Wednesday, November 11, 2009

An Example of Social Risk Capital in Action?

When we teach about nonprofit organizations, most of us have a conversation early in the semester about why the U.S. has such a large and tax favored third sector. One of the primary justifications has to do with social risk capital: we need a sector where small groups with innovative ideas for benefiting society can incubate their projects.  If the ideas are good and the projects work, and if the majority approves, government might intervene and apply them nationally.  When I have this discussion with my students, I use City Year as an example.  It was launched in Boston by two of my college classmates (one of whom, Alan Khazei, is a candidate for Teddy Kennedy's Senate seat in Massachusetts) as a sort of urban Peace Corps.  It was wildly successful, spread across the country, and became one of the models for Americorps.

A recent article in the New York Times reports on a contemporary nonprofit project that history may or may not judge as an important social innovation: One Laptop Per Child, a U.S. nonprofit that promises to revolutionize global education by putting cheap, functional laptop computers in the hands of children in poor countries around the world.  The Times article chronicles OLPC's successes and failures and concludes, more or less, that it is too early to judge.  Thus far, it has distributed laptops to a million children in 31 countries at approximately $200 per -- obviously a significant accomplishment, but far less than its founders had promised.

I imagine we'll know within the next few years whether OLPC can be used, along with City Year, to illustrate the social risk capital justification for our nonprofit sector.


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