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McGRAW HILL FINANCIAL | GLOBAL INSTITUTE MHFGI.COM

July 31, 2013

How Innovative Change-Makers Are Testing New Solutions to

Entrenched Social, Economic and Environmental Problems

Social Entrepreneurship

By:

Georgia Levenson Keohane

Fellow

Roosevelt Institute




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Introduction

In less than a generation, we have witnessed a tectonic shift in the way people think about and work

toward social change. There are many reasons, from impatience with existing programs and policies to a

profound desire for meaningful work that makes a positive impact on the world.

This groundswell of new activism, or what we call social entrepreneurship, manifests across society as

creative change-makers test new solutions to entrenched social, economic and environmental

problems. Not all these efforts are new; most have their roots in a rich history of innovation for the

common good. What is different about this new activism is its momentum, sweep and fundamental

approach to problem-solving.

This paper is not about entrepreneurs; rather, it seeks to explore social entrepreneurship: the systems

and ecosystems that allow social entrepreneurs in the nonprofit, private and public sectors to flourish.The case studies that follow illuminate these recurring themes: a heightened emphasis on measurement

and evaluation; an embrace of competition in a number of forms, including the design and

implementation of tools like prizes and challenges; the development of “laboratories” to foster social

innovations, which can then be brought to scale; new ideas about asset management and investment,

the nature of social value and returns, and the sources of capital available to address chronic social

problems.

Some of the more innovative contributions of the social entrepreneurship movement occur at the

intersection of the nonprofit, private and public spheres, where new collaborations take on social,economic and environmental problems. This paper also explores many of the debates and tensions

inherent in cross-sector work.

The Rise of Social Entrepreneurship

The contours of the social and civic sectors have changed dramatically over the course of a generation,

in countries around the world.

In the United States, the pronounced expansion of the nonprofit sector has resulted in part from ourshift to third-party government: the use of private organizations, both nonprofit and commercial, to

deliver services once provided directly by public sector agencies.1 Today, the nonprofit sector accounts

for approximately 10% of the U.S. economy. 2 Contrary to the notion that government is distinct from,

or at odds with, the nonprofit or private sectors, this network relationship reminds us that government

remains the primary funder of social services.




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Of course, not all of these third-party organizations are led by social entrepreneurs. The nonprofit sector

is an amalgam of many different kinds of entities, but the growth of the sector has allowed for the

emergence of a new kind of entrepreneurial activism, and in this paper we follow the arc of the social

entrepreneurship movement from the nonprofit sphere, through the commercial and public realms.

Social Entrepreneurship and American Capitalism

Entrepreneurship is deeply embedded in our nation’s DNA; it is also closely linked with the actual

workings and ideological underpinnings of a distinctly American form of capitalism. We celebrate iconic

entrepreneurs—from Benjamin Franklin to Andrew Carnegie to Bill Gates—for the ways in which they

personify the American mythos and the idea that social mobility can be achieved through individual

ingenuity and hard work. This notion of the power of the entrepreneur as the primary proponent of

change also animates our conception of competitive market capitalism. The spirit of individual

entrepreneurship undergirds the national experience, whether it is immigrants fleeing Europe for theUnited States or pioneers settling the American West.

The rise of social entrepreneurship occurred during a particularly entrepreneurial period in our nation’s

history, one characterized by individual adroitness and a general disaffection for large government and

corporate organizations. In the private sector, it meant the blossoming of a new breed of company in

the form of the tech startup and the boutique financial firms, many of which produced spectacular

fortunes and, in turn, a new degree of and agenda for philanthropy.

Many social entrepreneurs who shared the gumption of their private sector peers believed that thepersistence of pernicious social problems, despite decades of public sector efforts to alleviate them,

called for distinctly non-government solutions. The “new” philanthropy provided both financial and

ideational support for their work, fueled by the ethos of the era—an unabridged faith in the power and

primacy of markets—to provide for and improve social welfare.

The Role of Government in Promoting Entrepreneurship

Of course, this view overlooks a second and equally robust tradition in our country's history and political

economy: the role that government has played in promoting private sector activity, dating back to thefounding of the republic. Alexander Hamilton may have been the first architect of American industrial

policy, but in the intervening centuries, any number of political leaders have used government resources

in the form of dollars and public policy to shape markets, to incentivize innovation, and to bring private

sector capital and energy to bear on public purpose activities, from infrastructure development and

scientific, medical and technological discoveries to the provision of a host of other public goods.




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Perhaps the best-known achievements along these lines are the government-sponsored inventions

during and after World War II, which produced a number of breakthroughs for civilian use, including

nuclear energy, jet engines, early computers and even drugs like penicillin. Previously, radio and aviation

were unequivocally government-abetted projects, as were so many of the country’s 19th

centuryinfrastructure developments, which often used land grants to encourage settlement in the American

West, prime transcontinental railroad construction and to establish the nation’s agriculture and

mechanical colleges (A&Ms).3

As conceptions of public goods have evolved, so, too, have policies to stimulate private investment for

their provision. Regulation, government insurance, and the advent of the GSE (government-sponsored

enterprise), for example, would motivate commercial lending in any number of industries, from housing

and higher education to venture capital and private equity. In recent years, government’s expanded

market-shaping toolkit encompasses a range of positive inducements, such as guarantees, tax breaks,and matching funds, among other instruments, to encourage entrepreneurial activity in areas of market

failure.

The next century of innovative change-making needs to recognize two strands of the American tradition:

entrepreneurship in the private sector, often with substantial public benefit, and the government’s role

in promoting it. Social change and shared prosperity depend on states and markets working together

and a worldview that acknowledges that smart public policy and competitive enterprise (social and

otherwise) are not only mutually compatible but necessarily intertwined.

The aim of this paper is to situate social entrepreneurship within the American political and policy

context by tracing the social entrepreneurship movement across three distinct spheres of American

society—the nonprofit, private, and public sectors. This study centers on human services: policies and

programs designed to fight poverty, relieve suffering and improve the prospects for disadvantaged

people across the globe, rather than on market-based solutions to problems like environmental

degradation. This research is also U.S.-centric, relying primarily on domestic case studies rather than

those from the larger world of global social entrepreneurship.

I. Social Entrepreneurship in the Nonprofit Sector

Just as commercial entrepreneurship has a deep tradition in American life, so, too, does social

entrepreneurship. Although most innovators for the public good—activists working for social change—

are unknown and unsung, some have made the history books, including Clara Barton, founder of the




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American Red Cross; Jane Addams, whose Hull House would define and inspire the larger settlement

house movement; and Martin Luther King, Jr. and the movement he led for civil rights and social justice.

Defining social entrepreneurship, however—distinguishing these activities from other good works of

social service or advocacy past and present—is the subject of lengthy debate in the field. A usefulstarting point involves examining the work and insights of William “Bill” Drayton, the founder of Ashoka:

Innovators for the Public and the man widely considered to be the father of modern social

entrepreneurship.

In 1980, Drayton founded Ashoka, hoping to identify individual social entrepreneurs and bring them

together in a kind of global fellowship. Drayton believed that the kind of social entrepreneurs he was

seeking— passionate, resourceful, system-changing innovators who could fix static social, political and

economic equations—were extremely rare.

For Drayton, Ashoka f ellows must evidence truly entrepreneurial qualities, “deep in their personality,

[and] know from the time they are little that they are in this world to make it better in a fundamental

way.” 4 Greg Dees, one of the first scholars of social entrepreneurship, roots this vision within the

broader economic literature on entrepreneurship and, in particular, the work of Austrian economist

Joseph Schumpeter, whose dynamic notion of entrepreneurship – the entrepreneur as a disruptive and

generative force for change in the economy, an agent of “creative destruction,” – is a force for economic

progress.5

Drayton also emphasizes the adaptive nature of the entrepreneur; he suggests the driving passion is asmuch idealism as a determination to find practical solutions to a problem -- a commitment to the “how-

to” through revision and adaptation. “Every day you’re modifying the idea,” Drayton says. “You’re

seeing new opportunities. You’re seeing the nuances of problems. It’s a continuous process.”6

Management scholars Peter Drucker, Howard Stevenson and others have similarly conceived of the

entrepreneurs as agents of opportunism, whether they are in the nonprofit or for-profit realms.7

Drayton and those who study social entrepreneurship also suggest that what distinguishes it from other

social change efforts is the ambition of its scale and scope. In Drayton’s view, social entrepreneurs work

toward “systemic” and “far-reaching” social change. The term innovation is also often used in definingsocial entrepreneurship, though what this means is widely debated. Etymologically the word implies

newness, but again, Dees suggests, “Successful innovation is as much a matter of execution as it is of

having new ideas... Innovation can take many forms. It does not require inventing something wholly

new; it can simply involve applying an existing idea in a new way or to a new situation .”8




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Social Entrepreneurship Snapshot

Teach For America

Teach for America (TFA), founded by Wendy Kopp, is often held up as a defining social entrepreneurshipnonprofit. First articulated in Kopp’s 1989 undergraduate thesis at Princeton, TFA recruits talented

college graduates to teach students in low-income schools. In the organization’s first year, Kopp raised

$2.5 million and placed 500 selectively recruited college graduates in schools in New York City, Los

Angeles, New Orleans, southern Louisiana, and eastern North Carolina. TFA continues to adapt its

operations model (in Drayton’s words, “relentlessly grappling with the how-to”), establishing teacher

training institutes, alumni programs and moving to a more regional structure. TFA has used both private

sources of funding — foundations, individuals and corporations — and large federal awards to scale the

program nationally. Much of this funding has resulted from TFA’s efforts to closely track outcomes and

impact through a variety of metrics. Today, with a $180 million operating budget, TFA is the largestsingle provider of teachers for low-income communities: 9,000 corps members reach more than 600,000

students. Cumulatively, nearly 33,000 TFA participants have taught over 3 million students across the

United States.

