More Debate on Social Innovation vs. the “Social Services Industrial Complex”

Congratulations to Daniel Stid at the Bridgespan Group for shedding light on a topic that is vitally important to the future of social impact in this country: the power of social services organizations to thwart social innovation.

Daniel and I disagree about whether there is a “Social Services Industrial Complex” with both the desire and ability to block innovation. (See his original Washington Post opinion piece here, and my previous response here). While we might disagree about how much of a problem this is, I think we might agree on a solution (I will let him speak for himself on this). Let me explain.

Let’s start with why this is an important issue. Fundamentally it about the difficulty innovators face when trying to scale proven ideas. The problem with most analyses of this issue, though, is that they are too focused on foundations and private philanthropy.

Private philanthropy is not, and never was, a realistic source of funding for scaling innovation. Its role is to finance new ideas and, if they take hold, help them find the public funding needed to go to scale. Government funding for most social services, after all, amounts to 70-85% or more of all funding. If you want to go to scale, public funding is the way to do it.

Some have highlighted recent trends in federal and state budgets to argue that public funding might not be the answer after all. The real question, however, is not whether there will be sufficient new resources, but whether the resources that already exist can be successfully rerouted to new, higher-impact programs.

This is where Stid’s argument becomes important. If, as he implies, there is a powerful “social services industrial complex” that will thwart such efforts, the possibilities for using public funding to scale high-impact programs look quite grim.

Count me as more optimistic than that – and yes, in part, because I remain convinced that the sector is not that powerful. While it does sometimes act in the ways Stid describes, the sector is mostly a bunch of paper tigers (some quite cuddly). They possess little power to stop good ideas that would genuinely support children, nor do most have any desire to do so.

In his follow up, Stid uses the example of a state health and human services administrator who thought it made sense to move more children out of residential treatment programs (where care is expensive) into community- and home-based programs. According to Stid, “he ran into a buzz saw of opposition from nonprofit defenders of the status quo.” I have no doubt that this is true. But he is assuming that the nonprofit defenders were the reason this state administrator lost his fight.

The truth is that nonprofit residential treatment centers have very little political power. They don’t give out campaign contributions. They can’t get involved in elections. They work with very few children and they cost lots of money. For these reasons,  residential treatment centers are in a lot of trouble. In fact, fewer and fewer children are ending up in residential treatment or foster care these days — far fewer than was the case 10 years ago.

The problem is not that residential treatment centers have too much power. It is that this issue, like many, is not as black and white as it seems. While there is widespread agreement that many children should be diverted from these programs, many others believe that some children need the higher level of care found in quality residential treatment programs, such as children with severe mental and/or physical disabilities. This is a controversial issue that well-meaning people can and do disagree about.

Against this backdrop, the example of a single state official losing one political battle with residential treatment centers says very little about the power of the sector, especially when the trend has been going against these centers for years. What it probably says instead is that this particular fight stumbled over differing views about what was in the best interest of the children.

This is where my conclusion circles back and (possibly) dovetails with Stid’s. While I am not impressed with the supposed raw political power of nonprofit social services organizations, I do think they possess the power to persuade. If social nonprofits hold the high moral ground (an important “if”), they are powerful indeed. Facts and values and policy analysis make an important difference.

If I am right, this paints a far more optimistic picture of the prospects for scaling socially innovative programs. If nonprofits have power when they hold the moral high ground, but have little power when they act like a self-interested interest group, the politics favor the shifting of funds to higher impact programs.

Unfortunately, a lot of this is based on the availability of solid policy analysis and a corresponding amount of advocacy, and those things do not come cheap. They require financial support. And this is something that has been overlooked for too long by too many in the social innovation community.

Simply put: if you want to see more good ideas taken to scale, then you need government funding, and for that you need to fund solid policy analysis and advocacy. This is a role that foundations and/or wealthy high-tech philanthropists need to fill.

Unfortunately, for the most part, they have not. Both seem uninterested — foundations because they have traditionally shied away from it, and high tech philanthropists probably because they made their money in the private sector and seem allergic to government.

For the sake of our children’s future, this needs to change. Foundations and philanthropists need to step forward and fund not just innovation, but advocacy too. Only then will our best ideas be taken to scale.