Social Innovation

Books about it are becoming much more common and that is a very good thing.

This review, from The Philanthropy Roundtable, examines the new book by Stephen Goldsmith—one of our more insightful public sector thinkers—The Power of Social Innovation, which I posted on earlier.

An excerpt from the review from The Philanthropy Roundtable.

“It’s a tale of two caricatures. In liberal imaginations, conservatives think that government programs don’t pull people out of poverty but that people pull themselves up out of poverty, Horatio Alger–style. To a conservative mind, liberals appear to believe that all poor people are structurally unable to advance, and that only sweeping government intervention can work. Of course, most people, conservative or liberal, sit somewhere between these two extremes. In his new book, The Power of Social Innovation, Stephen Goldsmith stakes out this broad middle ground.

“Social innovation,” as Goldsmith uses the term, simply refers to how social service providers (nonprofit and governmental) can solve social problems by providing clients (the poor, for instance) with positive incentives and treating them as active agents in the process. The traditional, top-down, service-delivery model has created “entrenched underperforming social safety net systems of providers, government and philanthropic funders, advocates, and interest groups,” Goldsmith writes. Thus, he says, we need “civic entrepreneurs” to shift the power dynamic and make real change possible on an individual and community level. “Transformation occurs as these social risk-takers help change residents from passive recipients of government services to productive, tax-paying members of society,” he adds.

“Stephen Goldsmith is the right man to write this book. He served two terms as Mayor of Indianapolis, advised President George W. Bush on faith-based and nonprofit issues, and chaired the Corporation for National and Community Service under Presidents Bush and Obama. Shortly after he published this volume, he was appointed by Michael Bloomberg to serve as Deputy Mayor of Operations for New York City—overseeing many of Gotham’s biggest service agencies.

“For a politician, Goldsmith is candid about the shortcomings in how nonprofits relate to government, and he cites his own experience along with other national and local examples. Many nonprofits refuse to let go of ineffective programs, because these programs are their lifeblood and to do so would jeopardize their existence. This, argues Goldsmith, prevents people with new ideas from entering the market. “The comfort of long-term relationships often undermines entrepreneurial opportunity,” he writes. Incumbent nonprofit service providers are therefore skilled at nurturing the “political and philanthropic contacts necessary to sustain their model, regardless of performance.” “Meanwhile, clients do not have choices, nor is their feedback solicited; and service providers do not have incentives to do better.

“For an example of nonprofits more attuned to political patronage than service provision, Goldsmith turns to United Way CEO Brian Gallagher, whom he quotes as saying: “Columbus [Ohio] had a deep, rich history of settlement houses, and we were trying to move away from this program funding. . . . [T]hey had learned to become the best program funding recipients ever. They knew politics: how to get to a city council member. I went to the godfather of the seven or eight settlement houses in the city and said, ‘I will go to my board and get a guarantee that you will get $750,000 or $850,000 and it will not be at risk over the next three years.’” The result? The settlement houses were not interested in funding that might force them to change their top-down delivery system.

“When nonprofits seek the support (both financial and moral) of citizens, however, they are in a stronger position to tackle social problems. One of the most enlightening chapters of The Power of Social Innovation is about “Building a Public”—how civic entrepreneurs build a movement by creating citizen demand for change. “Civic progress requires that those who advocate for new interventions build a community of engaged citizens to demand change in social-political systems,” Goldsmith writes. He cites the example of Sara Horowitz, who founded a national membership organization called Working Today. Horowitz asked freelancers what they wanted and provided them with what they identified as their top need: health insurance. (Working Today is now aligned with a 501(c)(4) called the Freelancers Union, which provides health insurance and a retirement plan to 120,000 independent workers.)”