Working Today—Freelancers Union

Working Today offers another example of social entrepreneurship at work. Founded in 1995 by labor

attorney and union organizer Sara Horowitz, Working Today began by connecting the growing

independent workforce—approximately 35,000 freelancers—to benefits, including health and lifeinsurance, as well as disability coverage, which they could take with them to new jobs.

From Working Today’s beginning, Horowitz hoped to infuse New Deal–era worker protections with the

spirit of modernity in what she believed was a kind of new mutualism. Accordingly, in 2009 she launched

the Freelancers Insurance Company (FIC), a social purpose insurance company that promised affordable

health insurance to New York state members. The nonprofit Freelancers Union is the sole shareholder,

and profits are reinvested in community-building and advocacy for the national membership.

The New Funders

Many of the most pronounced changes to the nonprofit sector that bear the social entrepreneurship

imprint have come on the funding side, with the advent of a new wave of entrepreneurs who achieved

enormous success in finance and technology and were keen to apply their business acumen and

methodologies to philanthropic pursuits. Some of the first so-called “venture philanthropies” were




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poverty-fighting organizations forged from the 1980s financial boom, including Paul Tudor Jones’ Robin

Hood Foundation and George Roberts Enterprise Development Fund. Others, including the Gates and

Skoll Foundations and the Omidyar Network, are legacies of the technology revolution.

Early advocates of this new kind of funding argued that foundations could and should learn explicitlyfrom venture capital models. Specifically, funders should focus on strengthening organizations rather

than just underwriting projects, providing funding over long time frames in larger amounts to fewer

organizations and working closely with grantees to build greater capacity, particularly in the area of

performance measures. Some even argued for an exit strategy to ensure that the organization remained

viable even after financial support from that foundation ceased. 9

Venture philanthropy quickly acquired its own lingo: grants became “investments,” program areas

became “portfolios,” and program officers “portfolio managers.” Nonprofits themselves no longer

applied for grants but instead “leveraged resources,” not through a grant proposal but via a businessplan, and performance was increasingly described in return on investment (ROI) terms. Venture

philanthropies of all shapes and sizes soon appeared on the charitable landscape. Launched in 1997 by

Vanessa Kirsch, New Profit Inc. is a kind of prototype of the new philanthropy which looks to provide

mezzanine financing to help social entrepreneurship nonprofits by using rigorous performance

evaluation to determine funding over a three- to five-year period and by providing grantees technical

assistance, often in the form of consulting services from one of New Profit’s strategic partners. New

Profit’s first investments included Teach for America and Working Today.

Since the early 2000s, the field has exploded with regional and organizational variations on the venturetheme. Some, like the Blue Ridge or Draper Richards Kaplan foundations, focus on early stage funding.

Others, like Echoing Green or the Skoll and Schwab foundations, provide Ashoka-type fellowships to

social entrepreneurs. Sometimes high-engagement philanthropies like the Tiger Foundation have the

dual purpose of supporting grantees and educating donors about best-practice philanthropy. This is

true of the giving circle model, first pioneered by Social Venture Partners (SVP) in Seattle, which requires

relatively small donations but active participation on the part of its members.10 By some estimates,

there are 400 giving circles in the United States today.11

This new approach is also evident in a number of established philanthropies where staff and boardmembers have transformed their grant-making along the venture lines. For example, Judith Rodin, who

took over the Rockefeller Foundation in 2006, was dubbed by “The Economist” magazine as the




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“Rockefeller Revolutionary” for the dramatic changes she put in place.12 And while Rodin became a kind

of lightning rod in the debates about the new philanthropy, she was hardly alone in her efforts. Today,

nearly all leaders of storied philanthropic institutions (Edna McConnell Clark, Ford, MacArthur, The

William and Flora Hewlett Foundation, among others) have reassessed their approach to grant-making.13

Innovations in Philanthropy

The new philanthropy has shaped the social sector in a number of important ways.

The Value of Evaluation

Perhaps the most pronounced contribution of the social entrepreneurship movement is a heightened

emphasis on measurement and evaluation. In particular, the new funders have made important

advances through the use of assessment tools to try to measure progress against social problems.

In the world of social entrepreneurship, the measurement and evaluation challenge is fundamentally

epistemological. How do we know an organization is achieving an impact? This question is easier to

answer in the private sector. Companies typically perform well when they produce a good or service

that consumers are willing to pay for, and profits are a reasonably accurate indicator of the value of that

good or service. Life is more complex in the social sector. Broadly speaking, social entrepreneurship

focuses on three types of measurements:

1.

Demonstrating “returns” in quasi-financial or social termsNot surprisingly, many ‘venture’ funders want to measure and evaluate their social sector

investments in returns. Social return on investment (SROI), first outlined by Jed Emerson of the

Roberts Enterprise Development Fund (REDF), attempted to monetize the social and economic value

of its economic development programs, comparing the upfront investment to the “returns” over

time in terms of cost-savings (reduced public spending) or benefits (increased tax revenue). The

Robin Hood Foundation and others have since devised related approaches that are focused on the

benefits that accrue to an individual compared to the cost of the grant investment.

2.

Improving performance of an organization’s internal management or operationsAlthough much of the venture capitalist lingo focuses on returns, some new funders also emphasize

the importance of evaluation for internal management purposes. New Profit’s balanced scorecard,

which incorporates both financial and non-financial performance measures, aims to do both and has

been widely adopted by social entrepreneurs across the field for internal management purposes and

to provide performance data to their donors.




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3. Proving impact, emulating a kind of scientific approach

Some funders, like the Edna McConnell Clark Foundation, use an evidence-based approach to grant-

making that correlates levels of funding to evidence of a program’s efficacy, with the highest levels

of funding going to organizations that can prove their impact through randomized control trials

(RCT). A movement to use RCTs as an evidentiary gold standard in the social sector is generatingboth momentum and controversy.

The Role of Technology

Not surprisingly, the Internet has radically changed how measurement and evaluation work in the

nonprofit sector. In some cases, the web has simply allowed for greater and more transparent access to

raw data about organizations.

Many other organizations have emerged to both evaluate and facilitate giving, including CharityNavigator, GlobalGiving, GiveWell, Great Nonprofits, Philanthropy In/Sight, Just Give, Network for Good,

iGive and Donors Choose. Philanthropedia, for example, aims to give expert opinion and analysis, a

rating system and expert nonprofit “mutual funds.” In contrast, sites like Great Nonprofits rely on a

crowdsourcing approach, allowing anyone to post a review of a particular nonprofit.

A number of funders have been exploring the intersection of technology and social change, and how to

harness the power in dollars and wisdom of crowds in innovative ways. For example, some of the early

online-giving campaigns, like those sponsored by the Case Foundation, paved the way for today’s peer-

to-peer (P2P) crowdfunding entities, such as DonorsChoose, Kiva, Kickstarter and Indiegogo (and thelater emergence of for-profit versions like Lending Club).

Case was not the only philanthropy working in this space. In 2006, the Rockefeller Foundation partnered

with InnoCentive, a company which harnessed online its global scientific community to solve R&D

challenges on behalf of corporate clients. Rockefeller and Innocentive applied this crowdsourcing

approach to try to solve a number of social and environmental challenges, which led to successful

technological breakthroughs.

PrizesThese InnoCentive –style challenges are part of a more sweeping trend toward the use of prizes in the

social sector and a risk-mitigating tool that philanthropists use to spur innovation in the face of

traditional market failure.




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Although the public and private sectors have long used prizes to incent innovation, particularly in the

areas of science and technology, the past decade has seen an enormous growth in private philanthropy

prizes for other areas of human activity, including social services and poverty alleviation. In the last

decade, in particular, philanthropic prize capital has burgeoned beyond an estimated $375 million, and

60 new large purse prizes have emerged since 2000.14

Prizes can help shape markets where none exist. The X-Prizes, for example, founded in 1995 by Dr. Peter

Diamandis, aims to stimulate “radical breakthroughs for the benefit of humanity” by designing and

administering prizes that are underwritten by nonprofit or commercial sponsors for at least $10 million,

including those focused on commercial space travel, the invention of energy-efficient vehicles and

genomic sequencing. The idea is that over the long-term, these prizes will create markets for socially

useful products, services, and industries.15

Prizes also exemplify another principle of the social entrepreneurship movement: By design, prizes shiftrisk from sponsors to competitors by paying awards only for successful achievement of a defined goal.

Prizes are also highly evidence-based, as winning concepts or technologies must prove their efficacy.

Finally, prizes are a tool for leverage and stimulate levels of innovation that vastly exceed the cash value

of the original prize.

Activist Assets

In addition to market-shaping tools like prizes, many executives and trustees have begun to think about

how they, as shareholders and investors, can better use their philanthropic assets to advance the

missions of their organizations.

For years, foundations have engaged in the kind of socially responsible investing (SRI) that applies a

filter—a positive or negative screening on environmental, social and governance factors—to the

companies in which they invest their endowments. The SRI field has grown dramatically in recent years.

By some estimates, SRI assets in the United States rose $639 billion in 1995 to $3 trillion in 2012.

Negative screening – avoiding investments in companies engaged in undesirable activities – is the

easiest and most common way to align asset ownership with philanthropic mission. In 2002, for

example, when the Rockefeller Foundation initiated a grantmaking program to combat smoking in Asia,

it also stopped investing in tobacco companies. In 2007, the Boston Foundation divested in companiesthat engaged in business with the government in Sudan, which had been helping to finance the military

conflict in Darfur.




