Posted on January 5, 2011

2010: Two Steps Forward, One Back for Social Innovation Fund

As the year opened, the $50 million Social Innovation Fund, a White House initiative designed to support innovation in social change work, was viewed as a promising new venture by nonprofit leaders hopeful the Obama administration, having passed healthcare reform and bailed out Wall Street, would turn its attention to the nation's struggling nonprofits. At the same time, many experts were critical of the White House for not adequately funding the effort.

In May, the Corporation for National and Community Service, which houses SIF, announced commitments totaling $45 million over two years from the Open Society Foundations ($10 million), Omidyar Network ($10 million), Eli and Edythe Broad Foundation ($10 million), Skoll Foundation ($10 million), and Doerr Family Foundation ($5 million) to match SIF grants and/or invest in other innovative community solutions. (Over the summer, it was announced that additional private commitments had been secured, bringing the matching total to $74 million.)

In July, CNCS announced the eleven winners of the inaugural round of SIF grants: Boston-based Jobs for the Future ($7.7 million over two years); the Local Initiatives Support Corporation (LISC) ($4.2 million over one year); the Mayor's Fund to Advance New York City ($5.7 million over one year); San Francisco-based REDF ($3 million over two years); the Foundation for a Healthy Kentucky ($2 million over two years); the Missouri Foundation for Health ($2 million over two years); the National AIDS Fund ($3.6 million over one year); New Profit, Inc. ($5 million over one year); the New York City-based Edna McConnell Clark Foundation ($10 million over one year); D.C.-based Venture Philanthropy Partners ($4 million over two years); and the United Way of Greater Cincinnati ($2 million over two years). Under the rules of the competition, eight of the SIF grantees were to select sub-grantees through a competitive process within six months of receiving their SIF funds.

Although initial concerns about the adequacy of funding for SIF may have been addressed by the willingness of private funders to participate in the effort, the initiative faced scrutiny of a different sort when, following the July grant announcement, the nonprofit press raised questions about the award to New Profit, Inc., a Massachusetts-based venture philanthropy fund that previously had employed SIF's executive director, Paul Carttar, in an executive position. As nonprofit bloggers rushed to attack or defend the fund and the process used to select its inaugural grantees, it was revealed that Carttar had recused himself from the process at the outset.

Nevertheless, questions about transparency and conflicts of interest lingered into the fall, when the New York Times reported that the inspector general charged with oversight of the Corporation for National and Community Service would audit the fund's selection process. According to the Times, the audit, which CNCS had requested, could lead to recommendations for changes in how SIF distributes funds it receives from Congress.

By year's end, it seemed as if the fund's critics and supporters had agreed to a temporary truce. And as Billions of Drops in Millions of Buckets author Steve Goldberg argued, when all is said and done it may come down to the investigation being "yet another case where a responsible government agency is trying to do the right thing in the way that it manages taxpayer money."

Related:

White House Announces Commitments Totaling $50 Million to Social Innovation Fund (5/28/10)

Social Innovation Fund Announces Inaugural Grants (7/23/10)

Knight Foundation Awards $1.1 Million to National Fund for Workforce Solutions (8/27/10)

Duke Endowment Partners With Edna McConnell Clark Foundation (10/4/10)

Social Innovation Fund Grant-Decision Process to Be Audited (11/16/10)