To understand how we can address the needs of social innovators, we need to first understand the nature of the role they will play in spreading what works. Here at Root Cause, we believe that social innovation is the process of finding, testing, and honing potentially transformative ideas, practices, principles, and models of approaching social issues. Therefore, we need to first train social innovators to correctly assess and analyze social needs in order to enable their development of innovative approaches. Innovators, trained in social needs assessment and analysis, will be able to understand the complex nature of social problem solving, clearly articulate their vision of change and develop expertise on the social issue landscape.

This in turn will allow them to identify new opportunities for impact, define organizational roles, and develop innovative solutions with a focus on target beneficiaries. Finally, this capacity of social needs assessment will assist them in developing and articulating an approach and managing an organization to achieve its goals. But once these leaders have developed innovative approaches, how can we help them spread these models? In other words, how are we equipping them to advance social innovation?

Our work through the Social Innovation Forum shows that spreading proven approaches requires collaboration between nonprofits, philanthropy, government, and business as they move through the social innovation process. Thus, social innovators need to be trained in strategic collaboration, where they can Identify and develop key partnerships within and across social issues and sectors. These partnerships will facilitate the spread of innovative approaches via knowledge sharing about best practices and collaboration with similarly mission-aligned organizations.

However, this collaboration itself requires a platform like a social impact market. Therefore, effective social innovators understand how social impact markets operate. They can develop and implement a system to measure and communicate performance. Consequently, social innovators need to be trained to learn from performance, make data-driven decisions focused on continuous improvement, and effectively allocate resources based on performance.

If sustainable impact is a question of performance, leaders engaged in social impact need to measure their performance to maximize their social impact. This new generation of leaders will need to develop competencies in market assessment and analysis, building and sustaining organizations, engaging in outcomes-driven adaptive learning, and collaborating across sectors. Are our leaders ready for this? If not, how can we prepare them?

This past week, I explored how social impact markets can facilitate this role in a webinar hosted by Stanford Social Innovation Review based on my Winter 2012 article in the magazine. The webinar featured State Street Foundation’s Corporate Citizenship Vice President Sheila Cody Peterson representing the Youth Violence Prevention Funder Learning Collaborative, ACCESS CEO Bob Giannino- Racine speaking about his participation in Root Cause’s Social Innovation Forum, and Shawn Dove, the Campaign Manager for Open Society Foundations’ Campaign for Black Male Achievement. Through the conversation, it became even clearer to me that there are two ways in which a funder can be the key lever in ensuring the allocation of resources based on performance in a social impact market.

First, funders need to take the initiative to provide the infrastructure, information, and incentives required to direct resources toward performance. Created three years ago to align funding in youth violence prevention, State Street Foundation’s Youth Violence Prevention Funder Learning Collaborative stands as such an example of an emerging social impact market. Currently the collaborative consists of 45 private and 12 public funders, who are learning, sharing, and acting in a market-based approach. Yet the knowledge sharing goes beyond the collaborative since all the information is publicly accessible to any interested funder.

According to Sheila, one of the most important first steps was to identify strategy areas most in need of aligned funding based on research and on funders’ current giving priorities. The three areas—workforce development, youth development and mentoring, and family support and mental health—helped organize funders into working groups aligned around these strategy areas.

Within these working groups, funders learn about their area of focus, creating a common set of knowledge. They share funding expertise and learn to use this knowledge to align funding by developing funding tools, co investing, etc.

The funders invest in nonprofits based on shared views of prevention and by choosing outcome-driven practices they all agreed were necessary. Using the social impact market model, some funders in the YVP Funder Learning Collaborative have aligned $1.5 million in private investment, increasing meaningful employment experiences for over 900 youth in targeted communities where violence is highest.

Second, funders need to be willing to help programs build capacity to perform better and spread what’s working within the social impact market. Root Cause’s Social Innovation Forum played that role for ACCESS, a national nonprofit working towards removing the inability to afford college as a barrier to education. During the webinar ACCESS CEO Bob Giannino-Racine attributed the organization’s tremendous growth to the capacity-building support provided by SIF. Within the few years of working with SIF, ACCESS has gone from serving 2,734 students to serving 9,500, while securing $57.2 million in financial aid compared to $45 million before SIF. ACCESS went from an individual organization in need of support to piloting a training program in ten cities and expanding direct services in three others.

Shawn Dove, representing the Campaign for Black Male Achievement, reiterated this role of funders while discussing the work required to improve the lives of black men and boys. As an example, with 42 percent of all black boys failing an entire grade at least once, black male achievement is a challenge in need of a social impact market. He noted that there are thousands of programs working in communities across the country that are having results; however, there is currently no social impact market structure to organize the efforts, incentivize performance, and spread the impact.