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Some foundations use shareholder activism to exercise their voices on a range of corporate governance

issues when they hold a significant stake in a company, often through proxy voting, shareholder

resolutions, or direct engagement with companies and their directors on a number of practices. The

$400 million Nathan Cummings Foundation, for example, has been influential on corporate policy on

climate change, health care and transparency on political contributions, and has filed successful say-on-pay resolutions at Apple, Walmart, Goldman Sachs and others.16

Beyond screening and shareholder activism, a number of foundations have become more proactive in

their use of endowment assets to advance their charitable objectives. Broadly speaking, mission

investing can take two forms: program-related investments (PRIs), which typically come out of the 5%

required payout that foundations must make to their grantees, and the larger class of mission-related

investments (MRI), which refers to investments made with the remaining 95% of the institution’s assets.

Traditionally, PRIs have taken the form of below-market investments in nonprofits for charitable

purposes (typically loans, loan guarantees, or linked deposits for grantees to build affordable housing orengage in other community development work). However, most foundations have been reluctant to

make investments that yield concessionary returns, because the opportunity cost of these investments –

forgoing market rate returns in more conventional investments today – means fewer assets available for

philanthropic grants in the future.

PRIs first appeared on the philanthropic scene in 1968 but have grown in popularity in recent years. In

the past decade, the number of foundations engaged in mission investing has doubled, and the dollars

invested have tripled. Most of the growth has occurred at small- and medium-sized philanthropies, such

as the $250 million Heron Foundation in New York City. Heron has played a prominent role in advancingthe MRI and PRI field, and, in 1996, dedicated 50% of its endowment to mission investing to finance

projects that might not otherwise find affordable capital in the commercial markets. In 2012, Heron

committed the full 100% of its endowment to mission investment.

Heron’s leadership, successful investment track record and road map for mission investing have

provided a model for the field (see figure below).17 Heron contends that this integrated approach of

grants, PRIs and MRIs enhances its philanthropic impact and belies the notion that effective

philanthropy requires separation between endowment and charitable investing. Heron’s PRI returns are

hardly anomalous; a number of studies show that low beta investments in the social sector can offersmaller but consistent yields.18




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Figure 1: F. B. Heron Foundation Mission-Related Investing Continuum

Higher risk Lower risk

Market-rate investments

Source: Used with the permission of the F. B. Heron Foundation.

In recent years, a number of organizations have emerged that encourage foundations to make MRIs and

PRIs by providing necessary expertise and guidance. The PRI Makers Network, for example, is an

association of 90 PRI grant makers that provides tools, professional development and other resources to

foundations engaged in program-related investing. Similarly, More for Mission is a campaign organized

by Heron and the Annie E. Casey Foundations and the Meyer Memorial Trust to advance mission

investing and to encourage foundations to spend an additional 2% of assets—or an industry total of $10

billion—on PRIs.

Collaboration between PRI makers also takes the form of co-investing. The emergence of syndicates ofphilanthropic investors has served as a kind of market-shaping function when foundations take a first-

loss position as a lender, reducing risk for commercial investors to join social purpose projects.

Increasingly, these “blended” or “stacked” investments that fuse capital sources include foundations

that use guarantees or deposits, not just conventional loans.

In the case of the $230 million New York City Acquisition Fund, for example, then Housing Commissioner

Shaun Donovan used the PRI commitments of various New York City foundations (places like Ford, Robin

Hood, Rockefeller and Starr), often in the form of subordinated, low-interest loans and loan guarantees,

in combination with guarantees from the city, to attract commercial investors like Bank of America, J.P.Morgan and HSBC to help finance affordable housing. In recent years, a number of newly created public

private partnerships are funding affordable housing and health care facilities along these lines. Morgan

Stanley, the Local Initiatives Support Corporation (LISC) and the Kresge Foundation have formed the

Healthy Futures Fund, and, in April, the Housing Partnership Equity Trust (the nation’s first nonprofit




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owned REIT) was able to raise $100 million in investment in a similar fashion from the MacArthur

Foundation, Citigroup, Prudential Financial and Morgan Stanley.

In September 2010, the use of PRIs gained significant attention when the Gates Foundation announced

it was allocating $400 million in nongranting financial instruments to advance its antipoverty work. Inaddition to making PRIs in the form of low-interest loans and loan guarantees to nonprofits, Gates also

made a handful of investments in for-profit companies working in global public health and development

and American public education. In 2012, Gates announced it was increasing its PRI pool to $1 billion,

approximately 25% of which would be used for investment in profit-making entities.

From Entrepreneurship to Enterprise

The Gates move, while high profile, reflects a larger and subtle but important shift in emphasis from

social entrepreneurship to social enterprise and the belief that businesses can go further towardachieving social impact than their nonprofit counterparts.

Also emerging are a number of hybrid structures and charitable investment funds supporting social

purpose businesses that invest in the self-sustaining livelihoods of disadvantaged individuals in a way

that recycles the capital for reinvestment and scale. Before Gates’ foray into PRIs, eBay founder Pierre

Omidyar created the Omidyar Network, a limited liability corporation – what he called a “philanthropic

investment firm” – which could invest in for-profit entities and make grants. 19 This hybrid model was

the first of its kind, but others, including Google.org, soon followed. To date, the Omidyar Network has

committed a total of $442 million: $239 million in nonprofit grants and $203 million in for-profitinvestments.20

Similarly, Jacqueline Novogratz’s Acumen Fund, launched in 2001, is a nonprofit investment fund that

supports social purpose businesses with the belief that “small amounts of philanthropic capital

combined with large doses of business acumen can build thriving enterprises that serve vast numbers of

the poor.”21 Novogratz explicitly adopts the language and theory of the late C. K. Prahalad, the

economist who popularized the bottom of the pyramid (BoP) approach to poverty-fighting. According to

Prahalad, the billions of people in the world who live on less than $2 a day represent a prodigious

market opportunity as consumers. By selling products and services to this segment, firms can earnprofits and serve the needs of the poor.22




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Novogratz recognizes that the BoP markets she seeks to invest in are in a place where commercial

investors typically have shied away. Therefore, she believes that addressing the market failure may

require new models of business that provide basic services like clean water, health care, housing, and

energy at affordable prices which, in turn, may require capital patient enough for long time horizons—

certainly longer than those required by conventional and commercial private equity and venturecapitalists—and often below market rates of return. The goal of patient capital, according to Novogratz,

is to support investments that yield both financial and social returns.

Some describe these multiple returns as a kind of double (or even triple, when it comes to

environmental benefit) bottom line; others argue this is a false distinction. Jed Emerson, who pioneered

the SROI methodology at REDF, suggests that all organizations (for-profit and nonprofit) produce a

nondivisible “blended value” with economic, social, and environmental components.23 The proliferation

of Acumen-like nonprofit investment firms and funds includes Endeavor, the Soros Economic

Development Fund, E+Co and others. Root Capital, founded by Bill Foote to address the “capital marketsgap” in rural, isolated BoP markets, invests in small and growing businesses (SGBs) by combining loans

for projects like working capital with business building supports. Some of Root Capital’s own investors

include firms like Starbucks and Nestle that help fund technical assistance to coffee farmers who in turn

run productive and profitable businesses that better serve the corporate needs of their investors.

Harvard Business School’s Michael Porter suggests that these kinds of partnerships are central to

“shared value” capitalism, in which companies create economic value “in a way that also creates value

f or society by addressing its needs and challenges.”24 A number of scholars and practitioners are

exploring this social financial value nexus, where firms can create “innovation, profits, growth, and social

good.”25

II. Social Impact in the Private Sector

International Impact Investing

These nonprofit investment funds have laid the groundwork for the emerging field of impact

investments -- those that generate social or environmental value alongside financial returns. According

to a seminal report from the Monitor Institute, impact investors are those who “actively seek to place

capital in businesses and funds that can provide solutions at a scale that purely philanthropicinterventions cannot usually reach,” 26 rather than just traditional screening. Monitor also suggests that

while all impact investors seek some kind of financial return, the field is comprised of a continuum of

impact first and financial first investors.




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Figure 2: Segments of Impact Investors

Source: Used with the permission of the Monitor Institute.

Monitor suggests impact investing has the potential to grow to approximately 1% of total managed

assets over 10 years, which is roughly $500 billion, while J.P.Morgan projects potential profits between

$183 billion and $667 billion. As evidenced by the chart below, nearly all market estimates of these

kinds are derived from businesses that expand access to basic goods and services in BoP markets.

Figure 3: Potential Invested Capital to Fund Selected BoP Businesses

Source: J.P.Morgan, “Impact Investments: an Emerging Asset Class,” J.P.Morgan Global Research

(November 29, 2010). 27

Potential Invested Potential Profit

Capital Required Opportunity

Sector (US$ billion) (US$ billion) Housing (affordable urban housing) $214 –$786 $177 –$648

Water (clean water for rural communities) $5.4 –$13 $2.9 –$7

Health (maternal health) $0.4 –$2 $0.1 –$1

Education (primary education) $4.8 –$10 $2.6 –$11

Financial services (microfinance) $176 not measured




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As we have seen, many of the initial forays into impact investing have been from the philanthropic

sector. In recent years, however, as nonprofit investors have demonstrated the profitability of some

investments in these areas, financed nascent infrastructure or mitigated risk for commercial lenders

through “blended” capital deals, more mainstream and decidedly for-profit investment firms have

looked to enter the impact investing fray.

Many of these efforts began at boutique firms, whose first social impact portfolios were often invested

in microfinance and over time expanded to other sectors. For example, Switzerland-based BlueOrchard

manages $80 million in microfinance portfolios, and has been a leader in the field. In the United States,

private equity pioneers of microfinance like Gray Ghost Ventures and Unitus have recently raised new

funds for other impact areas that include private schools in poor countries. There are also a number of

impact investment firms that specialize in energy and environment, including Generation Investment

Management, EKO Equilibrium Capital Partners and SJF Ventures, among others.

