Review of the New Social-Innovation Fund

In July, the Chronicleof Philanthropy simultaneously applauded and questioned President Obama’sSocial-Innovation Fund (SIF), a $50 million allocation for promotion of socialinnovation.  The main issue debated at the time was implementation, withconcern being expressed about how the fund would determine the “best” charitiesto support.

An article published by OMB Watch lastweek reiterates that concern by questioning whether the SIF’s resources (nowreduced to $35 million) will reach the right target organizations.  Only10% of the funds are slated to go directly to community organizations who willhave to match contributions dollar for dollar.  The rest of the fundingwill be channeled through larger foundations down to community organizations.

The matching requirement may prove a major obstacle forcommunity organizations.  Rick Cohen, of BlueAvocado, wrote that “unless they’realready in the embrace of well-connected foundations and their initiatives,community nonprofits – at the heart of social innovation – are unlikely to findthemselves winners in the foundation-dominated Social Innovation Fund.”

Foundations, on the other hand, stand to benefittremendously from the SIF. OMB Watch indicates that 85% of SIF resources willbe disbursed in grants sized between $1 million and $5 million to ‘grant makinginstitutions.’ The foundations will have to match the grant funds beforethey re-grant them but this requirement is unlikely to be an obstacle for largefoundations.

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