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Roadblocks to Innovation

May 11, 2012

The failure of funders to provide [risk capital] is one of the reasons why innovation has not had a larger impact on the field.

– Karina Mangu-Ward, Director of Activating Innovation at EmcArts.

I always enjoy Nell Edgington’s social innovation interviews, but her recent interview with Mangu-Ward struck a cord and is particularly informative and enlightening to me.

I quite like Mangu-Ward’s insights on “innovation,”

[W]e’re primarily concerned with organizational innovation, which EmcArts has defined as instances of organizational change that: 1) result from a shift in underlying assumptions, 2) are discontinuous from previous practices, and 3) provide new pathways to creating public value…

As a recovering nonprofiteer, I find that nonprofit organizations are unnecessarily criticized for not being “innovative” enough–both by outsiders of the sector and nonprofit workers themselves. It’s rather difficult to innovate when risk and innovation go unfunded, which is what occurs in the nonprofit sector. As Mangu-Ward notes,

[S]eed money helps managers resist the pressure to monetize or fossilize new programs too soon, giving them the breathing space for innovations to grow and embrace a culture of adaptive capacity.

One of the roadblocks to significant nonprofit-led social innovation in Baltimore City is the nature and structure of local philanthropic funding. I’m careful not to paint with too broad a brush, but many funders act as “philanthropic buyers” (which, I should add, is a critically important function). Read Sean Stannard-Stockton’s excellent post on the difference between a builder (someone who donates money to build an organization) and a buyer (someone who donates money so an organization can provide services to the nonprofit’s beneficiaries). Buying is not synonymous to building.

Baltimore’s nonprofit sector could benefit from more diverse funding options–in fact, perhaps we need to move away from the term funding and inch closer to investment. Unfortunately, Baltimore lacks a Roberts Enterprise Development Fund, Venture Philanthropy Partners or Social Venture Partners affiliate organization.

Still, ask yourself: What would happen if local funders capitalized a fund focused on innovation, risk and organizational development (beyond capacity-building)?

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