A number of investment banks, including some of the larger and publicly traded firms, are beginning to

provide products and services to clients focused on impact. Here, too, much of this investing began with

microlending. In 2005, for example, Citigroup launched its global microfinance practice. In 2006, Morgan

Stanley worked with BlueOrchard to place the first rated microfinance bond offering with European

institutional investors, raising more than $100 million for 22 microfinance institutions from 13 countries.

That same year, Goldman Sachs helped structure and market the International Finance Facility for

Immunisation (IFFIm), a multibillion-dollar bond issue that financed emerging market vaccine

campaigns. In 2007, J.P. Morgan launched its social finance unit, and in recent years, others, including

UBS’s Philanthropy and Values-Based investing unit, have followed suit. Today, Morgan Stanley has anentire Global Sustainable Finance (GSF) group, responsible for the firm’s broader sustainability strategy

for investors and clients interested in business models and investment products capable of achieving

financial, social, and environmental returns.28

Despite the growing interest of mainstream investors, the impact investing sector faces a number of

barriers to further growth, primarily related to infrastructure and deal flow.

As with many startups, social purpose enterprises, particularly in the BoP context, often begin as small

companies in fragile markets. In addition to loans or equity investment, they need technical assistance,and because they can take longer to scale than traditional companies, their absorptive capacity is

limited. Social enterprises of this type often require and can only handle smaller initial investments than

many large investors are accustomed to or interested in making.




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In addition, because many of these deals are market-, location-, and sector-specific, they necessitate

specialized research and due diligence, which is also expensive. And, just as we have seen in the

nonprofit sector, proof of impact via a demonstrated track record or a consistent and standardized way

of conveying returns (financial, social or environmental) is often lacking, costly to develop, or simply

elusive.

In recent years, a number of organizations have developed methodologies and platforms to grapple with

this measurement and evaluation challenge. Some have evolved independently, like Pulse, Acumen’s

data management and reporting system. Others include the GIIN (the Global Impact Investing Network),

an initiative of the Rockefeller Foundation, USAID and J.P. Morgan to strengthen the infrastructure of

the field. GIIN has developed IRIS, a set of reporting standards for impact investments to allow for

comparable and credible consistency in how funds define, track and report on the social performance of

their investments and ImpactBase, an online database of global impact funds. Similarly, the Global

Impact Investing Ratings System (GIIRS), developed by the nonprofit B Labs, a rating system that isanalogous to Morningstar investment rankings, attempts to assess the social and environmental impact

of companies and funds.

The field has also been strengthened by new advisory or specialized asset management firms, like

Imprint Capital or ImpactAssets, which help to match prospective investors with impact investment

vehicles. There have also been a number of efforts to create social impact stock markets, in places such

as the UK, South Africa, Brazil and Singapore.

Case Study: The Microcredit Story

The evolution of the microlending industry offers a compelling case study in the transition from

entrepreneurship to enterprise and in the promise and pitfalls of impact investing – and of harnessing

private capital for social purpose.

Microcredit’s Nonprofit Origins

The appeal of microcredit has always been its elegant simplicity. As a solution to market failure –

commercial banks did not historically lend to poor people because it was seen as unprofitable or toorisky – the architects of microcredit showed that, under the right conditions, small loans made to poor

people could be repaid. In 1976, in Bangladesh, Muhammad Yunus launched the Grameen Bank with a

series of joint-liability loans to small cohorts of poor women. Fazle Abed, the head of the Bangladesh

Rural Advancement Committee (BRAC) created similar programs in the region, and numerous models

worldwide soon proved that the poor could be counted on for repayment.




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Developments in microfinance infrastructure – including new standards and rating systems and the

emergence of nonprofit and publically funded networks – significantly strengthened the sector,

attracting additional nonprofit actors as well as the interest of for-profit lenders. The early 2000s

marked the entry of a number of commercial investors into the industry, and in 2006 Muhammad Yunus

won the Nobel Prize for his pioneering work in the field. In those heady days, microfinance wasconsidered a kind of global panacea, one that could combine poverty alleviation with profits. Today, $65

billion in microcredit loans are made to 100 million borrowers worldwide, and much of this growth has

been fueled by an infusion of private capital.

Commercialization

The commercialization of the industry has taken a number of forms, but often it has meant the

conversion of nonprofit organizations into for-profit conduits. In one of the first high-profile examples of

this trend, Compartamos, a Mexican microlender, morphed from a nonprofit to a for-profit to a publiclytraded company. In 2007, Compartamos’s IPO raised $467 million in exchange for 30% of the company.

Not surprisingly, this IPO spurred even greater interest for for-profit lending. In July 2010, SKS

Microfinance in India issued 17 million shares to investors like Silicon Valley’s venture capital firm

Sequoia Capital, raising $50 million in the process. SKS has been particularly controversial, both at the

time of its IPO and in the years since.

In October 2010, just two months after the SKS IPO, the local government in Andhra Pradesh in India,

the center of the microfinance industry, adopted rules to reign in market lenders. This action came in

the wake of a significant backlash against the IPO as well as more generally to the substantial profitsaccruing to commercial investors. It also followed 200 suicides in the region amid excessive

indebtedness and pressure by lenders to repay loans. In the months that followed, default rates on

microloans in Andhra Pradesh skyrocketed, and federal lawmakers joined the political fray. By the spring

of 2011, shares of SKS Microfinance, which were once heralded as proof it was possible to serve the

poor and earn market rate returns in the process, were down nearly 70% from their IPO price. Other

companies operating in Andhra Pradesh also experienced significant losses.

The larger political backlash against microlending was not confined to India. In May 2011, Yunus was

ousted by the Bangladeshi government from his post as managing director of Grameen Bank, rattlingthe field further. Like SKS stock, the euphoria once surrounding microcredit as a cure-all for global

poverty seemed to have plummeted.




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Most observers agree that the credit turmoil in Andhra Pradesh can be explained by the rapid growth of

microfinance there. Others concur that the allure of market rate returns attracted the flood of private

investment in the first place, vastly accelerating industry expansion and risk of collapse. From the early

days of microenterprise, concern about commercialization, whether and how much to harness market

forces to provide credit to the poor, has animated the debates in the field. After all, capital quantity andquality are closely linked.

Yunus has long maintained that the profit motive, by definition, compromises the integrity of

microcredit, since it privileges the needs of investors over the needs of the poor. In The New York Times

in January 2010, Yunus wrote, “Commercialization has been a terrible wrong turn for microfinance, and

it indicates a worrying ‘mission drift’ in the motivation of those lending to the poor. Poverty should be

eradicated, not seen as a money-making opportunity.” Yunus distinguishes the Compartamos and SKSs

of the world from Grameen, technically a for-profit business but one in which borrowers are the owners

and in which profits are reinvested in the bank. For Yunus, Grameen is a “social business . . . anopportunity to help people out of poverty, which is different than an opportunity to make money.” 29

For this reason, Grameen charges 15% interest, while publicly traded Compartamos’s going rate is closer

to 100%.

Advocates for and defenders of commercialization counter Yunus’ critique with the contention that

sharing profits with private investors is the only path to scale, a prerequisite for reaching the billions of

the world’s unbanked. After all, the SKS and Compartamos public offerings raised hundreds of millions

of dollars that could then be loaned to the poor.

Truth can be found on both sides of the commercialization debate: profitably brings scale but also

potentially unintended perils. The trade-offs inherent in these arguments have important implications

for policymakers worldwide. These larger questions related to commercialization go well beyond the

field of microlending and are relevant to the debates in the United States about privatization, and about

the provision of public goods and services by for-profit actors. The same fundamental questions hold:

what are the benefits, and potential pitfalls, of harnessing the profit motive, when it comes to the

provision of pubic goods, whether it is healthcare, housing or higher education finance, prisons and

other security services, or other ‘public goods?’




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Impact Investing in the United States

While much of the impact investing discussion centers on the bottom of the pyramid, there is also great

enthusiasm for social purpose business in the United States. What today is referred to as impact

investing – bringing private capital to bear on public purpose projects in a way that generates financial

and social returns –is not all new in the American context. It began with the field of community

development, exemplifying the sequence of public and philanthropic investment followed by private

capital flow.

The contemporary community development field traces its origins to the 1950s and 60s urban renewal,

when neighborhood activists and philanthropic institutions began to work collaboratively to strengthen

distressed communities, offering models like community development corporations that the federal

government would then replicate on a national scale. In particular, PRIs allowed philanthropy to play a

major role in the community development, enlisting foundations as market shapers and demonstrating

for more commercial investors that it was possible to pursue social goals while earning financial returns.

In the late 1960s and 1970s, as community development became a central component of the federal

government’s national economic growth strategy, a number of regional and national nonprofit

development organizations emerged, which further strengthened the field.

The passage of the Community Reinvestment Act (CRA) in 1977, which required banks to extend lending

activities to poor communities across the United States, marked a pivotal moment in community

development. By requiring banks to dramatically increase their investments in poor communities, the

federal government paved the way for the growth of a multibillion-dollar industry of affordable housing

development and community-based lending.

Additionally, a number of tax credit programs have incented large flows of capital to economic

development in housing and enterprise, including the Low Income Housing Tax Credit (1986), the New

Market Tax Credit (2000) and the emergence of Community Development Venture Capital financial

institutions which, collectively, have leveraged hundreds of billions of dollars of investment from the

private sector.

Advocates of impact investing ask whether there are commercial business or enterprise investment

opportunities that qualify beyond the field of government or philanthropy-led community development.

Despite enthusiasm on the investor side, the definitional parameters remain fuzzy. The questions of

intentionality, market failure, and impact are worth revisiting in the domestic context. Just what firms

qualify? Does employment qualify as an ‘intentional’ social purpose? Environmentally sound practices?




