Review of the New Social-Innovation Fund

In July, the Chronicle of Philanthropy simultaneously applauded and questioned President Obama’s Social-Innovation Fund (SIF), a $50 million allocation for promotion of social innovation.  The main issue debated at the time was implementation, with concern being expressed about how the fund would determine the “best” charities to support.

An article published by OMB Watch last week reiterates that concern by questioning whether the SIF’s resources (now reduced to $35 million) will reach the right target organizations.  Only 10% of the funds are slated to go directly to community organizations who will have to match contributions dollar for dollar.  The rest of the funding will be channeled through larger foundations down to community organizations.

 The matching requirement may prove a major obstacle for community organizations.  Rick Cohen, of BlueAvocado, wrote that "unless they’re already in the embrace of well-connected foundations and their initiatives, community nonprofits – at the heart of social innovation – are unlikely to find themselves winners in the foundation-dominated Social Innovation Fund."

Foundations, on the other hand, stand to benefit tremendously from the SIF. OMB Watch indicates that 85% of SIF resources will be disbursed in grants sized between $1 million and $5 million to 'grant making institutions.' The foundations will have to match the grant funds before they re-grant them but this requirement is unlikely to be an obstacle for large foundations.

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