This piece originally appeared on Stanford PACS.
Innovation in social entrepreneurship is critical to solving the world’s most pressing social problems, such as rising inequality and persistent poverty. The good news is that in recent years, the sector has seen an explosion of innovation, with rigorous methods like human-centered design leading to more testing of pilot projects, the development of solutions that are more responsive to the needs of beneficiaries, and the implementation of better methods of measuring actual impact. Yet as Johanna Mair and Christian Seelos point out in a comprehensive review of non-profit innovation practices, many mistakes are being made. Too many organizations are devoting too much of their scarce time and money to flawed ideas, aren’t abandoning approaches quickly enough that fail to produce results, or, on the flip side, aren’t allowing enough time to test for results and then modify programs to improve them.
Philanthropists can play a critical role in fostering more effective innovation. But many donors are reluctant to play an active part in funding innovation, in part because they consider themselves ill-equipped to evaluate the risks involved and whether they are worth taking. They also aren’t confident that they can identify which organizations are best prepared to manage the process successfully. Additionally, many funders categorize innovation as an overhead expense rather than a program expense, and their policy is not to fund overhead. As a result, donors often default to funding programs that have already proven their impact, leaving minimal financial support for critical research and development.
So how can philanthropists do more to support innovation? Here are some key lessons I have uncovered in my conversations with leading experts in the field: