1.    Establish institutions that support and promote social entrepreneurship.
The establishment of institutions, such as the Small Business Administration and the Office of Homeland Security, has long served as a key step that public officials can take to commit to and advance a particular issue. New institutions at the city, state, and federal levels would lead the way in creating environments in which social entrepreneurship can thrive. These institutions could also take the form of quasi-public agencies. 

Model: Louisiana’s Office of Social Entrepreneurship
Louisiana’s Office of Social Entrepreneurship has made its mission to “enable citizens and organizations working across sectors to use business principles to build, measure, and scale the most innovative, effective, and sustainable solutions to the social problems facing communities across the state.” It plans to conduct convenings across the state, in partnership with the private and nonprofit sectors, to discuss the root causes of Louisiana’s most pressing social problems and to identify the solutions that have already proven successful. During this ongoing process, the office and its partners will support citizens and organizations by: seeking to improve public policy and remove barriers; recognizing and rewarding successful models; offering training and networking opportunities to social entrepreneurs; and providing access to financial and in-kind resources. The office is also in the early stages of developing a public-private social innovation fund. Louisiana’s Office of Social Entrepreneurship is positioned to be the first of many institutions that support and promote social entrepreneurship.

Learn more about the Louisiana Office of Social Entrepreneurship and view an outline of its mission, strategies, model, and vision.

2.    Allow greater autonomy. Set standards. Publish results.
Granting initiatives working on difficult social problems greater autonomy in how they spend their allotted money can encourage entrepreneurial behavior. At the same time, government can set performance standards and publish results. Such practices will ensure that the necessary work is getting done, while creating space for developing new ways of meeting and even surpassing those results. 

Model: New York City Public Schools’ Children First Initiative
Seeking to give school principals more control over their ability to meet performance standards, New York City Public Schools’ Children First Initiative grants greater autonomy to principals in handling day-to-day issues such as scheduling, hiring, curricula, and professional development. In return for this greater autonomy, schools are held to clear standards of accountability, particularly related to assessments and outcomes in reading and math, and particular school-performance measures, such as attendance and graduation rates. A central part of this reform is the development of public progress reports for every school in the system, based on a variety of measures, in which schools will receive a letter grade of “A” through “F.”

In partnership with government, social entrepreneurs can augment their ability to generate and implement transformative, cost-effective solutions to the most challenging societal problems facing our nation and the world. According to Vanessa Kirsch, president of New Profit Inc. and co-chair of America Forward, “Every day, social entrepreneurs are developing and implementing innovative solutions to meet our country's domestic challenges, and they are achieving greater results with fewer resources. Just as public investment has supported major initiatives in the past, a future president—and other city, state, and federal administrations—can support social entrepreneurs and their effective solutions and, in doing so, effect measurable change in our nation.”

In addition to Louisiana’s Office of Social Entrepreneurship, a number of initiatives focused on collaboration between government and social entrepreneurs have appeared in recent years. In Virginia, the Phoenix Project has partnered with high-level government officials to encourage social-entrepreneurial solutions that will reduce poverty in the state. In Texas, the OneStar Foundation, a quasi-public agency that leads the Corporation for National and Community Service activities in the state, is working in partnership with Texas Governor Rick Perry. OneStar has established a social sector development fund—with funding from the state matched by private funds—that seeks to stimulate social innovation, entrepreneurship, and investment in Texas’ nonprofit sector. Vermont recently passed legislation for a Low-Profit, Limited Liability Partnership Company (L3C), to accommodate social enterprises that blur the lines between the nonprofit and private sectors. The U.S. Department of Agriculture partnered with the Girl Scouts of the USA to train a new generation of leaders in rural communities in social entrepreneurship through the Challenge and Change program. One of the presidential candidates has called for a national Social Entrepreneur Agency. The Center for American Progress has provided thought leadership and recommendations for a White House Office of Social Innovation. New Profit’s America Forward coalition of more than 60 social-entrepreneurial organizations is working to connect social entrepreneurs with policymakers. The Ash Institute for Democratic Governance and Innovation at Harvard University’s John F. Kennedy School of Government will convene a working group of government officials, social entrepreneurs, and other thought leaders to examine and seek to change the way America’s communities approach social problem solving. Root Cause’s Public Innovators is working with government leaders at the city, state, and federal levels to promote a new way of thinking about and approaching social problems. These new initiatives constitute the first wave of what is likely to be a flood of new experiments in governmental support of social entrepreneurship.

RECOMMENDATIONS FOR GOVERNMENT TO ADVANCE SOCIAL ENTREPRENEURSHIP
Government has frequently developed institutions, programs, and policies to support a variety of activities in the private and nonprofit sectors. The 13 recommendations detailed here are coupled with models that draw on existing government support of social entrepreneurship; government support of private-sector small business entrepreneurship; and non-governmental initiatives that could serve as models for government.

To aid policy makers and government agencies in navigating these recommendations, we have divided them into three categories from which to take action from:

•    Lay the foundation for a new era of social entrepreneurship.
•    Set policy to enable and encourage social entrepreneurship.
•    Develop financial and non-financial resources for social entrepreneurship.


Next week: 13 Recommendations & Models

So far, collaboration between social-entrepreneurial organizations and government has occurred in isolated incidents. Yet, given the traditional role of the government in responding to market failures—and the amount of federal funds dedicated to resolving domestic social problems—it is evident that working together strategically provides the United States with an opportunity not only to accelerate solutions in the areas in which our nation currently lags, but to become a model for the rest of the world. As Roger L. Martin and Sally Osberg state in a recent article for the Stanford Social Innovation Review, “Social entrepreneurship, we believe, is as vital to the progress of societies as is entrepreneurship to the progress of economies, and it merits more rigorous, serious attention than it has attracted so far.”


Leading the Advancement of Social Entrepreneurship

Government support of entrepreneurship in the private sector provides a model for the steps that government leaders can take to address America’s toughest social problems while helping to make our nation a global leader in social entrepreneurship. With the establishment of the Federal Reserve (1913), Securities and Exchange Commission (1934), and the Small Business Administration (1953), along with countless other policies, institutions, and programs, the federal government has encouraged a flood of innovation and entrepreneurship that produced some of the world’s greatest companies. The innovations of these companies have led to the creation of thousands of jobs, at times spawning entire new industries—as did Ford Motors with the automobile industry and Microsoft with the software industry. Ultimately, government played a crucial role in making America all but synonymous with business innovation and entrepreneurship. 

Momentum is building for government to create the same type of environment for social entrepreneurship. In February 2007, Louisiana Lieutenant Governor Mitch Landrieu launched an unprecedented effort to find and promote effective solutions to the myriad challenges facing his state following Hurricanes Katrina and Rita. Seeking to bolster the state’s social service system, and to ensure that emergency funding would be well spent, Landrieu founded the nation’s first government-run Office of Social Entrepreneurship. The office aims to shift the orientation of the social-services sector of Louisiana to a results-driven approach, while making Louisiana, in Landrieu’s words, “the most hospitable place in the country for those who are testing and launching the best, most effective new program models for social change.”  As Director of Strategic Partnerships Brooke Smith explains, the disasters of Hurricanes Katrina and Rita actually surfaced an opportunity to find new ways to approach longstanding societal challenges in Louisiana. “We began to see successes in areas where we’d never looked before. They all centered on social entrepreneurs who had succeeded in finding a way to bring the public, private, and nonprofit sectors together and to run truly effective, innovative, sustainable programming that could really move the dial on the state’s issues in education, health care, transportation, and other areas that have been problems for a long time.” 

Next week: Leading the Advancement of Social Entrepreneurship, continued

Introduction: A New Type of Entrepreneurship for the Twenty-First Century

As the first decade of the twenty-first century comes to a close, the United States faces incredible societal challenges. One quarter of the population fails to finish high school, creating a national graduation rate that lags 8 percent behind rates in the European Union.  The United States has the highest incarceration rate in the world, with 1 in 100 adult Americans behind bars.  U.S. child poverty rates are also among the highest of the world’s developed nations, with 21 percent of American children living below the poverty line.  And even with the highest per capita spending on health care,  the U.S. health system ranks 37th in the world—lower than any other developed nation.  On the global stage, nearly 3 billion people live on less than 2 dollars a day,  while malaria—an easily preventable and curable disease—kills more than 1 million children per year.  If the United States is to maintain its place as a world leader, we must find ways to reverse these trends, both in our own country and around the world.

Crucial to surmounting these and other challenges facing our nation and the world will be making efficient and effective use of public sector resources, and leveraging those resources through collaboration with the private and nonprofit sectors. Public-finance theory tends to assign two major roles to government: 1) providing public goods, such as libraries, public education, national defense, and policing; and 2) addressing inequalities produced by market failures through redistribution—in the form of unemployment benefits, disaster assistance, or benefits to families living in poverty, to name a few of the most common methods.  To carry out the latter role, the federal government alone spends more than $1 trillion per year, by conservative estimates, to provide direct benefits to constituents, award service grants and contracts to nonprofit and private service providers, and employ government agency staff.  State and local governments dedicate their own funds to benefit their constituents—creating an even larger pool of government resources and activities, all aimed at solving social problems. Government resources dwarf the funds spent by the nation’s largest foundations and by individual donors, who contribute $16.4 billion  and $163.5 billion  per year respectively. Given the magnitude of the challenges we face, and the vast amount of government resources devoted to these challenges, spending every taxpayer dollar wisely is imperative. 

Social entrepreneurship—the practice of responding to market failures with transformative, financially sustainable innovations—is uniquely positioned to help government officials address our nation’s toughest social problems more effectively.   Combining business principles with a passion for social impact, social-entrepreneurial initiatives can take the form of for-profits, nonprofits, or government programs and exhibit three core characteristics:

•  Social Innovation - finding, testing, and honing new and potentially transformative ways of approaching social problems;

•  Accountability - measuring results, continuously making improvements based on those results, and sharing performance and outcome data with stakeholders;

•  Sustainability - identifying reliable financial and other types of support by utilizing markets, forming partnerships across sectors, and responding to stakeholder needs to ensure that the solution will be enduring. 

Next week: Leading the Advancement of Social Entrepreneurship