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Just what kinds of investments are we talking about? To help answer that question, we examine a

number of companies that impact investors have targeted as qualifying and relevant.

For starters, we follow the money that foundation PRIs have directed toward for-profit education

companies, particularly those focused on underserved communities. Recall that Gates, for example,made a number of equity investments, including one in Inigral, an education technology startup. The

Kellogg Foundation used a portion of its $100 million mission investing program to make a private equity

investment in Acelero Learning, the for-profit Head Start provider. Recently, the NewSchools Venture

Fund, an education venture philanthropy, opened its portfolio to for-profit investments, including

Acelero, Grockit (an online social learning test-prep company) and Education Elements, a company that

helps schools use technology to improve instruction.

Companies that have self-identified as benefit corporations give insight into the eclectic and growing

world of domestic impact investing. Founded in 2007, B Lab is a nonprofit certifying companies that“use business as a force for good” as benefit or B Corps. To become a B Corp, companies must meet

extensive standards for their environmental and social performance, and must also expand their

definition of legal and fiduciary responsibility to encompass a broad universe of stakeholders that

includes employees, suppliers, consumers, community, and the environment. Today, more than 775

Certified B Corporations across 60 different industries represent $3 billion in revenues. The first cohort

of B Corps mostly comprised firms that already exemplified progressive corporate citizenship, including

Method, a pioneer of “premium environmentally conscious and design-driven” home and personal care

products and King Arthur Flour Company, the country’s oldest flour company and one that is 100%

employee owned. B Corps are also investors like TBL Capital, “an intentional, patient capital venturefund” that invests in triple bottom line companies and EKO, the private equity investor in environmental

markets like carbon, water, and biodiversity.

Although the U.S. impact-investing landscape is distinct from some of the BoP investment opportunities,

many of the barriers to industry expansion hold in the developing and developed world contexts. In the

United States, social impact companies and their investors are hampered by issues of infrastructure,

including standardized definitions, assessments and ratings systems. In addition, investors in the U.S.

face deal flow challenges; most of the companies that self-identify as impact are small, with limited

absorptive capacity. Finally, the companies that satisfy both the size and requisite return hurdles forlarge commercial investors are hard to find. As in the developing world context, advances made in the

domestic impact investing sphere help to address some of the infrastructure deficiencies. GIIN’s tools

(e.g., IRIS and ImpactBase) pertain to U.S. as well as BoP companies. Similarly, the GIIRs rating system

also includes American impact companies.




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On the issue of deal flow, advocates of impact investing in the United States have attempted to address

the issue of fiduciary responsibility -- the desire and legal obligation of investors to seek market rate

returns. Although some of these efforts focus on swaying long-held investing conventions to include a

longer-term and more sustainable approach,30 others have sought innovative legal forms that would

allow firms and investors to pursue social or environmental impact alongside financial returns withoutviolating fiduciary responsibility.

These new legal forms can be helpful in a number of ways. Consider, for example, a company that has

engaged in admirable environmentally and socially responsible practices but then goes public or is

acquired by a publicly traded company (e.g., Burt’s Bees by Clorox, Ben and Jerry’s by Unilever, Body

Shop by L’Oréal). In recent years, a number of new legal corporate forms have emerged that attempt to

protect intentions of social impact or sustainability by incorporating blended value or double or triple

bottom line performance objectives in a company’s articles of incorporation. To date, none of these

legal forms has achieved critical mass, although statehouses across the country (most businesses areincorporated at the state level) have shown increasing interest. These new forms include the flexible

purpose corporations, low-profit limited liability company (L3C) and B Corporations, which allow

company managers and owners to pursue both profit and social and/or environmental impact objectives

by legally embedding social purpose in their articles of incorporation. B Corp legislation is gaining

momentum; as of spring 2013 there were fifteen states that had adopted the new corporate form

including, importantly, Delaware.

III. Social Innovation in the Public Sector

At the dawn of the 21st century, the social entrepreneurship revolution has made important inroads

into the public sector. Although the movement’s pioneers, particularly in the United States, were

comfortably rooted in the nonprofit sphere, their influence is now present in a number of government

reform efforts. In the public sector context, we call this the social innovation school.

Like social entrepreneurship, social innovation in the public sector eludes any one definition and bears

different significance in different contexts. However, a number of common themes have emerged. At its

root, social innovation is an effort to improve the way the government addresses deeply entrenched

social problems, to shape markets and serve a common purpose where they have traditionally failed,and to ensure that either public or private individuals produce value when meeting human needs.31




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Nearly all of the contemporary social innovation efforts focus in some way on proving that value by

measuring, evaluating and then directing government resources to scale these evidence-based solutions

to social change. To this end, governments at local, state, and federal levels are using more

sophisticated data collection and assessment for performance measurement and management

purposes.

In some places, social innovation concentrates on the workings of government itself, with the adoption

of new policy tools that include prizes, challenges, targeted ‘innovation’ funds and big data initiatives to

promote innovation either within government itself or within the entrepreneurial third-party entities

that deliver social services on government’s behalf.

The social innovation school, therefore, represents more than a benign conception of government; it

imagines a resoundingly more affirmative array of responsibilities for government that are active and

catalytic, wherein government becomes a market shaper that can create the infrastructure,architecture, and conditions to support the way private actors, both nonprofit and commercial, meet

human needs. The social innovation school therefore rejects a kind of bifurcated, states-versus-markets

worldview and instead posits that government is necessary for entrepreneurship (social and

commercial) and, in turn, healthy and entrepreneurial markets are necessary for a well-functioning

economy and society.

The Case of New York City

Nearing the end of his third term as New York’s mayor, Michael Bloomberg remains both a revered andcontroversial figure by some, in large part because of his private sector approach to governance and the

ways his administration has embodied tenets of the social innovation school. Choice, competition and

greater accountability to citizen-consumers are defining qualities. Similarly, rigorous measurement

through exhaustive data collection and the evaluation of data to inform policy design and agency

management lie at the heart of the Bloomberg paradigm.

Perhaps the most high profile of the innovators in Bloomberg’s administration was Joel Klein, hired as

schools chancellor by the mayor.

To Bloomberg and Klein, public schools were a monopoly, and introducing competition meant creating

more choices for parents, which would ultimately improve the performance of individual students and

schools and close the achievement gap. In policy terms, this approach resulted in the testing of a

number of new approaches meant to ensure or create higher-quality schools: small schools; charter

schools; community designed and led schools; experiments with curriculum; teaching models;




24

technology; changes to the length of the school day; merit pay where possible; closing failing schools;

and training for teachers and principals, who were often given greater latitude over school management

in return for accountability for student performance and outcomes, as measured by test scores and

school report cards. Ultimately, Klein opened 125 new small high schools, 100 charter schools in high

poverty neighborhoods and closed dozens of others.

Although Klein may have been the most visible, there have been other important innovators in

Bloomberg’s administration. Shaun Donovan, Bloomberg’s young and entrepreneurial housing

commissioner tapped in 2004 to address the city’s affordable housing crisis, pioneered a number of

policy innovations, particularly when it came to finance. By using city and philanthropic dollars to

mitigate risk for private investors, Donovan was able to bring the energy and capital of New York’s

commercial real estate developers to bear on the affordable housing crisis. For example, his landmark

New York City Acquisition Fund was designed to use public and philanthropic dollars to remove risk for

private investors, ultimately attracting $230 million to produce or preserve 30,000 low-cost apartmentsover the course of a decade.

A number of other New York City agencies have championed rigorous measurement and evaluation –

use of the evidence base – to guide and scale policy innovation. For example, when Linda Gibbs was

appointed in 2002 as commissioner of the Department of Homeless Services (DHS), she and her staff

used data collection and analysis to determine that housing, not shelter, should be the long-term goal of

the agency, which would also require new measures of success (i.e., no longer just counting the number

of people off the street or the number of people served in shelters) and new investments in programs

and policies aimed at homelessness prevention.

In 2006, Bloomberg appointed Gibbs deputy mayor for Health and Human Services, where she would

oversee nine city agencies with a combined budget of more than $20 billion, including the city’s new

Center for Economic Opportunity (CEO), an in-house poverty-fighting laboratory, created to reduce the

number of people living in poverty in New York City through innovative and results-driven initiatives.

Since its founding, the CEO has pioneered a number of important policy reforms, including a redefined

poverty metric and one of the country’s first innovation funds, which it uses to support evidence-based

programs that reduce poverty and increase self-sufficiency among city residents. The CEO has also

provided an important model for other laboratories of social innovation. The White House Office ofSocial Innovation, created in 2008 with its own (and first) federal social innovation fund, was in part

modeled on New York’s CEO.




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The Bloomberg approach to governance has not been without critics, and time will provide greater

insight into the nature of its results. In the meantime, however, it is clear that the administration’s

social innovation legacy – and, in particular, enhanced data collection, analysis, measurement and

evaluation – has had a profound impact on the design of public policy and the delivery of social services

in New York City and beyond.

The Obama Administration: Social Innovation Goes to Washington

At the federal level, social entrepreneurship found a natural ally and advocate in Barack Obama, who

championed innovation as a linchpin of economic renewal: public investments in infrastructure and

systems that would, in turn, foster technological and scientific innovation from private sector

investments in research and development. The innovation agenda also infused the Obama

administration’s vision for social policy, and the social innovation mindset was reflected in many of the

intellectual and policy allies Obama tapped for top posts within the administration. As in New York City,this has meant a vigorous emphasis on measurement and evaluation and the evidence base in policy

design; the use of competition (prizes, challenges, big data initiatives) and policy laboratories to incent

innovation; and a renewed and creative use of financial and other instruments to nurture

entrepreneurship and attract private capital to bear on social problems.

