There haven’t been many times in recent years when I’ve been reading a report on social innovation or social enterprise and I’ve found myself thinking: ‘the author of this section has missed Social Impact Bonds and they’re genuinely relevant to this discussion’.
If European social innovation research collaboration, Tepsie‘s report Building the Social Innovation Ecosystem in Europe achieved nothing else, that would be quite a feat. Fortunately, given that there’s 105 pages of it, it does achieve some other things, too.
While the one they’ve gone for is snappier, a more accurate title for the report would ‘Describing the possible component parts of a Social Innovation Ecosystem in Europe should one come to exist’. The bulk of the report is made up of snapshots of the landscape of interventions emerging to support social innovation in different parts of the world, written by social innovation academics from around Europe.
Where’s the innovation?
Keen to avoid a social innovation definition debate, the authors make clear that they’re: “particularly interested in socially innovative organisations that emerge from civil society and the third sector, including social enterprises, co-operatives and mutuals.”
The problem with the choice to focus on socially innovative organisations rather than socially innovative activity (wherever located) is that while some subsections – such as the one on ‘prizes for social innovation’ – are about support for innovative activity which may ultimately lead to the creation of organisations, most of the subsections focus on resources, organisations and networks that support new or growing social sector/civil society organisations in a general sense.
In many subsections, the specific relationship between this support and those organisations actually having and successfully executing any new ideas or models is either not explained at all or explained through gratuitous speculation such as this on crowdfunding: “A fourth advantage particularly for social innovators is that it pays for them to be really innovative: Whereas they often do not fit into more traditional funding schemes just because they are ‘too innovative’, they are likely to attract crowdfunding more easily by being innovative, if they succeed in making innovation comprehensible and convincing to ‘the crowd’”
The report divides the ‘Social Innovation Ecosystem’ into three main sections:
- Enhancing the supply of innovative goods and services
- Enhancing the demand for innovative goods and services
- Intermediaries: transferring knowledge about social innovation
There’s over 60 pages on ‘Enhancing the Supply’, divided between different types of: ‘Financial Support’, ‘Non Financial Resources’ and initiatives developing ‘Skills for Innovation’, 15 pages on the different ways of ‘Enhancing demand for innovative goods and services’ and 12 pages on ‘Intermediaries’, looking at networks and evidence.
The subsections are written by different researchers from Tepsie’s partner institutions and, perhaps unsurprisingly, they’re a real mixed bag. The intended model (demonstrated by the good ones) is: explain what the activity is (for example, ‘crowdfunding’), explain what it’s got to do with socially innovative organisations, give some examples of some current approaches including interviews with people involved and provide ‘reflections’ on what this means for the social innovation eco-system.
Ventures needs grants because ventures need grants
It’s a model that works particularly badly for the subsections on Financial Support. Gunnar Glänzel of University of Heidelberg is the co-author of a very good paper I’ve read on social investment in Germany but he gets lost somewhere between writing superfluous beginners guides and complicated specialist analysis of topics that (on this evidence) he’s not really a specialist in. As a result, the first three sub-sections here on ‘Grants for early stage development’, ‘Crowdfunding’ (see above) and ‘Loans’ are stews of confusion peppered with blindingly obvious filler.
For example: “The rationale behind early-stage grants is that social innovators who are about to set up ventures are in need of relatively small amounts of money at low or no cost” and “As long as an idea remains just an idea, it continues to have two major drawbacks: First, it does not make any difference in the world; and second, it does not generate any job opportunities for anyone.”
Particularly baffling is the subsection on loans which is apparently aimed at someone who needs to read a 500-word description of what a loan is beginning: “A loan is a form of funding where a lender provides money (the principal) to a borrower on pre-defined terms concerning the repayment of these funds” but can understand the idea of ‘mezzanine’ capital with no explanation at all.
As if this lurch from spoon-feeding to jargonitis wasn’t enough, the mezzanine is reached in an interview with Charity Bank. Charity Bank are really good but they’re virtually the only organisation offering loans to UK social organisations who don’t claim to be particularly interested in social innovation. Sure enough, Glänzel also interviews Triodos before noting: “It needs to be pointed out that both examples refer to banks that make loans to organisations that should not be seen as social innovators.”
Fortunately, other sections are much better. The subsection on ‘Mentors and Coaching’ by Jeremy Millard of The Danish Technological Institute includes an interview with Servane Mouazan of Ogunte and is a really good summary of what the point of those activities is – something which many social enterprise support agencies that refer social entrepreneurs to coaches and mentors could do with explaining better. It’s less good as explaining why socially innovative organisations need different mentoring or coaching to anyone else but there may not be a reason.
Does anyone actually want to buy this stuff?
While it’s worth dipping into the ‘Supply’ section to read about the different types of support available to socially innovative organisations around the world, the most interesting thinking in the report is in the demand section.
To begin with, it’s great that the section exists at all. It’s no great revelation that there’s loads of support for people looking to bringing socially innovative organisations ‘to market’ but there’s currently very limited understanding of what or where the markets for their social innovations are.
