The proposed Obama extreme makeover of our government and economy includes good news for nonprofit social entrepreneurs. Recognizing that these social entrepreneurs are often the drivers of innovation in education, economic development, healthcare and the environment, Obama plans to expand their effectiveness and reach by:
* Providing R&D tax breaks to nonprofits similar to those available to the private sector;
* Establishing a Social Investment Fund; and
* Creating an agency dedicated to building the capacity and effectiveness of the social enterprise and nonprofit sector.
Obama’s plans for high-impact nonprofits are part of his larger agenda to expand Americans’ engagement in national service.
Our problems are not too big, but our solutions are currently too small.
He delivered this noteworthy quote during the campaign along with a promise to support an agenda that identifies and scales the best solutions to some of our most pressing problems.
R&D Tax Credits
Obama believes the federal government should invest in the capacity of nonprofits to innovate and expand successful programs. In the private sector, this type of activity is supported by the federal government with up to $7 billion a year in R&D tax credits. But R&D in the nonprofit sector is limited because of a disconnect between foundations that can fund innovation and the grassroots organizations that can develop new concepts and bring them to scale.
The Obama/Biden makeover calls for a new partnership between the federal government, private sector investors and the nonprofit sector fostering the best practices of the private sector to nurture innovation. This will help identify the most successful programs and expand them to be scalable in other markets, which will increase the efficiency and impact of the nonprofit sector as a whole.
Social Investment Fund Network
This fund will be a government-supported nonprofit corporation, similar to the Corporation for Public Broadcasting, that will use federal seed money to leverage private sector funding to improve local innovation, test the impact of new ideas and scale successful programs. The fund will operate through a network of funds that will be rooted in the private sector at the community level, with local decision-making informed by a shared network of best practices.
For example, a successful social enterprise could apply for funding to study ways to improve or expand their organization to other locations. Or an angel investor could work with the fund to identify high-quality nonprofits that should be expanded to other locations and invest in that expansion. The network of funds would bring experts skilled at analyzing data, picking winners, measuring results, and building capacity. Choosing worthy projects will driven by the following key principles:
* Results-Focused – Funds would provide financial capital to organizations based on rigorous criteria and analysis to ensure the highest likelihood of results, particularly projects that would yield a return on investment, such as savings on future public services.
* Community-Directed – Funded efforts would respond to specific community-identified priorities. For example, one community might focus on crime prevention while another might choose education.
* Cross-sector – Strategies that engage volunteers and businesses would receive special emphasis; a private sector board of local leaders, including business, government, community organizations, and the target beneficiaries would make funding decisions with assistance from analytical experts.
* Long-term – Investments would occur over a period of years to increase the likelihood of success and sustainability. At the national level, the Social Entrepreneurship Agency (see below) would oversee the fund network to ensure that they meet these criteria. The agency would also help the funds learn from one other, enabling them to build a body of effective practices and expand their knowledge of possible solutions to the problems they seek to address.
Social Entrepreneurship Agency
The Obama plan will create an agency within the Corporation for National and Community Service dedicated to building the capacity and effectiveness of the nonprofit social entrepreneur sector. The agency will be charged with:
* Coordination – Improving coordination of programs that support nonprofits across the federal government.
* Accountability – Fostering nonprofit accountability.
* Streamlining – Improving processes for obtaining federal grants and contracts, and eliminating unnecessary requirements. Removing barriers for smaller nonprofits to participate in government programs.
The agency will make grants to build the infrastructure of the nonprofit sector and capacity of nonprofit organizations, including their ability to ensure accountability, manage volunteers, and improve outcomes.
Get Involved and Add Your Two Cents
National service is an area where Obama has practiced what he preaches. He began his career directing the Developing Communities Project in Chicago’s south side, and later passed up lucrative law firm offers to head Project Vote. Although scoffed at by the Republicans, Obama’s experience with community organizing and citizen engagement paid huge dividends on Election Day. Obama gave numerous speeches on the importance of national service during the campaign. You can see a full version of one of those speeches here:
Do you have some good ideas on how to get involved and make a difference? Visit the change.gov website where you can post your contributions to this discussion.
(Images courtesy of CharityNetUSA.)