SIF Debate Generates Transparency, Recommendations for Future

Well, we learned a couple of things about nonprofit funders, grantees, advisors, and critics this week: They are a vocal lot and want to know a lot. Just how vocal can be gleaned from the anthology of blog posts on the subject started by Jeff Raderstrong of Change Charity and expanded by Adin Miller of Adin Miller Consulting.

We also learned that nonprofit activists can make things happen.

Yesterday, in a Twitter debate the discussion continued. It was organized by Matthew Bishop, US Business Editor and New York Bureau Chief of The Economist, and co-author of Philanthrocapitalism: How Giving Can Save the World. When the dust settled, three issues and some recommendations emerged.

Has SIF given enough information?
This seems moot to me now. The controversy about transparency produced good results – more information, a venue to post both winners and non-winners – but now that's been done. The applications and reviewers' comments on winners are online. The questions of integrity have been answered.

But enough already.

Judging by the debate, some people won't be satisfied with any amount of information or aren't aware of the amount of information that is now available. More importantly, continual harping on when did SIF release the information and was it enough runs the risk of overshadowing the great possibilities – innovation, better metrics, new and better social programs – that can come out of SIF.

Why does SIF matter?
Several answers to this seem important:

• It is a test of public/private partnerships.
• The intermediary grantees provide matching funds, so the program leverages the government money.
• It is a paradigm shift in the way government looks at funding.

Not mentioned in the debate but of great importance in my mind is the development of a secondary market. Some applicants who didn't win had terrific ideas, but weren't a perfect fit for the SIF criteria. They may be the perfect fit for other funders.

How do we measure success?
Now this is where the discussion got really interesting! The big take-away is that government and nonprofits need to accept failure. Yep. It is all right to try and fail, as long as we learn from our mistakes.

The consensus in the debate was that at least 60 percent of the intermediaries and their grantees had to be wildly successful. This despite the fact that venture capitalists accept a much higher failure rate – 80 to 90 percent.

But for nonprofits and the people who fund them, success is required every time. Unrealistic. And continuing this fantasy means any failure will call into question the whole idea of SIF and private/public partnerships, even if some are very successful. We need to focus on what works well and learn from what doesn't work.

With taxpayer money involved, that's going to be difficult but for-profit shareholders have gotten used to it (even Google bombs and Apple's phone had that antenna problem). We in the nonprofit sector need to educate people.

Recommendations for the future

• Give the program time! It's only just begun so let's keep an eye on what the intermediaries do, maybe even make suggestions as they go along, but give them time to have their efforts bear fruit.
• The intermediaries should give larger grants to fewer grantees. In other words, don't spread the funds too thin. Of course, the onus is on the grantee to ask for what it really needs to get the job done. 
• Provide incentives for state and local versions of SIF. A variation on this theme is for SIF to fund different approaches for allocating money and see which works best. Of course, that takes us back to accepting failure in some of these models.
• Develop a common language around measurement: What do we mean by impact?

Are there other lessons we should take away from the SIF controversy?