A new era of public innovation and impact Investing

Two separate discussions this week reflected a clear evolution in thinking around how public agencies can and should participate in the social innovation process. The panel discussions in New York and Washington, DC brought together over 100 investors, policy-makers, social entrepreneurs and intermediaries to celebrate the launch of the recently released report Breaking the Binary: Policy Guide to Social Innovation.

Jonathan Greenblatt, Director of the White House Office of Social Innovation and Civic Participation, spoke on how his office was poised, in President Barack Obama’s words, to “find new ways to solve old problems”. Development finance institutions such as the Overseas Private Investment Corporation (OPIC) and Inter-American Development Bank (IADB) are living examples of social innovation, providing critical support to developing markets.

Private sector actors, too, recognize the role that policy has in growing the field. Audrey Choi, Head of Global Sustainable Finance for Morgan Stanley and Member of the Global Agenda Council on Social Innovation, commented that governments “set the parameters for the social contract” and provide the “connective tissue” that improves the quality of life and creates stronger, more resilient communities.

Government innovation is also critical to social enterprises. For example, Schwab Foundation Social Entrepreneur Rebecca Onie, Co-Founder and Chief Executive Officer of Health Leads, has received 600 expansion requests over the past 12 months (compared to the prior average of 60 requests annually). This surge of interest is due in large part to an increased emphasis on improving patient outcomes as set out under the US’s new Affordable Care Act.

But there were admonitory tales as well. Panellists cautioned that “new isn’t always better” and that government’s role is not just to innovate and sometimes create new tools, but also to remove systems that are broken or barriers to effective market development.

Building on and iterating on tools that already exist is also important. According to Mildred Callear, Executive Vice-President of Small Enterprise Assistance Funds (SEAF), more needs to be done to “empower people to be creative using existing tools to solve social problems”. And where social innovation is taking place, measurement and tracking is key to success. In the words of Andrew Kassoy, Co-Founder of B Lab, “If government is going to do business with business, they should require to measure what matters.”

While the global social impact investing market is growing, the field is not itself new. But the discussions at these events signaled a new era of public innovation for social enterprise and impact investing, one where government is not just a critical participant in the social innovation process, but is, in fact, an innovator in and of itself.

The Policy Guide to Scaling Social Innovation is a collaborative effort between the Schwab Foundation for Social Entrepreneurship, InSight at Pacific Community Ventures, the Initiative for Responsible Investment at Harvard University and the SK Group.

Author: Colby Dailey is Associate Director of the Impact Investing Policy Collaborative at InSight at Pacific Community Ventures.

With the collaboration of Sarah Ritter, Community Manager of the Impact Investing Policy Collaborative at Insight at Pacific Community Ventures.

 Image: People are silhouetted at the business district in London REUTERS/Luke MacGregor