continue to be major contributors to social innovation. But the role philanthropies, nonprofits and government can play continues to unfold daily. If the estimates are correct, social innovation is the next frontier. Public administrators need only to punch the gas.

Author: Yvonne Fischer is a researcher and writer for the Public Administration team. She believes that the public sector is an untapped silo of creativity and innovation. It is her goal to educate and present to others the diverse impact of today’s socially-conscious public administrators.