A few questions on the Social Innovation Fund

Yesterday, the Corporation for National and Community Service held a conference call on the Social Innovation Fund (SIF). The conference call was revealing in the information it provided. However, many significant challenges and questions remained unaddressed and could potentially derail the effectiveness of the SIF. 

Authorized under the Edward M. Kennedy Serve America Act, the SIF will distribute up to $47.5 million for innovative projects through direct grants to local organizations and to intermediary grantmaking organizations that will in turn fund local projects (5% of the SIF will be used for research and evaluation). In both cases, the Corporation expects local grant recipients and intermediary grantmakers to provide a 100% cash match for the SIF grants. In the specific case of the intermediary grantmakers, a grant issued by the Corporation through the SIF will generate an equal cash contribution by both the grantmaker and the local grant recipient. 

Currently the Corporation has focused its efforts on designing the parameters of SIF while also collecting suggestions and ideas from stakeholders and the public. Yesterday's call was one more effort by the agency to provide clarity about the SIF. Several points stood out for me from the call:

  1. The SIF aims to provide substantial funding to effective organizations, generate substantive evaluation of nonprofit effectiveness, and raise the bar on the quality of evidence used to identify organizations worthy of funding.
  2. The Corporation expects to invest in organizations that will generate highest return on investment.
  3. Experienced grantmaking institutions will serve as the intermediaries for most of the SIF funds and will be responsible for identifying the innovative local projects that will ultimately receive the grant dollars. 
  4. The Corporation will look for strong organizational effectiveness and grantmaking intermediaries that have a strong track record in partnering with local organizations. 
  5. Local organizations will receive at least $100,000 if awarded a grant for a period of between 3 to 5 years; grantmaking intermediaries will receive between $1,000,000 and $5,000,000 for a period of 5 years. 
  6. Grantmaking institutions can apply solely or partner with other entities such as government units. 
  7. The grantee selection process used by the grantmaking intermediaries will have to comply with the Serve America Act requirements. 
  8. The Corporation will look to fund nonprofits that can demonstrate impact potential, program effectiveness, and readiness to replicate or scale-up in size.

 

By the end of the call, though, I came away with more questions than answers:

  1. The Corporation originally anticipated published the Notice of Funding Availability (a.k.a., the Request for Proposals) this fall with an ambitious timetable of awarding the grants in spring 2010. However, now the guidelines will not be released until the winter with the awards expected to be made over the summer. Will grantmaking institutions approved by the Corporation over the summer need to run their own local grant selection process and issue their grants by the end of the federal fiscal year? If so, that could be a very short window of time to identify, recruit, and award grants to innovative local programs.
  2. How long will grantmaking intermediaries and local nonprofits have to raise the cash match? Will the match need to be in hand at the time of the grant award?
  3. How does the Corporation define return on investment and innovation? 
  4. How does the Corporation define an experienced grantmaking institution? Is the SIF limited to foundations or could nonprofits that also issue small grants qualify? 
  5. What are the reporting and monitoring implications for a grantmaking institution that receives a grant award from the Corporation but has never received federal funding before? 
  6. How will the SIF be structured if the actual Congressional funding appropriation for the program falls short of the $50 million requested by the White House? 
  7. How will the Serve America Act requirements affect the internal grant reviews at grantmaking institutions that have traditionally placed a cloak over those processes? For example, will a local organization denied a grant by a grantmaking institution be able to contest that decision? And if so, to whom? 
  8. How will the Corporation balance the need to support nonprofits that have demonstrated effectiveness with those nonprofits that might truly be advancing an innovative but unproven approach? 
  9. Last, how will the Corporation make the SIF into a huge PR success for the agency and the White House? As Rick Cohen notes, "the Social Innovation Fund may be the signature philanthropic effort of the Obama era."

While the blogosphere appears fairly quiet on the subject, the nonprofit and philanthropy fields' expectations are high and I suspect will continue to grow. The SIF continues to draw audiences to conference sessions and meetings such as the 2009 National Conference on Volunteering and Service and next week's symposium at the Hudson Institute. The more the philanthropic, nonprofit, and national service communities trumpet the ideals and promise of the Social Innovation Fund the more demand will outpace the available funds.

In one plausible scenario, the Corporation could be flooded with SIF applications – from both grantmakers and local nonprofits, which could overstress an already short proposal review window and lead to resentment within organizations that competed and failed to receive funding support. Based on the funding parameters for the SIF, the Corporation will fund at most 50 local nonprofits directly and 42 grantmaking intermediaries. That will leave a lot of organizations out in the cold.

I intend to explore some of these questions in more detail in future posts. For now, what other critical questions remain unanswered? How should the Corporation handle these issues?

 

Acknowledgements and further blog reading on the Social Innovation Fund:

  • Sean Stannard-Stockton of Tactical Philanthropy Advisors wrote extensively on the SIF in a series of three posts (one, two, and three) earlier in July. 
  • Jeff Trexler, Wilson Professor of Social Entrepreneurship at Pace University, also raised some critical points in this post
  • OMB Watch post on the possible impact the SIF will have on the nonprofit sector. 
  • Rick Cohen examines where the SIF funding will go in this insightful post
  • Nicky Goren, Acting CEO of the Corporation for National and Community Service, recently posted on the White House blog on the SIF.

 

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