Feedback Welcomed…
A reoccurring theme in social innovation and non-profit conversations is effectiveness. With the announcement of the United States Social Innovation Fund, and the current economic downturn, non-profit executives, entrepreneurs, and social advocates have been reinforcing the importance of fulfilling social missions effectively.
Like many other industries, the social sector has had to cope with cuts in funding. One of the methods of doing so has been only focusing on services in which an organization effectively serves its consumers. Everyone including the President of the United States is in agreeance that it is not a good strategy for agencies to continue to dedicate funding and time to areas with inadequate performance and ineffective services. Therefore, many experts believe social agencies should direct their consumers to other agencies that can help them in the areas in for which their resources cannot effectively contribute.
Also at this point, firms with social missions are being discouraged from expanding away from their core mission. It is important for non-profits to focus their resources on finding smarter ways to serve the needs of their clients which fall under their mission statement. Efficiency on the operations level of an organziaton can lead to a more effective product for the consumer. It does not reflect well on an organization’s management when available resources are not being allocated to improving a firm’s current services.
Effective service is essential to any organization with a social mission. If an organization is not serving its clientele effectively, it is not fulfilling its mission at all. The goal has to be to isolate the effective areas of the organization and discontinue the inadequate areas.
Innovation
Earlier this summer, the Social Innovation Fund was authorized through the Edward M. Kennedy Serve America Act. The Obama Administration proposed the fund to identify successful non-profit organizations in the country and help those organizations expand their reach. The administration admits that many of the social issues in the United State are being tackled by nongovernment ran organizations. The plan is to target those organizations and recognize what methods are helping them achieve success. The fund will provide some 50 million in finances for growth capital and research. The administration plans to conduct further evaluation by singling out the top solutions for social issues and setting benchmarks for those agencies that may receive government funding.
There are several initiatives being forwarded by proponents of social innovation to shift the responsibility of our social welfare out of the government’s hands and into that of the entrepreneurs. Americans for Community Development is an organization dedicated to working with our nation’s legislators to get the L3C legislation enacted. The L3C is a new form of the limited liability company tailored for low-profit firms whose primary goal is to carry out a social mission, not to earn money. This hybrid firm will use innovative business techniques to fulfill charitable purposes. Such firms will have the flexibility, ease of organization, and simplified taxation of normal LLCs with the liability protection and ease of transferability ownership of corporation. An L3C as an entity would be exempt from federal taxes and its income and expenses would be reported on the returns of the L3C members for tax collection. The investments of the firm would not be tax deductible. This structure is designed to help socially-minded businesses with high risk and low return that struggle to raise capital.
The first among our 50 states to set up an office dedicated to social entrepreneurship is none other than my native, Louisiana. Lieutenant Governor Mitch Landrieu established the Louisiana Office of Social Entrepreneurship back in the fall of 2006. The mission of this organization is to further social innovation in the public and private sectors of Louisiana and to encourage volunteerism amongst the citizens of Louisiana. With Louisiana being the source of so many major social issues there could not be a better place to initiate such a program. The office is more of an educational and informational source at this stage as the organization conducts seminars on business plan writing, grant writing, etc.
Stay tuned for part two…The Evidence