Therefore, the challenge lies in the process of getting funders to take these two bold steps: data-aligned funding and provision of capacity building support so organizations can strengthen performance to improve lives. A striking example Shawn brought up was that there are currently many foundations that ask for performance data in their grant proposals, while very few of these actually give grants for measuring performance and evaluation. Sheila added that since not all nonprofit partners can provide outcome information in a cost-effective manner, the initial selection of performance indicators should be based on feasible and currently available indicators. The funders should talk to content experts to understand what indicators these nonprofits can feasibly measure while simultaneously supporting nonprofits to build capacity to evaluate their own impact.

All in all, the conversation brought to light the need to emphasize the role of funders in directing the flow of resources in a social impact market. The market approach pushes beyond collaboration as it allows a clearer way to allocate limited resources. As Sheila stated, funders need to move away from loose collaboration with individual areas of focus and a lack of sharing practices and knowledge toward strategic alignment that incentivizes performance and builds capacity.

I have been asking myself this very question since the day I sold my business in 1997 and decided to devote my career to making progress on social issues. While I am still certain we must do a better job in building a system that allocates resources towards performance and while I am clearer on what does not work, I am much less clear on what does work. At one point in my career, I thought making social progress was simply a matter of finding a great leader and giving these leaders more resources and tools. However, we have “scaled” organizations with great leaders; but that has made only a little bit of progress. For example, take a certain national nonprofit that has been working to increase college enrollment rates. Although in the eight years from 2000 to 2008, the organization grew by 750 percent, serving more than 17,000 students, it estimates that it will only reach about 2 percent of the 1 million low-income high school students in the United States. Why is this the case? Why are we not reaching the other 98 percent? What we need is a lot of progress.

At another point, I also thought making social progress might simply be a matter of providing greater transparency on particular social issues and on what’s working so that people with resources will make more rational decisions on how to allocate those resources. However, we have seen that allocating resources based on data is only one, and often not the primary driver of decision-making. Adding to this problem is that we have much less data then we thought. In fact, through our Social Impact Research (SIR) division, we have seen that in social areas like School Readiness, there is currently no available data to demonstrate aggregate program success rates since the outcome data is tracked only at an individual level based on teacher observation of students. According to the top four developers of curricula and assessment tools, the individual data cannot be aggregated to accurately show program-wide results. Additionally, the accuracy of the teacher assessments themselves varies greatly with a teacher’s level of training on assessment tools, thus supplying very little reliable data to track aggregate outcomes.

So I keep asking myself why? Why can’t we spread what works faster? Some would argue that it is simply a matter of political will—with the right policies in place progress would be faster. However, I continue to dispel that notion. We have had plenty of policies during the terms of both Republican and Democratic administrations in D.C., and in various other cities, and states that have allocated plenty of resources towards plenty of programs without creating much progress. Instead, I continue to believe that we need to do a much better job of allocating resources based on performance. I continue to believe that we need to strengthen the social contract between the people who make the policies, the people who allocate the resources, the people who deliver the programs, and the populations they seek to help. In the end, we are either providing a better outcome for them or not. If not, we must ask why not!

Photo: Creative Commons

As 2010 draws to a close, I have found myself reflecting on the journey that the field of social innovation and entrepreneurship has experienced.

In February of 2011, Root Cause will celebrate its seventh birthday. It is amazing to me to consider how far we have come as a community working to advance the field of social innovation and entrepreneurship.

Here are some of the developments that I believe we, as a field, can be proud of:

• Social innovation is continuing to capture the attention of new stakeholders in nonprofits, philanthropy, government, and business. When I started Root Cause seven years ago, social innovation and entrepreneurship were a set of ideas about how to improve our approach to social problem solving shared by a small community of nonprofits and philanthropists. Perhaps the most prominent illustration of that community’s growth over the past several years is the existence of a White House Office of Social Innovation that is working to raise the profile of our field and helping communities spread effective approaches and invest in what works. Also, the emergence of America Forward, a coalition of innovative nonprofits, funders, and thought leaders in the field of social innovation has helped to ensure our voices are continuously heard—so that we can support important federal activities, such the creation of the Obama Administration’s Social Innovation Fund, while building champions on both sides of the political aisle.

• We are beginning to understand the importance of collaborative efforts to target tough social issues. Seven years ago our field’s focus  was on supporting and scaling individual organizations with approaches that had the potential to make significant progress on tough social issues. While building organizational capacity remains critical, the recent flood of studies, grant opportunities, and conversations focused on collaboration shows how much our thinking has matured. As John Kania’s and Mark Kramer’s recent article on “Collective Impact” impressively analyzes, no one organization has the resources, knowledge, and influence to tackle a social issue on its own. As I argued in a recent article on government’s role in collaboration that appeared in MIT’s Innovations journal, we need to target social issues collectively, and to coordinate our efforts on the programming and the funding side. One of the shining examples of this approach is the Youth Violence Prevention Funder Learning Collaborative started in Boston by the State Street Foundation.

• We have also begun to experiment with new ways to produce and distribute more rigorous and actionable information that will help us to understand the root causes of social issues, the best approaches to addressing them, and the programs that are demonstrating the best results.  Through Root Cause’s Social Impact Research initiative, we have become part of a committed community of researchers and information providers—including Charity Navigator, GuideStar, GiveWell, and Philanthropedia—that are working to improve the quality and availability of information to help guide decision-making about philanthropy.

As I look ahead to 2011, I believe that the United States is at a crossroads. The future of our society’s health and ability to advance depends on tackling our toughest challenges in education, health, job creation, and environmental sustainability. In an era of limited resources in which we must do more with less, it will take entrepreneurial and innovative leadership from all three sectors of society—public, nonprofit, and business—working together to better invest taxes and philanthropic dollars, as well as to better utilize markets in more creative and strategic ways.  Ultimately, we will need to form healthy social impact markets that enable us to direct financial, volunteer, and in-kind resources to the approaches that are demonstrating results.

I look forward to continuing the journey with you in the new year.

The emergence of “social innovation” as the term that has gained mainstream attention is not surprising. For decades, “innovation” has been a glamorous term used by business and government to excite business leaders, entrepreneurs, and the general public to think about the future with hope. Social innovation has leapt into the spotlight for many of the same reasons. When it comes to today’s social issues, we face large challenges, many of which have persisted for decades, and the idea of social innovation give us hope for a new way to solve old problems.

But turning that hope into measurable progress on our toughest social challenges is going to require discipline–to ensure this attention brings true change. In other words, now that we have firmly established social innovation as a possible way to generate greater solutions, the big question becomes: what do we need ensure this focus on social innovation works?

In the end, social innovation must be about ensuring that more resources are allocated to what works, in order to accelerate our solutions to the tough social issues that we face now and those that will arise in the future. One of the lessons of the efforts to address social problems in the United States in recent decades, I believe, is that no one sector has the resources and the knowledge to tackle today’s social issues alone. We need to create what I would call a social impact market that enables greater collaboration across sectors and social issues–in order to foster innovation and direct resources towards the most effective approaches. How do we realize this new kind of market? I believe the answer lies in the development of cadre of leaders from all sectors that fundamentally commit to fostering social innovation to ensuring that resources are allocated based on performance. We need great champions from the three sectors to become models for hundreds of thousands of others. A colleague of mine recently said, “When a challenge to a system has reached mainstream, the next stage of its evolution is to ensure there are enough well-trained leaders to make that system stick.” Perhaps that is part of the story that will unfold in the next chapter of social innovation.

To start, there was the Obama Administration’s commitment forging a new role for government, which was evident in her words.  As Ms. Obama put it at one point: “With a little nudge from government and a lot of private investment, we can create a powerful new model for making change in our communities.”  This is the vision that many of us, including Root Cause through its Public Innovators initiative, have been working to realize in recent years.  We are finding a middle path between the two ideologies that have dominated political rhetoric over the past several decades: that of the FDR-styled ‘government-as-service-provider’ on the one-hand and the Reagan-inspired ‘government-is-the-problem’ on the other.  That new way of operating – in which government plays a role in orchestrating cross-sector approaches to creating social impact – is still taking shape.  But initiatives like the Social Innovation Fund are providing hopeful glimpses of what it will look like.

In addition, yesterday’s event helped to reveal a new path forward for another key stakeholder in the future of social problem solving: our nation’s foundations. Ms. Obama’s remarks called attention to two important and complementary roles that government and foundations can play by partnering together.  While government can help to facilitate collaboration from the top down, foundations can help ensure that the ideas we encourage and ultimately spread come from our local communities. Deeply entrenched in the communities in which they operate, foundations already know the needs and some of the best solutions to addressing them.  By recognizing the need to direct resources based on results and fostering the continual creation of new ideas in their communities, foundations can play an essential role in bringing about healthy social impact market that fosters innovation and directs resources for solving social problems based on performance.

It was clear yesterday that a new generation of leaders at our nation’s foundations is poised to meet this challenge. A letter of support submitted immediately after the First Lady’s remarks by the Council on Foundations on behalf of many of our country’s community foundations impressively summarized the opportunity: “We know that to make progress on our challenges, we need to find and support the best, most promising ideas and enlist all parts of our communities in implementing these solutions. We also know that with the right resources, the right partnerships, and the right collaborations, we can develop new solutions that can be replicated and moved to other communities to address their needs.”

Yesterday’s event at the White House, I believe, brought us one step closer on our journey toward a more effective, twenty-first century approach to today’s social challenges. We are beginning to speak the same language about finding and spreading solutions and making investments based on results.  We are beginning to see the variety of roles that need to be played in order to align and amplify existing efforts to solve social problems. Of course, the road ahead is still long, but yesterday left me feeling hopeful and energized for what will come next.

What will it take to ensure that resources – not only money, but also in-kind donations, volunteer time, and partnerships – go to the organizations that are best positioned to create social impact? One key factor, I believe, is the emergence of a new generation of philanthropists – social impact investors, we might call them – who prioritize using information about nonprofit performance to guide their decisions. We need these leaders to help change the current culture of nonprofit giving in the United States. The challenge is that donors – whether they are foundations, individuals, or government agencies – often do not have the information they need to ensure that their resources are going to organizations with promising new ideas or proven, high-performing solutions.  As a result, too often, money flows to organizations based on existing relationships or aspirational mission statements, rather than a clear understanding of the outcomes that an organization is seeking to achieve and the results that it has already demonstrated.

On Tuesday night, Root Cause hosted its 7^th annual Social Innovation Forum showcase event, which provided a glimpse of what this new generation of philanthropists will look like. The event, modeled after private-sector venture capital forums, featured six Boston-area nonprofits , identified through a rigorous selection process, as up-and-coming organizations with promising new approaches in the areas of workforce development, obesity prevention, healthy aging, homelessness, empowering women and girls, and youth development through the arts. Local foundation leaders and individual donors attended to hear the organizations pitch their approaches, with an emphasis on their performance to date, and the resources they need to increase that performance and spread their ideas.

These leaders’ responses were enthusiastic. During the event, we asked attendees to commit some resource, be it a new connection, an in-kind or monetary donation, or a date to meet for coffee, to one or two of the organizations they found most interesting. Root Cause then collected these commitments and posted numerous examples through the #sif2010 hashtag on Twitter. These resources, I believe, will help these promising nonprofits creating lasting social impact for Boston’s residents.

Looking ahead, as we work to create a vibrant social impact market that fosters social innovation and directs resources based on performance, we will need more of these philanthropic leaders who demand information about performance and are ready to direct resources to those organizations with the most promising and proven approaches.

The compact is an exciting and necessary step toward bringing the nonprofit, philanthropic, business, and government sectors together to move the bar on pressing social issues in the areas of economic development, education, the environment, health and health care, and youth, family, and elderly issues. In an op-ed I wrote in the Boston Business Journal almost a year ago calling for an Office of Social Innovation in the Massachusetts, I said that, too often, innovative and proven approaches already operate in our communities, but are not given the support they need from government. The state has the potential to help the promising ones extend their reach and have far greater impact by putting new policies, systems, and resources into place.

Here is what the compact commits the administration and the nonprofit sector to do:

The Commonwealth has agreed to:

• Welcome social innovation organizations with vision and experience in improving the lives of citizens
• Initiate a conversation with providers on the potential for unprecedented action and new approaches on infrastructure and government operations
• Commit to exploring the application of new, results-driven solutions to persistent problems that have gone unsolved despite repeated efforts and partnerships
• Explore new opportunities to take better advantage of locally cultivated talent directed at educating and caring for residents
• Provide new supports to promote the work of social innovation partners to reach a larger group of residents in need of assistance

The Social Innovators have agreed to:

• Engage in an active problem-solving dialogue with the leaders of state government
• Provide consulting services to government agencies to build the Commonwealth’s portfolio of social innovation initiatives and reach more residents
• Supply support, guidance and management for select projects based on the needs of residents
• Serve as a central point of contact for all potential national and local social innovation initiatives
• Channel information to the Governor and his cabinet regarding opportunities for Massachusetts on these opportunities as appropriate

There are many examples of the nonprofits that would be able to do much more with such support. Year Up has developed an exciting and successful training program for urban young adults to close the opportunity divide by providing them with professional skills, college credits, and corporate internships. Strong Women, Strong Girls, a program founded by a visionary college student, uses the study of female role models and a creative mentoring program to build self-esteem and leadership skills among at-risk girls in grades 3-5.

