January 29, 2009 | Read Time: 4 minutes
President Obama appears ready to make a major federal commitment to supporting America’s most innovative charities.
He is said to favor a new White House Office of Social Entrepreneurship and a multi-million-dollar fund to finance new answers to old problems like poverty, disease, and hunger. He is also said to want to create a social-entrepreneurship czar in charge of picking the most effective programs for government to support.
Notwithstanding the discomfort of using the word “czar” in the same breath as “entrepreneurship,” President Obama’s plan raises a host of questions about government’s role in social innovation.
The investment fund could easily become yet another tool to reward the well-known and politically connected, while the new office could become yet another self-perpetuating government bureaucracy that serves itself above all.
The term “social entrepreneurship” is widely used in the nonprofit world to describe audacious social change that sweeps away the old approaches to solving intractable social problems. Like business entrepreneurship, social entrepreneurship often generates a wave of creative destruction that solves problems rather than using the traditional approaches that simply treat them.
There are already many examples of successful social entrepreneurship, suggesting the natural workings of the social market in stimulating innovation without government intervention. Most of those efforts are led by creative, inspired individuals who have put years into building the infrastructure of change, but it is not clear that any of those individuals and organizations would qualify for President Obama’s social-entrepreneurship fund.
In part that is because many of the most imaginative social entrepreneurs do not know they are social entrepreneurs. Some tend to view social entrepreneurship as just the latest fad for raising money from starry-eyed high-tech investors, while others worry that the term itself denigrates the traditional nonprofit organizations that are so important to the social safety net, including ones that are studiously independent of government support.
Perhaps the best-known social entrepreneur is Muhammad Yunus, who shared the 2006 Nobel Peace Prize with the organization he founded, Grameen Bank, in Bangladesh.
But even the big prize winners are completely focused on designing new products and processes for growth. They do not have large advertising budgets, attend invitation-only seminars, or seek national attention. And few have participated in the conversations about President Obama’s plan.
Few social entrepreneurs fit the prevailing image of the lone-wolf inventor who struggles mightily against the odds to create change. Americans have a seemingly inexhaustible appetite for heroes of all kinds, but heroes are not necessary for making change. Heroism is. Successful social entrepreneurship resides in the simple optimism that drives the imagination and hubris needed to develop a new idea and carry it out.
Another reason that some social entrepreneurs aren’t getting involved in debating the Obama plan: Many of them achieve their goals through profit-making ventures and figure they will not be eligible for federal money.
However, changing the status quo often involves close partnerships with business to produce and distribute new products like vaccines and hand-powered laptop computers. It can also involve the search for profit at the bottom of the economic pyramid, as well as efforts to generate revenue through social enterprises.
Mr. Obama could easily be tricked into believing that the only social entrepreneurship worth supporting is the social entrepreneurship already under way. But the real value of starting a new federal effort would be to spark entrepreneurship that has not yet emerged.
He could also be tricked into believing that another czar is the answer. There is no reason to believe that a czar for social innovation will be any more successful than the federal government’s other czars. In fact, a czar could be just the thing to kill social innovation by playing favorites.
President Obama would be well advised instead to examine the history of breakthrough ideas that have reshaped both commerce and society, many of which emerged in spite of federal involvement.
He should set clear guidelines for investment that favor imaginative solutions over repackaged programs that have been tried without success. Moreover, he must avoid creating dependency on federal financing that will weaken future progress.
Even as he celebrates the creativity and perseverance of social entrepreneurs, he should make sure their organizations have the strength to survive and grow once he leaves office or the funds dry up. He should also place a time limit on his new Office of Social Entrepreneurship. Lacking a closing date, it is likely to follow a familiar path to mediocrity or irrelevance. And it may alter the social market by distracting social entrepreneurs from their most important work.
Paul C. Light, professor of public service at New York University, is author of The Search for Social Entrepreneurship (Brookings Institution Press, 2008).
