Innovation can come from anywhere, from the streets of Shanghai to the R&D labs of Silicon Valley. But for philanthropic organizations and donors, figuring out how to find breakthrough ideas that can solve today’s most pressing social and environmental problems can be a daunting challenge. Sourcing social innovation in a systematic way can be even harder.
Challenges, prizes, and other approaches that use public competitions to surface breakthrough solutions have gained in popularity in recent years. But they aren’t the only options. There are a range of different methodologies that funders can use to deliberately seek out new ideas.
Since 2012, the Monitor Institute, a consultancy and think tank focused on philanthropy and social change that operates as part of Deloitte Consulting LLP’s newly launched Social Impact Practice, has been working with nearly a dozen leading “innovation funders”—including programs like the Bill & Melinda Gates Foundation’s Grand Challenges program, the Robert Wood Johnson Foundation’s Pioneer Portfolio, and the MacArthur Foundation’s Discovery Fund—to identify and discuss the specific practices, structures, and systems that they use to find and fund breakthrough social innovation.
Through these investigations, we homed in on five main strategies—some, like prizes, commonplace, and others less widespread—to surface early-stage social innovation with transformative potential. Below, we compare and contrast some of their strengths and weaknesses.
CHALLENGES AND PRIZES
Over the last decade, open innovation competitions such as prizes and challenges have shifted from the fringes of the philanthropic space to the mainstream. The visibility of the XPRIZE Foundation, Ashoka Changemakers, and the Bill & Melinda Gates Foundation’s Grand Challenges program, augmented by new opportunities created by social media tools and mobile technologies, has increasingly made these competitive approaches the default option for many funders interested in searching for new ideas from beyond their traditional pool of recipients.
Structurally, challenges and prizes are quite similar—they both aim to spur innovative ideas by identifying a problem, publicizing an open call for potential solutions, and then offering funding to winning applicants. However, while prizes typically reward the efforts of winners after they have succeeded in accomplishing a goal, challenges provide resources to winning ideas and then support recipients in executing those ideas.
- They can help funders extend their reach beyond their normal circles, bringing in unusual players and new ideas from outside traditional channels.
- The broad visibility of an open call for entries can help bring needed attention to critical issues and catalyze new activity in an area, influencing even those who don’t end up participating or getting funding from the contest.
- They help raise funders’ profiles, and allow them to publicly signal their commitment to searching for and supporting new solutions in a given area, which can then attract additional participation and innovations in the future.
- By attracting a wide range of different applicants, they can help funders grasp the full landscape of possible solutions related to the issue at hand.
- While open calls can generate a large number of ideas, it is impossible to know in advance how strong or innovative those ideas will be. Some funders have found that the extensive work of managing the “idea flow” from a challenge can outweigh the relative upside of potential new ideas.
- They may not be a good fit for all types of issues. They are typically better suited to technical and scientific problems that can be clearly stated and solved (such as an online application that teaches six-year-olds how to read) than for more-complex social challenges (such as education reform in low-income school districts).
- It can be difficult to structure, set up, and publicize a good challenge. Doing so requires careful definition of the problem and extensive work to solicit the desired types of responses, particularly as the competition space grows more crowded.
The bottom line:
If you can articulate a clear and concise “call” for solutions that would benefit from increased public attention and new ideas from nontraditional sources, and you have the capacity and willingness to do the work required to publicize a call and sift through responses, then challenges and prizes may make sense for you.
INTENTIONAL NETWORKS FOR SEEKING IDEAS
Since new ideas can come from anywhere, no philanthropic organization will ever have sufficient reach to catch all of the most important high-potential innovations as they occur. But philanthropists can still try to extend the net as widely as possible. Over the last few years, a number of funders have very deliberately begun to build formal and informal networks of informants that can provide additional access to and awareness of spaces beyond the reach of their staff. These diverse, expert networks can serve as a sort of ongoing “sensing mechanism” to help a funder spot early stage innovations (even for challenges and solutions that are just emerging).
Network strategies can include advisory groups (like those used by the Robert Wood Johnson’s Pioneer Portfolio to help scan for cutting-edge ideas, trends, and individuals) and more-structured approaches for scanning (like Rockefeller Foundation’s Searchlight Partners program, which provided additional funding to a group of the Foundation’s existing grantees who reported back from the front lines about the latest trends and opportunities they were seeing). The WorldView Program of the Global Business Network provides another example; it actually built a portion of its business model around offering companies access to its network of “remarkable people”—leading experts from domains ranging from genetics to urban planning—who helped participants identify and anticipate emerging trends and problems.
- Deliberate use of networks can be one of the fastest and most productive ways to find high-quality new ideas on an ongoing basis.
- Establishing and maintaining regular communications to tap the perspectives and on-the-ground knowledge of a well-cultivated network can dramatically extend a foundation’s reach and field of view across disciplines, sectors, and geographies, and help test existing assumptions.
- The connections built within a network can also have a range of ancillary benefits: creating new relationships, facilitating learning and cross-fertilization across the group, and re-framing conversations within the field.