In our work at Root Cause, we have identified many more examples of organizations with promising new ideas through our Social Innovation Forum. Our recent reports on school readiness and the best organizations working on the issue in MA have inaugurated a new methodology for using data to find the highest-performing organizations with proven approaches to their social issue. And our partner in today’s signing at the State House, New Profit Inc., is supporting a portfolio of leading nonprofits that are working to dramatically improve opportunities for children, families, and communities.

Today is just a beginning. There is much more for all of us to do to leverage the work of these organizations to better address every Massachusetts resident’s basic needs. I applaud Governor Patrick for having the vision to play a leadership role in that work.

Landrieu’s job will not be an easy one, to say the least. As we approach the five-year anniversary of Hurricane Katrina, New Orleans still faces many of the challenges that the destruction of the city exposed and exacerbated. Add to that the burden of our nation’s current economic situation, and New Orleans appears as a microcosm of the United States and the issues we are currently confronting. When Landrieu walks into New Orleans City Hall, he will encounter, on the city level, a similar situation to that which President Obama found when he took office.

There are a number of reasons to be hopeful about what Landrieu can do. First, the overwhelming victory of the first white mayor in 30 years in a city where 67% of the population is black suggests that New Orleans is moving past the racial divisions that it has experienced in recent decades. Landrieu and the city’s population appear eager to work with leaders representing all backgrounds and colors to build a better New Orleans.

Additionally, the election of Landrieu provides an important opportunity to see up close how forward-thinking government leaders throughout the United States are taking on new roles in order to move the bar on our most pressing challenges in economic development; education; the environment; health and health care; and youth, family, and elderly issues. Landrieu represents this new breed of government leader who is taking bold steps to identify and help to spread the most effective, efficient, and sustainable solutions to social problems. Through the Office of Social Entrepreneurship that he founded while serving as the state’s Lieutenant Governor, Landrieu has demonstrated a commitment to ensuring that government resources for solving social problems go to organizations with proven results, facilitating public-private partnerships that maximize resources for addressing social problems, and creating a policy environment that encourages social innovation. Last April, we awarded the then Lieutenant Governor the first Root Cause Public Innovator Award precisely for this new style of leadership and his practical approach to the state’s social problems.

Now, as New Orleans enters a new chapter in its efforts to rebuild after Katrina, it is time for the nation to re-engage with New Orleans as well. With its new mayor, New Orleans is poised to provide us with a great American story of a city that pulled itself out of a state of dismay and distress to become a shining example of American social innovation. And that story will include many crucial lessons for other American cities as well.

This Saturday’s election in New Orleans features the latest in a string of campaigns in which a candidate’s core messages include social innovation or civic engagement. Lt. Gov. Landrieu, for whom this is a third attempt at New Orleans’ top spot, established Louisiana’s Office of Social Entrepreneurship – the first such office in the nation. When Hurricanes Katrina and Rita struck, they revealed the existence of successful approaches that that people of Louisiana had already been testing, as well as a need to bring successful models from elsewhere to fill in gaps. The lieutenant governor realized, however, that there was currently no good way for the government to facilitate the efficient spread of these ideas, efforts, and resources. Having the foresight to see that government could play a major role in effectively channeling these efforts and giving social entrepreneurs the skills they needed to give their ideas the best chance at having significant impact, the lieutenant governor founded the Office – and it has served as an example to many similar efforts around the country as more and more officials realize their own potential to facilitate the spread of enduring social impact. To learn more about the lt. governor’s social innovation agenda in Louisiana, you can watch him speak about the work at an event at the Aspen Institute and listen to a discussion between the two of us at the 2009 Social Enterprise Summit.

But Mitch Landrieu is not the only one who has put social innovation front and center. Paul Thissen, a state representative who is running for governor of Minnesota, has just introduced legislation that supports “innovation and multi-sector collaboration,” potentially opening new doors for cross-sector partnerships to accelerate social problem solving in that state. Alan Khazei, who ran for the senate seat left vacant by the death of Senator Ted Kennedy in Massachusetts, ran on the platform of “Big Citizenship” and was significantly buoyed by supporters of his work at City Year and the example it has set for national service. And Virginia Congressman Tom Perriello has been recognized for his focus on social entrepreneurship and lists “service” squarely on his Issues and Legislation page.

I’ve been excited to notice that this message is being repeated more and more frequently as many of us work together to spread a social innovation agenda across sectors and social issues. Candidates are beginning to use it as a differentiating message that has the potential to cut through the clutter and win elections because they know that citizens are disillusioned by the gridlock and stagnation they are used to seeing at all levels of government. As candidates search for ways to resonate with voters that are practical and solution-oriented, they increasingly see social innovation as part of that story.