The Social Innovation Fund’s Challenge: Helping Nonprofits Survive Failure

Who doesn’t love innovation?

On July 22, Patrick Corvington, chief executive of the federal government’s Corporation for National and Community Service, announced the 11 first-round recipients of money from the Social Innovation Fund, an experiment in “funding what works,” directed by Paul Carttar.

The ambition of the inaugural group of winners—including foundations, nonprofits, and government—is explicitly innovation. To the Social Innovation Fund, that means building the reach of promising social programs nationally and, more fundamentally, changing the process by which innovation is funded, especially in the context of government-philanthropy partnerships.

I’ve heard both cheers and harrumphs from all sides. And that’s truly healthy, as long as we take the long view. If we are to honor true innovation, as opposed to novelty or faddishness, the enthusiasts must expect and honor failures and the skeptics must hope for success.

And partisanship aside, I think it comes down to: “Can we get comfortable with learning from failure, which is inherent to true innovation?”

Even though we as a sector reflexively and conspicuously embrace the concept of “innovation,” that’s not typically the way we do things. As a colleague of mine likes to say, “The nonprofit sector eats its young.” We bury problems and failures—and with them, learning. And similarly, we burnish stars and shining examples as if they exist in perfect stasis—and always have.

The perils of the Social Innovation Fund structure and goals are obvious targets for a sectorwide feeding frenzy.

The government procurement process isn’t, typically, a suitable hothouse for innovation. Both the “scaling” and the “what works” part of the plan are fraught with uncertainty in both theory and practice. In the case of the former, it’s pretty clear that bigger isn’t necessarily better and “what works” metrics-wise is still in a state of creative chaos we can only hope produces something useful. (Suffice it to say that I never want to see the metric “lives touched” again—what, in the social sector, does not touch lives?)

True innovation is a process, and it’s risky. There are mess-ups, sometimes spectacular ones. And innovation is fundamentally experimental—so after the mess-ups, you need the operating latitude to try something different. Otherwise there’s no improvement and no learning.

Innovation is most likely to thrive in an environment that provides for a combination of privacy and transparency. Even well-tested practices and ideas require protective space when they are tried in new markets or with larger constituencies. They need to develop—and sometimes fail—out of the limelight. But innovators must also share experience and findings with peers so everyone learns. That process, central to true innovation, is expensive and takes a while, sometimes a long while. That’s what capital is for and that’s the opportunity here.

That said, the people, programs, and ideas behind the Social Innovation Fund deserve an engaged trial and retrial—to be supported, heard, argued with, considered, tested, reviewed—by those of us who want to improve capitalization, finance, innovation, and performance in the social sector.

It ain’t perfect, but that’s the whole point. Innovation plus problems, plus honesty, courage, and generosity just might equal progress.