Remarks by Paul Carttar at the Social Impact Exchange s Conference on Scaling Impact June 14, 2012

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1 Remarks by Paul Carttar at the Social Impact Exchange s Conference on Scaling Impact June 14, 2012 Background The following remarks were given by Paul Carttar, Director of the Social Innovation Fund, at the 2012 Conference on Scaling Impact hosted by the Social Impact Exchange. The Social Innovation Fund is a powerful approach to transforming lives and communities that positions the federal government to be a catalyst for bigger, broader, and faster impact mobilizing public and private resources to find and grow community-based nonprofits with evidence of strong results. The Conference on Scaling Impact is an event at which the Social Impact Exchange community of funders, social investors, philanthropists, and advisors share knowledge, learn about innovative co-funding opportunities and develop a marketplace to help scale topperforming initiatives and build the field of scaling social impact. Remarks First, let me share some quick snapshots of our work: In New York City, recently-released offenders eager to build productive lives have a place to turn where they can get immediate transitional jobs plus skills training, coaching and job placement support a combination proven to reduce the chances of their returning to prison;. In Connecticut, chronically homeless, frequent users of emergency care are getting into permanent housing and receiving vital health services that improve their quality of life and save the state thousands of dollars per person each year; In Los Angeles, young people engaged in foster care or the juvenile justice system have access to an integrated program of services that has been shown to reduce gang involvement and improve academic performance. These are precisely the kinds of efforts President Obama had in mind when he stated in 2009: The bottom line is clear: solutions to America s challenges are being developed every day at the grass roots and government shouldn t be supplanting those efforts, it should be supporting those efforts. Instead of wasting taxpayer money on programs that are obsolete or ineffective, government should be seeking out creative, results-oriented programs and helping them replicate their efforts across America.

2 In this remarkable statement, the President was making two critical points. First, he was endorsing a simple but powerful theory of social change that acknowledges the unique contribution of nonprofits like the ones noted above the Center for Employment Opportunity, the Integrated Healthcare and Housing Neighborhoods Program, and the Children s Institute and that sees their potential to create enormous impact for our society. This theory of change recognizes that great programs are already achieving strong results and that growing them to reach more people in need is a more effective strategy than trying to invent new ivory-tower solutions. Second, recognizing that even the most worthy of these organizations do not achieve desired scale on their own, he was asserting that there is a clear, focused, and value-added role for government in this growth process. In essence, the purpose of the Social Innovation Fund is to test this dual proposition: that immense value can be created by growing solutions that work, and that the government can be an effective catalyst for this growth. It is a program that aims to create transformative impact for people and communities not by creating another government bureaucracy that displaces community-based private efforts, but by leveraging a modest public investment and the most critical capabilities of the federal government. The SIF mobilizes additional public and private resources to find and grow innovative community-based nonprofits that have evidence of compelling impact. And how do we do this? As you know, our work begins with an innovative, two-stage grant program with four distinctive elements, that: Relies on the expertise of existing grantmakers to select and support promising nonprofits, Requires up to a 3:1 match in private and other non-federal funds to build committed local support and more sustainable financial models, Requires rigorous evaluation to drive performance and build evidence of what works, and Emphasizes systematic generation, capture and sharing of knowledge to improve performance and build value for other federal agencies and the broader nonprofit sector. Why should you care? Because, backed by the support of Congress and the Administration, we have an extraordinary opportunity to leverage the distinctive strengths of the federal government to make a substantive contribution to our society. At one level, through our direct grant activities, we have the potential to demonstrate a better approach

3 to federal grantmaking. In this approach, a limited amount of funds are thoughtfully and effectively deployed to drive improvements in the lives of hundreds of thousands of people living in low-income communities across the US, while also helping to strengthen rather than supplant existing sector infrastructure. However, as important as that is, it s not enough. All of us involved with the SIF, including the President himself, aspire to more. Indeed, our ultimate goal is to leverage the grant program to help foster the creation of an environment in which any organization with evidence of superior impact can gain access to the capital and support required to realize its full potential to help people in need. The key to achieving this is to encourage and enable funders especially those who work at large-scale, such as the federal government and endowed foundations to allocate funds primarily based on evidence of impact. To be clear, the essential focus of the SIF, and its ultimate promise, is not to draw more federal money to the nonprofit sector a completely unrealistic objective in these times. Rather, it is to demonstrate how both public and private money can be spent better. Ultimately this will lead to a day when: Individuals in need can gain access to the best programs available, no matter in which community they live, Communities can begin to get the upper hand on their most intractable social challenges, and We, as a society, can get the strongest possible return on the investment we make in addressing social problems. That is a tall order so how are we doing? We are now two full years into this grand experiment, and I d like to share some facts about our accomplishments to date: After two rounds of rigorous open competitions, we have awarded $95 million to 16 outstanding grantmaking intermediaries innovative, aspirational, leading-edge organizations like New Profit Inc., the Edna McConnell Clark Foundation, REDF, Venture Philanthropy Partners, Local Initiatives Support Corporation, the Corporation for Supportive Housing, the Mayor s Fund to Advance New York City and their partner the Center for Employment Opportunity, and the United Way of Greater Cincinnati - Strive Partnership; They, in turn, have competitively selected nearly 200 nonprofits that serve people in more than 150 communities in 35 states and that offer programs and models that are worthy of investment and growth; These organizations have committed to raise an additional $250 million from private and other non-federal sources, the majority of which has already

