Yale College alumnus Georgia Levenson Keohane visited SOM’s Social Impact Lab on October 30th to lead a discussion titled "Social Entrepreneurship for the 21st Century: Innovation across the Nonprofit, Private, and Public Sectors,” which is also the title of her new book. Keohane currently serves as a Fellow at the Roosevelt Institute, teaches at Columbia Business School, and writes frequently for several publications including Harvard Business Review, Slate, and Washington Monthly. Her work focuses on economic policy and social entrepreneurship across sectors.
She began her talk by noting that there has been a “sweeping, generational shift in thinking about social enterprise that has led to a Renaissance in the social sphere.” This change was due to both an infusion of private-sector approaches to traditional nonprofit models and a greater degree of collaboration across sectors.
Keohane was fascinated by the recent surge in social sector innovation and pointed out that this innovation does not necessarily mean that the idea is new. Instead, it can be seen an appropriation of a well-established idea that has found new life and created an impact when applied to further the public good. In particular, she highlighted two examples of utilizing established concepts in new ways: prizes and Social Impact Bonds (SIBs).
Keohane noted that competitions for prizes have been around for centuries, but within the last 10 to 15 years, hundreds of millions of dollars in prize money have been made available for companies and individuals who can develop solutions for specific societal problems. She described the three benefits of prizes as “stimulating markets when they fail, providing incentives for rigorously evidence-based successes, and leveraging excitement and more involvement.” She was especially interested in the use of prizes in the public sector, such as Race to the Top education grants and government-wide listings on Challenge.gov.
SIBs were a response to cash-strapped governments’ difficulty in financing projects that could help to address major societal problems. While there is general acceptance that prevention of social ills is less expensive than dealing with those problems after they take root (such as vaccinations instead of hospital treatment), there often is a lack of political will to spend resources now to create savings later. SIBs took the traditional model of municipal bonds and added in specific missions and performance metrics to drive capital towards investments that improve social welfare.
Keohane said that the city of Peterborough in the United Kingdom pioneered this approach to raise funds to combat prisoner recidivism. The city would raise funds to finance programs to address this issue, and if the recidivism rate fell at least 10 percent, investors would realize a return that was paid with the savings from not needing to re-incarcerate former prisoners.
Following a discussion with students, Keohane noted that these are two interesting examples, but are only the beginning. She noted that “they are not a panacea, because some problems don’t lend themselves” to these models. “Nonetheless,” she said, “there are many other experiments in social innovation that are very exciting…The possibilities are endless.”