The pronounced emphasis on measurement and evaluation was clearly articulated by Peter Orszag,

President Obama’s first head of Off ice of Management and Budget, who was tasked with crafting a

budget during a severe economic crisis, requiring close scrutiny of the effectiveness of each federal

program. For Orszag, this directive meant funding only what works in federal programs, and makingsmarter investments in education, healthcare and other social services through evidence-based

evaluation.32

The second pillar of the “innovation agenda” had to do with government promotion of “competitive

markets that spur productive entrepreneurship,”33 including greater use of high-risk, high-reward policy

tools along the lines of the prizes, challenges and the kinds of open innovation discussed earlier, not

only at agencies like NASA with a long history of prizes to incent technological breakthrough, but also in

areas of human services – fields like education and health – where desired outcomes can be harder to

define and measure.




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Perhaps the most high-profile example of this kind of innovation in social policy occurred at the

Department of Education, where Secretary Arne Duncan put into practice a number of path-breaking

programs, beginning in 2009 with Race to the Top, the $4.35 billion competition designed to spur

innovation and reform in state and local district K –12 education and the first large-scale application of

the prize-challenge model to social services.

Race to the Top, funded with emergency education spending from the stimulus, was designed to

encourage states to create the conditions for education innovation and reform, as demonstrated by

improvement in student outcomes. Race to the Top is a competition that required states to make

fundamental and often structural reforms, including changes to state laws and regulations or the

introduction of statewide standards, even before a single dollar of grants was awarded. In round one, of

the 40 states that applied, 20 changed laws, policies and standards in preparation for their applications;

dozens more would make similar changes as a result.

While Race to the Top was its most well known competition, the Department of Education rolled out a

number of others, including the $650 million Investing in Innovation (i3) Fund to promote “innovative

and evidence-based practices, programs, and strategies” 34 that would improve K –12 achievement and

close achievement gaps, decrease dropout rates, increase high school graduation rates and improve

teacher and school leader effectiveness. Unlike Race to the Top, the i3 grants went to individual school

districts, nonprofits working with districts or some kind of consortium of schools.

At its heart, i3 was hallmark social innovation because it linked funding to levels of evidence. Larger

awards went to applications with higher levels of proof and required applicants to match federal fundswith private, philanthropic dollars. In recent years, similar innovation funds have appeared at the

Departments of Labor and Justice, and the White House Office of Social Innovation and Civic

Participation (OSICP), a new office launched in 2009 to foster entrepreneurship, both within government

and in the larger universe of nonprofits. Among the first recipients of the OSICP Social Innovation Fund

awards was New York City’s Center for Economic Opportunity (CEO) to replicate five of its antipover ty

programs.

Other entrepreneurs have combined the power of prizes and challenges with big data. In 2009, the

administration launched Data.gov, a web portal that makes prodigious amounts of government dataavailable to the public, and named Vivek Kundra, the country’s first chief information officer, as




27

overseer. Kundra would work closely with newly appointed Aneesh Chopra, the first chief technology

officer of the United States. This open government initiative is sometimes referred to as Gov 2.0, and

though it was not the first time the government opened data reserves to private or commercial

innovators (think weather data in the 1970s or GPS data a decade later). The innovation, as it were, was

to extend Gov 2.0 to the world of human services to areas like public health, where the potentialbenefits of releasing data to the public and to commercial innovators are vast.

In 2010, Todd Park, a veteran of Silicon Valley and the founder of a number of highly successful

healthcare technology companies, joined the administration as chief technology officer of the

Department of Health and Human Services (HHS), an “entrepreneur in residence” job created especially

for him.35 At HHS, Park hosted a number of “Datapaloozas,” releasing large amounts of health data a nd

inviting leaders in the tech and healthcare industries to create technology tools around them, a practice

also explored by the Department of Labor and elsewhere. In 2012, Park succeeded Chopra as U.S. CTO,

where he continues his brand of open innovation work across agencies, hoping to “unleash theinnovation mojo” of the many talented innovators across government.36 In 2012, the administration

created the Presidential Innovation Fellows program to attract more Todd Park-like entrepreneurs and

innovators to government.

Social Impact Bonds: Local and Global

A final and interesting example of social innovation – the social impact bond (SIB) – is now manifest at

all levels of government. SIBs are a new public finance instrument premised on the not-so-new notion

that prevention pays off in the long-run, meaning that upfront investments in prevention – whether

vaccinations or supportive housing for the homeless – are often more cost-effective than remedies forfull blown social, economic, environmental or public health problems.

Yet while we know prevention often pays, governments, for a host of financial and political reasons, do

not always make the adequate investments in preventative programs. The social impact bond is an

attempt to harness private sources of capital – such as commercial investors and philanthropies – to

underwrite prevention programs, and if the interventions work, to repay investors out of the social

savings.

In 2010, the first SIB pilot was launched in Peterborough, England, a town with a large prison and highrates of recidivism; nearly 60% of the prisoners released from Peterborough prison reoffend and are re-

incarcerated within twelve months, at a cost of £30,000 - £40,000 per prisoner per year. The SIB pilot




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there is testing whether privately funded interventions – services for these ex-prisoners – can help

reduce recidivism rates. At its conclusion, investors (a consortium of philanthropies) will be repaid if the

interventions have made a dent in recidivism. And the better the improvements, the better the returns:

if the service providers succeed in reducing recidivism rates by 7.5% or more, the British government

will pay investors out of the long-term social savings, up to 13%. Below the 7.5% threshold, the investorsget nothing.

A number of features of SIBs make them characteristically social innovation. First, they are “pay for

success,” which means risk is shifted to the investor, who is only repaid for successful outcomes.

Second, the SIB hinges on rigorous measurement and evaluation. Evidence for success focuses on

outcomes rather than outputs (established through use of a randomized control trial) and will

determine whether the intervention has worked and how much, if any, returns are paid. Third is

leverage: SIBs are designed to unlock sources of capital previously untapped for these kinds of

preventative programs.

Since 2010, SIBs have caught the attention of policy makers across the globe. In 2012, Bloomberg

unveiled the first American SIB pilot with a $10 million investment from Goldman Sachs to help reduce

recidivism at Rikers Island, a New York City prison where recidivism hovers around 50%. There are plans

for SIBs underway in ten states and the Obama Administration has written $300 million into its 2014

budget to help support local SIB pilots under the larger pay-for-success banner. SIBs of various flavors

are emerging across the globe, from Canada and Australia to Israel and back to the UK, where there are

now 14 new pilots underway, addressing a range of issues from homelessness to foster care. There is

also great interest in piloting a development impact bond (DIB) as a tool for economic development inpoor countries.

IV. Room for Debate

The field of social entrepreneurship is ever evolving. Although debates over definition and direction

continue, the recent and severe economic dislocation has led to more urgent and heated discussion

about the role of markets in general, and, in particular, market solutions to social problems. In this final

section we explore some of the nuanced reconsiderations of social entrepreneurship: how we define it,

the value and limits of the business orientation, the ways in which impact is understood, measured and

evaluated, and how some social entrepreneurs have evolved their views of both government and

philanthropy and the respective roles they play in advancing social change.




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Every attempt to define social entrepreneurship stirs debate about the nature of that definition. This is

particularly true when it comes to the discussion of the business orientation of social entrepreneurship,

and to the extent and value of this sway in the social sector. Much of the business approach debate has

its roots in a kind of culture clash. What Omidyar, Gates and others praised in themselves as bold, new

thinking, others read as hubris and a deliberate attack on the nonprofit sector and its veterans, who hadfor years been grappling with many complex social and economic issues. To those who had spent

careers in the field battling issues like entrenched poverty, the new proposed solutions often seemed

overly ambitious or naïve and often not that new.

Demos scholar and former Ford Foundation executive Michael Edwards challenges a number of

presumptions of the inherent superiority of the market model, a kind of “business knows best” fallacy.

Edwards makes a useful and basic distinction between some of the tools of business, many of which can

improve both the effectiveness of nonprofit organizations and free-market ideology, a point more

recently reiterated by political philosopher Michael Sandel in What Money Can’t Buy: The Moral Limitsof Markets.

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Relatedly, Jim Collins, of Good to Great fame for his insights in the corporate sector, asserts, “We must

reject the idea—well-intentioned, but dead wrong—that the primary path to greatness in the social

sectors is to become ‘more like a business.’” Collins argues that the “culture of discipline” required for

high-performing organizations across sectors “is not a principle of business; it is a principle of

greatness.”38

The reassessments of the business paradigm for nonprofits and social entrepreneurship more broadlyhave also led to more refined thinking about scale.39 Some have suggested that the venture capital

analogy, with its sights set on organizational capacity building and scale, may have inadvertently led to a

muddying of purpose, an emphasis on increasing an organization’s size rather than its impact, which it

might achieve through spreading an idea or innovation, or through large scale policy change.40

Related to scale, a definitional “push-back” in social entrepreneurship from across the political spectrum

has occurred, with renewed attention to the role of more ordinary citizens (not Ashoka’s one in 10

million) in the work of social change. William Schambra of the Hudson Institute challenges what he

believed has become an elite view. The “real social entrepreneurs,” he says, are often unheralded,

improving their communities in local but important ways, a kind of centuries old “citizen




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entrepreneurship.”41 For others, this more democratic vision of social entrepreneurship challenges

some of the fierce individualism of the social enterprise school, advancing instead a more collaborative

or collective view of social entrepreneurship in what Ashoka now calls an “EACH” world in which

“Everyone is a Changemaker.”