4 been raised through more than 150 philanthropic partnerships with funders at the local, regional and national levels; and Most importantly, they are on track to serve more than 100,000 additional people in need with their SIF funding in their first year of operations alone. While the grant program has been our primary focus, we are also building the foundation for broader, sectoral impact. We have built a web-based platform to capture and share practices and insights within the portfolio. We are implementing more than 70 discrete rigorous evaluations of these models that will gene rate invaluable insights on what approaches actually work best and how these models can be improved. We have launched major long-term Knowledge Initiatives focused on three key areas subgrantee selection, evaluation and scaling where we believe the SIF has unique potential to advance our collective understanding of how to most efficiently and effectively to grow what works. In addition, we are actively participating in activities within the government to ensure that other federal agencies have the ability to understand and implement competitive grantmaking practices that emphasize evidence of impact. This is a good start, but daunting challenges lie ahead. Our current focus is on four imperatives: First, to continue to expand the number of highly-qualified intermediaries with ambitious programs for impact, and we are now well into third new grant competition, Second, to relentlessly push forward in effectively executing the core grant program, especially supporting our intermediaries in facilitating the growth and evaluation of the outstanding nonprofits they have selected while also trying to avoid the classic pitfalls and complications of federal grant programs, Third, to advance the knowledge initiatives to capture the extraordinary wealth of experience and learning generated by these organizations and foster a more efficient sector and funding marketplace, and Last but not least, to collectively build support among funders and other partners, including the Congress and the philanthropic community, whose collaboration and support is fundamental to our ability to realize the full potential of this extraordinary opportunity. This final point is critical. As a type of collective impact initiative, our success absolutely requires the active engagement of others. And, given the nature and breadth of this effort, there are myriad ways for other parties to contribute to the SIF program itself or to the broader movement. One, certainly, is to become a grantee, subgrantee or collaborating partner in a SIFfunded program. Another is to provide direct support to a SIF program, either at the intermediary or nonprofit level by funding match requirements or otherwise lending

5 skills, connections, and capabilities to facilitate their growth and sustainability. Another not directly connected to the SIF is to help develop the ecosystem that enables high-potential organizations and programs to be identified and supported for growth. A key example of this is the work of the Social Impact Exchange, and especially its SIF registry. Finally, perhaps the most vital way, is to align your own organization s practices with the key principles that define this movement. For nonprofits, that means: Crafting interventions that add distinctive, sustainable value to individuals in need, Rigorously evaluating your work to validate its impact and to drive on-going improvement and innovation, and Actively seeking out opportunities to expand your reach to maximize the impact you are capable of achieving. For foundations and other funders, that means: Embracing evidence of impact as a primary driver of your funding decisions, Investing in increasing the scale and impact of the organizations you fund; and Supporting on-going evaluation of your work and the work of the organizations you fund to increase accountability and contribute to building a stronger evidence base of what works. We truly are at a critical moment in time. Yes, our problems are significant and seem to be growing, while resources are highly constrained. At the same time, we have every reason to be hopeful, because as President Obama acknowledged we actually have many solutions that have been demonstrated to work. And, at the risk of being considered not just hopeful but hopelessly optimistic, it is also quite possible that those funding constraints will actually work to increase pressure on funders of all types, including perhaps even the federal government, to ensure that available resources are allocated in a systematic way, using available evidence, to maximize impact. Our challenge now is to work together to create the conditions to find the best of these nonprofits and grow them to realize their full potential to help people and communities in need and through that process, to help build a society that we can all be proud of. Thank you for your commitment and work to date and thank you in advance for the extraordinary progress we are about to achieve.

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