Millard’s subsection on Campaigning and Advocacy looks at the role of socially innovative organisation in simultaneously campaigning for and delivering social change. In the case of the first example, The Ghana Friendship Groups, the organisation literally does both things itself, pushing the Ghanaian authorities to provide children with the formal education they’re legally entitled to by delivering preparatory courses for children so they’re ready to enter the education system and training local ‘barefoot’ teachers, while simultaneously campaigning for politicians to fulfill they’re responsibilities and securing outside funding from Danish aid agencies. The other example is used is Social Enterprise UK and their work on boosting the market for social enterprise (which is apparently assumed to lead to a bigger market for social innovation) both through public campaigns and with engaging with politicians on initiatives such as the Social Value Act.
This subsection loses its way in the ‘reflections’ which ends up as a discussion of the pros and cons of campaigning rather than reflections on the interaction between campaigning and social innovation. For some social organisations campaigning may be the best way of creating a market for an innovation which they themselves can deliver. Hearing loss charity, the RNID’s work both demanding that the NHS provide digital hearing aids then working with them to make it happen is a good example.
The Young Foundation’s Rachel Schon does an extraordinarily good job of providing a high level overview of the fiendishly complicated topic of the place of social innovation in ‘Commissioning and Procurement’ explaining the problems of big contracts suited to big providers, risk aversion and excessive monitoring of processes rather than outcomes.
Impossible to tackle in the three pages of the subsection but important to the paper overall is the question whether governments actually want to buy social innovation and, if so, how they go about doing so.
(Possibly the only situation ever where) Social Impact Bonds get less coverage than they deserve
Unfortunately, the snapshots of the landscape format, while probably the most logical one for a report by multiple contributors based in various different countries, is a particularly bad one for considering how different organisations and initiatives function within an ecosystem.
The relationship between the different components of ‘An Ecosystem For Innovative Social Purpose Organisations’ is outlined in a diagram on page 11 but never explicitly mentioned again after that. As a result, the ‘supply’ section creates the impression of a ‘Social Innovation Ecosystem’ as a building constructed entirely from scaffolding that socially innovative organisations may or may not choose to visit to get what they need to succeed.
Some critics of social enterprise support and government funding for it might feel that impression is accurate but, either way, this non-engagement means failing to examine approaches that either consciously link together different forms of support or promote social innovation on both the supply and demand side.
To take two UK examples, not because I think they’re likely to be the most important ones in the world but because they’re the ones I know about: the UK’s social investment ‘pipeline’ and Social Impact Bonds.
For the last two years, the UK government has – it believes – been promoting social innovation through a social investment pipeline that begins with a socially innovative idea being supported by an accelerator funded through the Social Incubator Fund, moves on to ‘investment readiness support’ through Big Potential or the Investment and Contract Readiness Fund, and ultimately ends up with innovation social ventures received massive investments from Big Society Capital-backed social investment funds to scale up their services and sell them to public sector commissioners.
This pipeline may not work (or even meaningfully exists in a practical sense) but it’s a good example of several parts of s social innovation ecosystem that have (in theory) been designed to fit together and deliver some end products – and it would be useful to consider whether it’s a good idea and whether there’s comparable stuff going on elsewhere on Europe (or elsewhere in the world).
The hyperbolic promotion of Social Impact Bonds (SIBs) in the UK has been so successful that, despite the fact that the first SIB only published its first (half-decent but hardly breathtaking) results last week, they’re already being promoted as a key solution to the challenges facing whole countries.
It makes sense for serious social innovation researchers to be sceptical about the marauding progress of the SIBs bandwagon but that doesn’t negate the relevance of what they’re attempting to do. SIBs are:
(a) a form of theoretically commercial finance specifically designed to fund social innovation
(b) a model of funding with a built-in relationship between financial return and social outcomes
(c) a model of funding social innovation that’s received a phenomenal level of government support
Even more critically, though, they attempt to tackle the conundrum that governments are the most likely customers for many new approaches to doing social good but governments can’t risk spending (large amounts of) money on services that haven’t yet been proven to work.
Who pays and why?
Ultimately, socially innovative organisations don’t (or shouldn’t) exist primarily in a social innovation ecosystem. The ecosystems socially innovative organisations need to find their places within are their local communities, or the national or international communities of interest that want to see a solution to particular social problem.
The effectiveness of the growing range of supply side support for socially innovative organisations is based entirely on whether there’s ultimately anyone who wants to pay for what’s supplied. Ironically, given that grant-funded activity is often seen as an outdated alternative to socially enterprising approaches, Julia Unwin’s The Grantmaking Tango is one of the few UK publications I’m aware of that looks at a market for social goods provided by social organisations (grant-funding) and considers how that market affects the business models of the social organisations that deliver those social goods.
It would be really useful for UK or European researchers to do something similar, the Social Innovation Shuffle (?), that looks at the different markets for social innovative end products -governments in particular but also grant-funders, private sector businesses and individual consumers- and how a social innovation ecosystem could most usefully interact with them. This report makes a good start by telling us more about what’s currently out there.