Matching Human Capital with Financial Capital Will Make SIF’s Millions Go Farther

Literally years in the making, July 22, 2010 was a day of enthusiastic celebration for many across the social sector as the Obama Administration announced the eleven grantees of the new Social Innovation Fund (SIF). 

Established by the Edward M. Kennedy Serve America Act, SIF will support some of the nation’s most innovative and groundbreaking foundations and nonprofits.  As Commongood Careers and Talent Initiative are dedicated to supporting the growth and development of such organizations, we have watched with eager anticipation over the past year as this historic legislation was brought to life by the team administering the funds at the Corporation for National and Community Service.

Perhaps most exciting of all, however, is the paradigm shift that SIF represents in how the government thinks about investing in social change.  During the press conference to announce the SIF’s grantees, the Corporation’s CEO, Patrick Corvington, stated that, “Feeling good is not enough. Impact is what matters. Results are what matter.”

The SIF grantees are incredibly diverse in terms of their location, structure, and even mission focus.  Corvington explained the connection between these disparate groups in a press release by saying that, “They are all driven by the search for bold solutions and recognize that we must use evidence to target limited resources where they will have the greatest impact.” 

In our experience, SIF grantees can have the greatest impact by targeting their limited resources on “human capital.”  And by human capital, we mean that to fully leverage growth capital, nonprofits must be able to recruit sufficient numbers of talented staff and volunteers, utilize proven management systems, and shape their cultures in order to position talent for success, development, and retention.

Having worked for years with several of the SIF grantees, as well as the organizations that they support, we have witnessed first-hand the results that these foundations achieve when they bring financial capital together with human capital.

Although many traditional foundations have either overlooked human capital issues or focused only occasionally on piecemeal support, pioneering groups like New Profit Inc., Venture Philanthropy Partners, and the Edna McConnell Clark Foundation have excelled in supporting a more complete range of human capital needs across their grantees. 

Most of these foundations have senior staff dedicated specifically to advancing the human capital practices of their grantees.  They share information and resources with their portfolio, implement operationally-focused evaluation tools, and help ensure that the right leaders are in the right roles. 

The investment strategies of these funders have proven that optimizing human capital allows their grantees to increase revenue flows, decrease program costs, improve program outcomes, accelerate growth trajectories, create sustainable organizations, and achieve mission impact.

We strongly encourage all SIF grantees to consider the impact that human capital will have on their efforts, as well as the many ways that they can help to control those outcomes.  For example, when sub-granting funds to nonprofits, they can: ask about plans to expand leadership teams and management infrastructures; designate funding to support those investments; encourage diverse teams that include talent from constituent communities; provide resources for professional development; and collect and disseminate best-practices and knowledge.

As a fundamental determinant of social return on investment, human capital can either be an unanticipated barrier to success or an effective catalyst for achieving it.  The difference comes down to intent and strategy.

Read more stories by James Weinberg.