I would firstly submit that considering the $50 million as seed money for new non-profits is a mischaracterization of the fund’s mission. It is my belief that the President is committed to taking seriously the notion of for-profit social change business models. In speaking with funders of new for-profit and hybrid social ventures (using funds like Presumed Abundance to invest in for-profit businesses dedicated to social good), a rising belief within the social entrepreneurship community is that this funding amounts to a Presidential endorsement of a serious examination of for-profit, social good business models. The recent passage of Benefit Corporation legal status in Maryland points to the rising movement for creating business models to reflect the changing landscape for social innovators. As B Corp says on their website, “2 [states] down, 48 to go.”

We are embarking on something new here, a re-conception of the way we share goods and services. It is my firm belief that we are moving away from traditional capitalism’s focus on pure profit, and are steadily heading in the direction of business, and capitalism, as the newest mechanism for creating social change. Some define it as triple bottom line business (people, planet, profit) others call sustainable economics, and still others call it social capitalism.

In sum, there is a movement afoot. The energy is in the air, yes, but it is an energy grounded in action. The social enterprise movement is growing like never before, and is unwaveringly committed to ushering in a robust for-profit social change movement that not only competes with the best for-profit businesses, it seeks to transcend them.

This $50 million fund serves as the White House’s message to the for-profit social change community that the President is committed to seeing this paradigm shift through, giving it every opportunity to take hold throughout our country.

Sincerely,

Auren Kaplan
Director of Social Media, Hub LA
Ambassador, Urban Social Entrepreneurs
LA Board Member, StartingBloc

Hope you enjoy it
http://thirdsectornetwork.org/2010/06/16/social-innovation-fund-why-i-cant-get-excited-yet/

But, I believe that the White House has made efforts to reach beyond the “social entrepreneur” movement represented as you say by New Profit and Echoing Green. Sonal Shah, Michele Jolin and their team have sought input from across the country including local efforts.

Also, the organizations targeted by the Social Innovation Fund won’t necessarily all be “fairly safe” bets. During a recent SIF-related address Michelle Obama called out Maurice Miller and the Family Independence Initiative. FII is not a large organization—it has reached about 100 families over the last six years and is now moving to a fourth city, Boston, for another pilot. FII challenges many of the assumptions that traditional providers make when working with low-income families, and for that it has received push back from other providers as well as funders. Miller’s is the type of innovation the fund could really help grow.

In our new book The Power of Social Innovation (www.powerofsocialinnovation.com), we suggest executive leadership, e.g. a nod from the bully pulpit like the First Lady’s, can be as effective as new dollars in driving social innovation—in terms of individual models like FII and in changing the norms around how philanthropy and government fund them. For that reason, the relatively small size of the fund does not make it inconsequential.

Independent of it size, the Social Innovation Fund doesn’t have to be about getting philanthropy to give more, as you suggest, but rather to give in a new way. More funding does not necessarily equate to more innovation. The ‘how much’ isn’t necessarily as important as the ‘how’ in this case.

One more point of agreement. You mention that one donor offered to contribute $10 million in order to gain access to people in the WH. I think this is a great example of how social problem solving, which tends to be a web of nonprofit, philanthropic, business, individual, and government efforts, is inherently political in nature. Over time, organizations seek to sustain themselves rather than fulfill a mission. Incumbent providers oppose change in order to protect their interests. Despite all the goodwill, our social problem solving systems evolve to where being politically connected and savvy becomes the path to future funding, not achieving effective outcomes. Grassroots, advocacy and watchdog groups can help create the public awareness and demand and political will to overcome opposition from status quo providers and to transform these systems. Maybe, as you suggest, those looking to encourage more social innovation should also look to support those types of nonprofits too.