This broad reconsideration of social entrepreneurship has had a number of profound implications in

how the sector views measurement and evaluation. Among them are issues surrounding: attribution

versus contribution (how much any one organization can claim sole success for an outcome, versus its

role in contributing to a more “collective” impact in concert with others);42 the problem of metric drift

(organizations and funders skewing work toward activities that can be measured, perhaps jettisoning

other work that is important but hard to evaluate); the cost-benefit of measurement, and the fact that

the burden of evaluation often falls to nonprofits who find themselves “drowning in data,” regardless of

whether the data can prove impact.43 Some of these unintended consequences reveal confusion about

the basic purpose of evaluation. While many outputs can be assessed and measured; certain aspects justcannot be quantified for financial models.44

According to Jim Collins, as long as we focus on the right inputs and outputs, “It doesn’t really matter

whether you can quantify your results. What matters is that you rigorously assemble evidence—

quantitative or qualitative—to track your progress.”45 Collins’ point suggests that measurement, even of

outcomes, is as much about the exercise as the answer. Indeed, there has been an evolution in some

circles away from a judgment, attribution or strict ROI-style returns toward measurement for

organizational learning purposes,46 including, for example, a more positive view of failure, specifically

that programmatic stumbles can be viewed as learning opportunities for individual organizations and forthe sector more broadly.47

New Views on the Role of Philanthropy and Government

For all the enthusiasm about innovations in philanthropy and the potential of market-based solutions to

social problems, social entrepreneurs – particularly those who initially tried to scale their work through

private resources – have (re)discovered the unmatched reach of government in terms of dollars and

policy and have tried to increase advocacy efforts.48 This is even more true on the funding side; in the

2008 election cycle, a number of philanthropies participated in unprecedentedly large-scale policyadvocacy on reform issues like education (Gates, Broad) and health care (Atlantic Philanthropies), and in

the years since have continued to make large bets on advocacy (i.e., Bloomberg, Gates) to advance their

missions.49




31

The extraordinary growth in activist philanthropy necessarily begs age-old questions of power, influence

and accountability. By law, charitable foundations cannot engage in direct political lobbying and must

conduct exclusively nonpartisan activities that promote the public welfare; needless to say, this is not

always the case.50 Yet concerns about power and influence extend well beyond the legality of political

philanthropy. In light of the growing and significant inequalities in American society – and the limitedprivate and public dollars to address pressing social needs – some have begun to more closely scrutinize

philanthropy as a form of “public money,” a kind of quid pro quo, in which government forgoes revenue

(in tax deductions) in exchange for charities providing a public good.51 The choices implicit in this model

– and questions about who best provides public goods, and who has influence in our policy and politics –

are coming under greater scrutiny in our national policy debates, as we consider the respective roles of

the public, private and nonprofit sectors in advancing the common good.

Social Entrepreneurship for the 21st Century

To this end, social entrepreneurship for the 21st century must draw on two important traditions in the

United States: the dynamism of the individual entrepreneur and the role that government can play in

fostering private entrepreneurial activity, social and otherwise. This vision for change-making moves

away from the states versus markets impasse and instead imagines public policy that can shape markets

to a common purpose.

Without a doubt, the great social entrepreneurs of the last generation identify with and embrace the

spirit and practice of entrepreneurship that has deep historical and cultural roots in our nation’s history.

Likewise, many new funders, those social entrepreneur philanthropists who have also fueled the field’sgrowth, have emphasized the agency of the individual in the change-making process, consistent with our

historic conception of capitalism, in which markets are driven by the choices and preferences of

individuals, and the idea that the individual entrepreneur is the primary proponent of industrial change.

Although in recent years we observed the emergence of a more nuanced conception of social

entrepreneurship, one that encompasses a collective or collaborative view of change-making;

individualistic entrepreneurship retains a powerful hold on the American imagination and its well-trod

paths to prosperity.

The other gradual, though not universal, shift in social entrepreneurship we have noted is a moreaffirming view of the positive role government can play in fostering social change. As we consider the

role of the public sector, this “partners, not adversaries” 52 view of government and business also draws

on an important tradition in our history and political economy; government can be an agent and

promoter of technology, innovation and economic development, increasing the flow of private capital to




32

bear on public purpose—from infrastructure development to innovation in science, technology,

medicine and to other public goods, like credit for housing or education.

This history reminds us of the role government can and must play, not only as a regulator but as an

active catalyst of entrepreneurship, social and otherwise. It also gets to the heart of innovation in thepublic sector, whether via the New York City Acquisition Fund or social impact bonds, bringing private

capital to aid economic development and social challenges.

This view helps us better understand the role of government in fostering social entrepreneurship. As we

have seen, public policies to incent private investment for public purpose, promote innovation and

encourage social entrepreneurship can take a number of forms, including “sticks” (laws and regulations

requiring investment, like the Community Reinvestment Act) and “carrots” (incentives like subsidies,

matching grants, prizes, and tax breaks and tax credits, loan guarantees, and a variety of kinds of

investment insurance all of which can change both the risk and reward structure for investors).Government can also assist with industry infrastructure-building (setting standards, ratings or new legal

forms necessary for investor participation), and play a critical role as convener, as it does through the

new White House Office of Social Innovation.

This reclamation of the role government can play as a market-shaper -- steering private capital,

profitably and responsibly, to public purpose -- affirms that collaboration between government and

business is necessary for entrepreneurship, social and otherwise, for a more shared prosperity in the

21st century.

About the Author

Georgia Levenson Keohane is a Fellow at the Roosevelt Institute, where she works on a range of issues

in economic policy, including poverty and inequality, employment and job growth, and social

entrepreneurship and the role of firms in society. Keohane’s career has bridged the private and

nonprofit sectors. A former McKinsey consultant and foundation executive, she advises a number of

organizations including philanthropies, educational entities, community development agencies, and

think tanks. She has taught at Yale, and is an adjunct professor in the Social Enterprise Program at

Columbia Business School. Keohane writes regularly on social and economic policy and the intersectionof business and society for the Harvard Business Review, The Nation, The American Prospect, The

Washington Monthly, Slate, and other publications and is the author of Social Entrepreneurship for the

21st Century: Innovation Across the Nonprofit, Private and Public Sectors (McGraw-Hill 2013). She holds

a BA from Yale University, an MBA from Harvard Business School, and an MSc from London School of

Economics, where she was a Fulbright Scholar.

http://www.rooseveltinstitute.org/people/georgia-levenson-keohane


http://socialentrepreneurship21.com/










33

Notes

1 Stephen Goldsmith and William D. Eggers, Governing by Network: The New Shape of the Public Sector

(Washington, DC: Brookings, 2004).

2 “The Nonprofit Sector in Brief: Facts and Figures from the Nonprofit Almanac 2007,” Independent Sector (2007).

3 See, for example, Michael Lind, The Land of Promise: An Economic History of the United States (New York:

Harper, 2012).

4 The Fellow selection process is explored in more detail in Georgia Levenson Keohane, “Ashoka: Innovators for the

Public,” Stanford Graduate School of Business Case No. SM203 (February 2012).

5 Joseph A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1942).

6 As quoted in David Bornstein, How to Change the World: Social Entrepreneurs and the Power of New Ideas (New

York: Oxford, 2004), 119.

7 In Innovation and Entrepreneurship, for example, Drucker includes a number of examples for entrepreneurial

activity in entities he classifies as nonbusiness entities—many major universities, service organizations like CARE

and the Girl Scouts, hospitals, research labs, and even a number of labor unions. See Peter Drucker, Innovation and

Entrepreneurship (New York: Harper and Row), 1985. See also Jane Wei-Skillern, James E. Austin, Herman Leonard

and Howard Stevenson, Entrepreneurship in the Social Sector (London: Sage, 2007) and Martin and Osberg, “Social

Entrepreneurship: The Case for Definition,” Stanford Social Innovation Review (Spring 2007).

8 J. Gregory Dees, Jed Emerson, and Peter Economy, Enterprising Nonprofits: A Toolkit for Social Entrepreneurs

(New York: John Wiley and Sons, 2001), 161.

9 Christine W. Letts, William Ryan, and Allen Grossman. “Virtuous Capital: What Foundations Can Learn from

Venture Capitalists,” Harvard Business Review (March –April 1997).

10 See, for example, Laura Arrillaga-Andreessen “Giving 2.0: Getting Together to Give,” Stanford Social Innovation

Review (Winter 2012); and Giving 2.0 (San Francisco: Jossey-Bass, 2012).

11 Jessica E. Bearman, More Giving Together: The Growth and Impact of Giving Circles and Shared Giving

(Washington, DC: New Ventures in Philanthropy initiative of the Forum of the Regional Associations ofGrantmakers, 2007).

12 “Rockefeller Revolutionary: Judith Rodin is shaking up one of the world’s most venerable charitable

foundations,” The Economist (December 13, 2006).

13 See, for example, Paul Brest and Hal Harvey, Money Well Spent: A Strategic Plan for Smart Philanthropy (New

York: Bloomberg, 2008).

14 Jonathan Bays, “And the Winner Is… Capturing the Promise of Philanthropic Prizes,” McKinsey & Company

(2010), www.mckinsey.com/App_Media/Reports/SSO/And_the_winner_is.pdf ; Jonathan Bays and Paul Jansen,

“Prizes: A winning strategy for innovation,” McKinsey: What Matters (July 7, 2009),

http://innovbfa.viabloga.com/files/McKinseyQuarterly_Prizes_a_winning_strategy_for_innovation_july_2009 pdf

See also Liam Brunt, Josh Lerner, and Tom Nicholas, “Inducement Prizes and Innovation,” CEPR Discussion Paper

(2008), http://people.hbs.edu/tnicholas/CEPR-DP6917.pdf . 15

Peter H. Diamandis and Steven Kotler, Abundance: The Future is Better than You Think (New York: Simon and

Schuster, 2012).