- Networks can also easily shift roles over time, helping a funder not only to find new ideas, but also to enable and support the ideas as they develop.
- Building and maintaining networks can take considerable time and work, and there is no guarantee that even the best network will actually produce new ideas. (As Diana Scearce of the David and Lucile Packard Foundation told us once, “Networks take a lot of care and feeding.”)
- Cultivating connections often requires that staff spend significant effort and expense out in the world and actively listening—meeting with experts, attending conferences, soliciting and investigating new ideas. What’s more, these activities are often classified as an administrative expense, and may not easily be counted against a foundation’s charitable grantmaking budget.
- It’s often difficult to decide who should be included in a network. Setting boundaries of who is “in” and “out” can create concerns about whether the network’s membership practices are fair and representative.
- Creating a network doesn’t necessarily guarantee participation. Even within an established network, it can be a significant challenge to design incentives that will encourage individuals to openly contribute what they are seeing and learning to the group.
The bottom line:
Building and maintaining diverse networks, and tapping them to surface new ideas and opportunities, requires a significant investment of time and effort, but can be one of the most productive ways of continuously sourcing new ideas, while also building connections and support in the field.
PARTNERSHIPS WITH INCUBATORS, ACCELERATORS, AND VENTURE CAPITAL INVESTORS
In addition to creating their own networks for scouting, some funders have begun to tap into the system that exists for supporting startup businesses to identify early-stage projects with the potential to create social benefit. These funders are developing relationships with venture capital firms, incubators (which provide longer-term assistance to build out early stage ideas), and accelerators (which provide time-limited support for more market-ready enterprises) to create a natural pipeline of potential investments.
The California Healthcare Foundation’s Health (CHCF) Innovation Fund, for example, has developed an advisory committee made up of venture capitalists who help the fund scout out and evaluate promising ideas. CHCF also supports programs at accelerators and incubators—such as Blueprint Health, Healthbox, New York Digital Health Accelerator, Rock Health, StartUp Health, and StartX Med—aimed at helping early-stage health entrepreneurs and companies.
Additionally, Y-Combinator and the Halcyon Incubator, along with a number of other incubators and accelerators, have begun to target nonprofits and social enterprises, which may also create additional opportunities to collaborate with philanthropic funders.
- These types of institutional relationships can leverage the existing networks of VCs, incubators, and accelerators to create ongoing deal flow that taps into a broad range of ideas that philanthropic institutions normally have difficulty accessing.
- Helping VCs, incubators, and accelerators better understand what philanthropic funders are looking for can improve these groups’ ability to make referrals and direct social entrepreneurs in appropriate ways.
- The existing for-profit infrastructure can provide important supports for the growth and development of early stage ideas. It also allows social-benefit startups to build valuable connections with peers, mentors, and sources of technical expertise.
- The missions and goals of for-profit partners may not mesh easily with those of philanthropic funders, and many of the organizations within a venture capital, incubator, or accelerator pipeline may not be well-aligned with a philanthropic entity’s social goals. So some funders and social enterprises may find these relationships extremely productive, but for others, the partnerships may be less viable.
- Because these kinds of institutional relationships are new, there aren’t clear processes and systems in place, so structuring the partnerships can be challenging. It may take some trial and error to build the right ones.
The bottom line:
For funders interested in social enterprises and market-based solutions, partnerships with incubators, accelerators, and venture capital firms can create a ready-made pipeline of potential innovations, although funders will need to carefully manage the relationships to ensure good alignment between their goals and those of their partners.
SOCIAL INNOVATION LABS AND CONVENINGS
Bringing people together for the explicit purpose of generating new ideas and engaging in collaborative problem-solving is another approach worth considering. Unlike the other methods discussed so far, labs and convenings can help create new solutions, rather than just finding existing ones. Convenings and social innovation labs focus on a specific issue and use short, accelerated processes to bring together diverse stakeholders, develop a systems view, challenge existing assumptions, reframe thinking, co-create new ideas, and test potential solutions.
For example, in response to the rapid decline of statehouse journalism and transparency in the United States, the Laura and John Arnold Foundation convened a small working group of participants—including foundations, technology startups, nonprofit news outlets, and academic experts—to try to identify outside-the-box solutions that may improve government accountability. The gathering helped participants develop new relationships, exchange ideas, and explore potential solutions, all informed by the broader range of perspectives in the room.
Social innovation labs can bring people together at designed sites to brainstorm social solutions to problems that are particularly difficult to address. The Sustainable Food Laboratory, for example, brings together global leaders across sectors to address issues related to global food systems. And the MaRS Solutions Lab brings people together to understand pressing social and economic challenges and to develop, prototype, and scale potential new solutions (for example, the Future of Health and the Future of Work and Learning).
- Social innovation labs and convenings create a protected space that can break down traditional barriers, bring together diverse stakeholders to think creatively, build collective understanding, and generate and test new approaches.
- Labs and convenings are typically time-limited, and can be relatively contained investments, pulling people together explicitly to try to find a breakthrough, rather than requiring ongoing investment over a long period of time.
