Giving Compass' Take:

• Vanessa Kirsch and Kim Syman discuss the growth of social entrepreneurship and what we can do to lift up these changemakers.

• The piece discusses "system entrepreneurs" who are creating solutions to address problems within an entire population. How might you incorporate new approaches into your giving?

•  Read about the competitive advantages of social enterprises.

One of the most transformative stories of the last 25 years in America is the growth of the social entrepreneurship movement. Like the tech industry, but with less fanfare, entrepreneurial problem solvers have developed powerful ideas, tools, organizations, and movements that have unlocked opportunity for millions and pointed the way towards solving some of our biggest systemic social problems in the next quarter century. Yet, achieving impact at scale bedevils changemakers.

Because there is no dynamic, efficient capital market -- public or private -- for social innovation, too many approaches that could create systemic change remain sub-scale. Drawing on 20 years of experience working with more than 50 social entrepreneur-led organizations and initiatives, New Profit has developed a perspective on what it will take to create this market. It involves upending some of the conventions that have prevailed in philanthropy for decades.

  1. Make More ‘Build’ Capital Available. Without an adequate supply of build capital, even the most promising approaches can’t get to scaled impact, or even invest in the capabilities to ensure they are delivering the most value to their stakeholders.
  2. Compete Based on Outcomes, Incentivize Innovation. Funding in the social sector currently relies primarily on inputs and outputs rather than on outcomes, which means that demonstrated, research-based effectiveness and efficiency is rarely the driver of decision making that it must be for sustainable change to happen.
  3. Capitalize Diverse Leaders and Organizations. The social sector needs to invest more of all forms of capital (financial, intellectual, social, and political) in diverse leaders and their organizations, which are often closest to the problems we confront and the communities that have the biggest stake in solving them.
  4. Advance System Entrepreneurs. Scaling up individual programs or organizations can’t, by itself, ensure that results get delivered sustainably and at large scale ... A new class of leader, known as a system entrepreneurs, are driving solutions that address a problem for an entire population by re-arranging how a system (e.g. a school district, a healthcare delivery network) operates.

These approaches largely represent the opposite of convention in philanthropy, which we’ve been working for 20 years to upend in many ways. We are under no illusions about the challenges involved in executing against them, but what leaves us optimistic about their potential, both alone and together, is the fact that a relatively simple change in mindset among funders especially could lead to real breakthrough change.

Read the full article about building a dynamic market for social problem solving by Vanessa Kirsch and Kim Syman at Social Innovations Journal.