16 Nathan Cummings Foundation, “Changing Corporate Behavior through Shareholder Activism: The Nathan

Cummings Foundation’s Experience” (September 2010),

http://www.nathancummings.org/shareholders/Changning%20Corporate%20Behavior%20thru%20Shareholder%2

0Activism.pdf .

http://c/Users/Georgia/Dropbox/Downloads/www.mckinsey.com/App_Media/Reports/SSO/And_the_winner_is.pdf



http://innovbfa.viabloga.com/files/McKinseyQuarterly_Prizes_a_winning_strategy_for_innovation_july_2009%20pdf


http://people.hbs.edu/tnicholas/CEPR-DP6917.pdf



http://www.nathancummings.org/shareholders/Changning%20Corporate%20Behavior%20thru%20Shareholder%20Activism.pdf











34

17 http://www.fbheron.org/documents/ar. 2007mrigatefold.pdf

18 See, for example, Anne Stetson and Mark Kramer, “Risk, Return and Social Impact: Demystifying the Law of

Mission Investing by U.S. Foundations,” FSG Social Impact Advisors (October 2008),

http://www.fsg.org/Portals/0/Uploads/Documents/PDF/The_Law_and_Mission_Related_Investing_Full.pdf?cpgn=

WP%20DL%20-%20The%20Law%20and%20Mission%20 Related%20Investing%20FULL (accessed June 10, 2012).

19 Pierre Omidyar, “EBay’s Founder on Innovating the Business Model of Social Change,” Harvard Business Review

September 2011.

20 http://www.omidyar.com/about_us.

21 http://www.acumenfund.org/knowledge-center.html?document=56.

22 C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (University of

Pennsylvania: Wharton School Publishing, 2004).

23 Antony Bugg-Levine and Jed Emerson, Impact Investing (San Francisco: Jossey-Bass, 2011), 10 –11.

24 Michael E. Porter and Mark R. Kramer, “Creating Shared Value,” Harvard Business Review (January –February

2011), 4.

25 Rosabeth Moss Kanter, SuperCorp: How Vanguard Companies Create Innovation, Profits, Growth and Social

Good (New York: Crown Business, 2009). See also, for example, Joseph L. Bower, Herman B. Leonard, and Lynn S.

Paine, Capitalism at Risk (Boston: Harvard Business Review Press, 2011).

26 “Investing for Social and Environmental Impact,” Monitor Institute (January 2009), 9.

27 J.P.Morgan, “Impact Investments: An Emerging Asset Class,” J.P. Morgan Global Research (November 29, 2010),

12.

28 http://www.morganstanley.com/about/press/articles/8d25155d-790c-4926 -be23-dd559696b3b7.html.

29 Muhammad Yunus, “Sacrificing Microcredit for Mega Profits,” The New York Times (January 14, 2011).

30 See, for example, Generation Investment Management, “Sustainable Capitalism” (February 15, 2012), or Insight

at Pacific Community Ventures and the Initiative for Responsible Investment at Harvard University, “Impact at

Scale: Policy Innovation for Institutional Investment with Social and Environmental Benefit” (February 2012).

31 See, for example, Stephen Goldsmith, The Power of Social Innovation (San Francisco: Jossey-Bass, 2010).

32 Peter Orszag, “Building Rigorous Evidence to Drive Policy,” Office of Management and Budget Blog (June 8 2009)

http://www.ebpdn.org/resource/resource.php?lang=en&id=1175.

33 Executive Office of the President, National Economic Council, Office of Science and Technology Policy: “A

Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs” (September 2009), 17.

34 United States Department of Education. A blueprint for reform: The reauthorization of the Elementary and

Secondary Education Act. Department of Education (2010), 35.

35 Simon Owens, “Can Todd Park Revolutionize the Health Care Industry?” The Atlantic (June 2 2011),

http://www.theatlantic.com/technology/archive/20111/06/can-todd-park-revolutionize-the-heath-care-

industry/239708/.

36Eric Braverman and Michael Chui, “Unleashing Government’s ‘Innovation Mojo’: An Interview with the U.S. Chief

Technology Officer.” McKinsey & Company (June 2012). See also “Safety Data Jam Connects Tech Innovators with

Public Safety Officers,” OSTP Blog (June 8, 2012), http://www.whitehouse.gov/blog/2012/06/08/safety-data-jam-

connects-tech-innovators-public-safety-officers (accessed June 14, 2012).

http://www.fbheron.org/documents/ar.%202007mrigatefold.pdf



http://www.fsg.org/Portals/0/Uploads/Documents/PDF/The_Law_and_Mission_Related_Investing_Full.pdf?cpgn=WP%20DL%20-%20The%20Law%20and%20Mission%20%20Related%20Investing%20FULL%20



http://www.omidyar.com/about_us



http://www.acumenfund.org/knowledge-center.html?document=56



http://www.morganstanley.com/about/press/articles/8d25155d-790c-4926%20-be23-dd559696b3b7.html



http://www.ebpdn.org/resource/resource.php?lang=en&id=1175


http://www.theatlantic.com/technology/archive/20111/06/can-todd-park-revolutionize-the-heath-care-industry/239708/



http://www.whitehouse.gov/blog/2012/06/08/safety-data-jam-connects-tech-innovators-public-safety-officers

















37 Michael Edwards, Just Another Emperor: The Myths and Realities of Philanthrocapitalism (New York: Demos, 2008);

Michael Sandel, What Money Can’t Buy: The Moral Limits of Markets (New York: Farrar, Straus and Giroux, 2012).

38 Jim Collins, Good to Great and the Social Sectors, (New York: HarperCollins, 2005).

39 See, for example, Paul Bloom and Edward Skloot (eds.), Scaling Social Impact: New Thinking (New York: Palgrave

MacMillan, 2010).40

Jeffrey Bradach, “Foreword: From Scaling Organizations to Scaling Impact,” in Paul Bloom and Edward Skloot

(eds.), Scaling Social Impact: New Thinking (New York: Palgrave MacMillan, 2010).

41 William A. Schambra, “The Real Social Entrepreneurs,” 2010 William E. Simon Lecture, the Manhattan Institute

for Policy Research, New York City (December 9, 2010).

42 See, for example, John Kania and Mark Kramer, “Collective Impact,” Stanford Social Innovation Review (Winter

2011), http://www.ssireview.org/articles/entry/collective_impact (accessed February 24, 2012).

43 Alana Conner Snibble, “Drowning in Data,” Stanford Social Innovation Review (Fall 2006),

http://www.ssireview.org/articles/entry/drowning_in_data (accessed February 24, 2012).

44 Michael Edwards, Just Another Emperor: The Myths and Realities of Philanthrocapitalism (New York: Demos,

2008), 66.45

Collins, 7.

46 See, for example, Mario Marino, Leap of Reason: Managing to Outcomes in an Era of Scarcity (Washington, DC,

Venture Philanthropy Partners, 2011); “Learning for Social Impact: What Foundations Can Do,” McKinsey &

Company (April 2010), http://lsi.mckinsey.com (accessed February 25, 2012). Also “Evaluation in Philanthropy:

Perspectives from the Field,” Grantmakers for Effective Organizations and Council on Foundations (2009), 7,

http://www.organizationalresearch.com/publicationsandresources/evaluation_in _philanthropy_GEO_COF1.pdf

(accessed February 25, 2012).

47 Gary Walker, “Midcourse Corrections to a Major Initiative: A Report on the James Irvine Foundation’s CORAL

Experience,” James Irvine Foundation (May 2007); Prudence Brown and Leila Fiester, “Hard Lessons About

Philanthropy & Community Change from the Neighborhood Improvement Initiative,” William and Flora Hewlett

Foundation (March 2007), http://hewlett_prod.acesfconsulting.com/uploads/files/HewlettNIIReport.pdf (accessedFebruary 25, 2012). See also Paul Brest and Hal Harvey, Money Well Spent (New York: Bloomberg, 2008), 96 –99.

Also, To Improve Health and Healthcare, Volume XIII, Robert Wood Johnson Foundation (2010). Also, Stephen L.

Isaacs and David Colby, “Good Ideas at the Time: Learning from Programs That Did Not Work Out as Expected,” in

To Improve Health and Healthcare, Volume XIII, Robert Wood Johnson Foundation (2010)., Also Jean Case, “The

Painful Acknowledgement of Coming up Short,” Case Foundation Blog (May 4, 2010),

http://www.casefoundation.org/blog/painful-acknowledgement-coming-short (accessed February 27, 2011).

48 Steven Tells and Mark Schmitt, “The Elusive Craft of Evaluating Advocacy,” Stanford Social Innovation Review

(Summer 2011). Also Lisa Ranghelli, “Leveraging Limited Dollars: How Grantmakers Achieve Tangible Results by

Funding Policy and Community Engagement,” National Committee for Responsive Philanthropy (January 2012),

http://www.ncrp.org/files/publications/LeveragingLimitedDollars.pdf (accessed February 28, 2012).

49 Aaron Dorfman, “Bloomberg Makes Largest Advocacy Grant Ever,” Huffington Post (July 21, 2011). Also Megan

Tomkins, “Private Actors in the Public Arena,” Alliance 16, no. 3 (September 2011).

50 See, for example, Jane Mayer, “Covert Operations” The New Yorker (August 30, 2011).

51 See, for example, Evelyn Brody and John Tyler, “How Public Is Private Philanthropy?” The Philanthropy

Roundtable (2009).

52 See, for example, Michael Lind, The Land of Promise: An Economic History of the United States (New York:

Harper, 2012).

http://www.ssireview.org/articles/entry/collective_impact



http://www.ssireview.org/articles/entry/drowning_in_data


http://lsi.mckinsey.com/



http://www.organizationalresearch.com/publicationsandresources/evaluation_in%20_philanthropy_GEO_COF1.pdf


http://hewlett_prod.acesfconsulting.com/uploads/files/HewlettNIIReport.pdf



http://www.casefoundation.org/blog/painful-acknowledgement-coming-short


http://www.ncrp.org/files/publications/LeveragingLimitedDollars.pdf







