Innovation, Leadership & Funding

An excellent article from Harvard Business School exploring the intersection and articles like this always pose the question—though rarely in the article—what is truly innovative?

To be able to judge that, funders need enough expertise in their program areas to recognize a new idea, yet one based in the realities of the program environment, from a retread.

An excerpt.

“In order to garner the capital necessary to foot the bill for social change, nonprofits need to think less about traditional grants and more in terms of innovation--and so do the organizations that fund them.

“This was a key message from professional philanthropists as they explored "Social Investing: Emerging Trends in a Changing Landscape," a recent panel discussion hosted by Harvard Business School's Social Enterprise Initiative. They also touched on growing trends including venture philanthropy and social impact bonds.

"In general there's dissatisfaction with traditional philanthropy and a search for 'give us better practices,' " said Nancy Roob, president and CEO of the Edna McConnell Clark Foundation (EMCF). Joining her on the panel were Matt Bannick (HBS MBA 1993), managing partner of Omidyar Network, a philanthropic investment firm in Redwood City, California, and Mario Morino, cofounder and chairman of Venture Philanthropy Partners (VPP), based in Washington, D.C.

“Panelists agreed that the goal for philanthropy should be to help an organization scale to the point that it can sustain itself.

"I'm hearing an underlying common philosophy," said moderator Professor Herman "Dutch" Leonard, who serves as cochair of the Social Enterprise Initiative. "First, the focus is on impact. Second is taking that impact to scale. And the third element is that whatever is needed, that's what we'll do. Form follows function."

“The panelists explored the benefits and potential pitfalls of "venture philanthropy," the term for applying the techniques of venture capitalists in funding nonprofits and other socially focused organizations. The model differs from traditional grant-giving in that rather than simply writing checks to worthy applicants, venture philanthropists proactively find opportunities and develop them.

"A big part of the model is first seeking out the entrepreneur and the opportunity and then, and only then, figuring out what the capital mix is," said Omidyar Network's Bannick, a former senior executive at eBay. "We live in a world where entrepreneurship drives massive change in the private sector, and we feel that can be true in the social sector."