On Saturday the New York Times' philanthropy reporter, Stephanie Strom, published a piece looking at the debate swirling around the Obama administration's Social Innovation Fund, which last month rewarded multimillion dollar federal grants to 11 anti-poverty grant-making institutions. Each winner will then match the government funding and redistribute the total amount to community non-profits working on issues such as literacy, workforce readiness for low-income kids, and fighting chronic diseases such as AIDS and obesity.
Sounds great, right? Well, the crux of the controversy is this: The organization that conceived of the idea for the Social Innovation Fund–shopping it around to candidates during the 2008 presidential primaries–is the Boston-based venture philanthropy group New Profit, which has now won a $5 million grant from the fund, despite its application being rated "weak and non-responsive" by one group of reviewers.
As Tactical Philanthropy's Sean Stannard-Stockton notes, "New Profit is one of the most prominent growth capital funders in the country. Far from it being surprising that New Profit won a grant, it would instead have been shocking if New Profit had failed to win a grant." This is true, but there's also more here than meets the eye. New Profit is a remarkably politically well-connected group, not just because it lobbied to create the very program it is now benefiting from, but because its founder, Vanessa Kirsch, is a close professional contact of both Barack and Michelle Obama dating back to the early 1990s. Here's what I wrote about Kirsch and the Obamas last year in a feature story about the administration's "innovation" agenda:
…both Barack and Michelle Obama go way back with Kirsch. Barack served on the founding advisory board of Public Allies, a nonprofit Kirsch co-founded in Washington, D.C., in 1992, with the goal of directing low-income teens toward public-service careers. In 1993, Michelle left her corporate law firm job to found a Public Allies branch in Chicago and later joined the organization's board of directors. Public Allies won plaudits from both Bush presidents and Bill Clinton, but Kirsch was frustrated by her attempts to grow the group nationally. Many donors were less interested in "scaling up" a successful nonprofit than in launching sexier, newer programs.
In 1997, Kirsch married Alan Khazei, the co-founder of CityYear, an AmeriCorps volunteer program for young adults. (Khazei is now a Democratic candidate for Ted Kennedy's Senate seat, and he's running on a social-innovation platform — "a message of Big Citizenship instead of Big Government," according to a fundraising e-mail.) In 1999, Fast Company profiled Khazei and Kirsch. "There's lots of money for nonprofit work," Khazei said. "There's lots of money for the really big, established groups. But there's almost no money for those organizations in between — those who need bridge money to sustain and to grow."
The Social Innovation Fund, as drafted by Kirsch and America Forward, is intended to fill that need for "second stage" funding. "The term 'innovation' is maybe a little misleading," Kirsch now admits.
In response to criticisms of its application, New Profit has posted the full application online. The group intends to use the federal grant to support three small non-profits: College Summit, which focuses on growing a "college-going culture" in low-income high schools; Year Up, which provides training and internship/job placement to low-income young adults; and iMentor, which electronically connects New York City youth to professional mentors, who work together to create resumes and discuss education and careers.
I'm impressed with all three organizations, especially Year Up, which has an 87 percent rate of placing its graduates in paid entry-level jobs and internships. So I think the most important question about the Social Innovation Fund is less whether New Profit's influence is appropriate and more whether this extremely small, $50 million grant program is likely to make a national impact on the social problems it purports to solve–especially because the ethos of the program, as conceived of by Vanessa Kirsch and adopted by President Obama, is that the private philanthropic sector is more effective than government in responding to poverty, bad schools, and poor health.
"Let's face it, there's only so much Washington can do," Obama said to nonprofit leaders who visited the White House last year for the program's launch. "Government can't do everything and be everywhere — nor should it be."
The truth is that giant federally-funded programs like Medicaid, Medicare, TANF (welfare), and Social Security have had a much larger positive impact on the lives of the poor and middle class than a $2 million grant to a mentoring program ever could. That grant is still a good thing, but we should be careful about the hype around these "innovation" programs and not let the administration use them as an excuse to avoid action on more systemic anti-poverty fixes. Now that health care is done, we can't forget about other social priorities, such as transforming NCLB and revisiting welfare reform. Both of those programs are due for reauthorization but are not yet on Congress' schedule.