- The efforts provide for the rapid exchange of ideas, allow disparate perspectives to build off of one another in real time, help participants gain new skills and processes to help them implement potential solutions, and help build the networks and relationships required to sustain activity over time.
- Labs and convenings require a great deal of facilitation, expertise, and effort to execute well, and it can be difficult to get the right people in the room for the amount of time necessary to make the desired progress.
- Promising conversations can sometimes stall after initial convenings end. Organizers should plan ahead to set expectations appropriately and to ensure effective follow up.
- Even with all of the right processes and people in place, the reality is that developing new, breakthrough ideas “on demand” may not always occur.
The bottom line:
Social innovation labs and convenings require real expertise to do well, and can place a great deal of pressure on individual events and in-the-moment collaboration, but they can be an extremely efficient way to bring new perspectives and creative thinking to “stuck” problems, leveraging collective intelligence and building a network for follow-up over time.
FELLOWSHIPS AND OTHER PEOPLE-BASED STRATEGIES
In addition to identifying breakthrough ideas, a number of philanthropic funders, such as Ashoka, Echoing Green, and the MacArthur Foundation, have chosen to explicitly bet on people, using fellowships, entrepreneur-in-residence programs, and other strategies to provide flexible support for individuals who show particular creativity and promise. Fellowship programs, for example, allow funders to provide short-term opportunities and assistance for emerging leaders and innovators to develop their own new ideas and projects, while entrepreneur-in-residence programs bring in outside experts to work as a sort of internal consultant to an organization in order to seed and develop new ideas and projects within the group. Meanwhile, other funders, including the Skoll Foundation and the Draper Richards Kaplan Foundation, very deliberately bet on innovative social entrepreneurs and invest heavily in supporting their success.
- Fellowships and entrepreneurs-in-residence give talented innovators the flexible capital and freedom to experiment and explore, and to shift their ideas over time as they learn—a critical element for innovation processes.
- The iterative nature of these approaches means that rotating classes of fellows or entrepreneurs can serve as a constant source of new energy and ideas.
- Investing in emerging individuals means that a single investment can yield multiple new ideas and innovations over time.
- If done right, fellowship approaches can intentionally shape leadership in a field for years by facilitating cross-fertilization of ideas and building collaborative alumni networks.
- Deciding on the right process for finding and selecting fellows can be difficult, as past success doesn’t necessarily guarantee that an individual will be able to develop new breakthrough ideas in the future.
- People-based strategies typically require that funders give up a degree of control, leaving choices in the hands of the individual recipients. Even when a fellow’s ideas bear fruit, they may not fit neatly into a foundation’s pre-determined strategy or program area.
The bottom line:
Betting on talented individuals and providing them with resources and flexibility has long been a core approach to supporting innovation across sectors. For funders with the systems in place to find and support these individuals, and the patience and openness to see how their ideas develop and grow, this strategy can serve as a powerful method for creating new solutions.
DON’T FORGET YOUR EXISTING GRANTEES
Even as funders explore different sourcing approaches, it’s important not to overlook the innovative ideas that can come from existing grantees. Grantees often have relationships, expertise, and track records of success that make them good bets for developing new ideas as well, if given the opportunity. However, sourcing innovation from existing grantees can require that both the funder and the recipient operate differently than they normally do.
Funders can help existing grantees innovate in a number of ways: by providing flexible, less-restricted “risk capital” that allows grantees to try new things; by explicitly engaging grantees in surfacing, designing, and testing new ideas; and by giving grantees the flexibility to learn, iterate, and pivot when exploring new approaches.
Not all existing grantees will be the right partners though. Some organizations may be reluctant to deviate from more proven strategies, may struggle to allocate appropriate time and attention to innovation, or may find it difficult to incorporate new ideas into more established cultures, structures, and processes. To counter inertial forces, grantees often need to develop deliberate strategies for innovation, taking care to think though how those approaches fit within their organization.
MAKING SENSE OF YOUR SOURCING OPTIONS
The list of methods that philanthropic funders can use to source innovation that we’ve shared here is by no means comprehensive. We’ve heard of a number of other ways of finding ideas, such as “combing” social media to understand different viewpoints, using big data to find emerging trends, or working with crowdfunding platforms to surface emerging ideas. And it’s important to recognize that the approaches described here are not mutually exclusive; we’ve seen funders using several of these strategies at the same time.
It’s still too early to understand which approaches will work best in which situations. Certainly none of the strategies detailed here can ever guarantee a funder that they will successfully surface transformative ideas. But we know that if funders keep searching for projects the same ways they always do, they are likely to continue to find the same types of solutions they always have. For some organizations and some types of social and environmental problems, that’s just fine. For others though, it’s important to reach beyond the usual suspects to inject fresh thinking and ideas into philanthropic portfolios.
Exploring these different sourcing approaches may be a good way to start. Because finding breakthrough solutions isn’t just a matter of waiting for lightning to strike, it’s about having a deliberate strategy for discovering new ideas in a systematic way.