How to combine entrepreneurial innovation and state power to solve major social problems

March 6, 2020, 2:00 PM UTC
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While equal opportunity has been a foundational American value, profound stubborn inequities make it more myth than reality. Consider these facts. Only 3% of children who spend at least half their childhoods in poverty will go on to graduate from college by age 25. About 45% of Americans who spend more than half of their childhoods in poverty are still poor at 35. At the same time, less than 1% of Americans who were never poor as children will be poor at the same age.

Today, where you start largely determines where you will finish economically. But it doesn’t have to be this way.

Across America, social entrepreneurs are marrying social justice goals with data-driven practices to change the equation for people trapped in poverty. We need to combine these efforts with the power and funding of the state to achieve results on a national scale.

Consider Year Up, which provides training and skills-building work experience to young adults who are highly motivated, but lack opportunities to enter the mainstream economy. Nine out of 10 Year Up graduates are employed, enrolled in postsecondary education, or both four months after they complete the program, and their earnings are 53% higher than those in a control group. 

Or College Possible, founded by first-generation college graduate Jim McCorkell to enable low-income students to graduate from college. As a result of the organization’s coaching, 98% of its students are admitted to universities.

Sadly these innovative programs and others like them operate on too small a scale to counter powerful barriers that keep people poor. While many government programs have made important differences in the lives of low-income Americans, too many emphasize compliance over results, offer simplistic solutions to multifaceted problems, and shut effective programs out of funding because they buck business-as-usual practices. 

The good news? In spite of this, some forward-looking policymakers have found ways to partner with social entrepreneurs to tackle specific challenges using new strategies. For example, Social Finance (not to be confused with personal finance company SoFi) works on issues ranging from veterans employment to successful reentry for formerly incarcerated individuals. For example, the nonprofit helped secure financial and counseling support for community college students in Ohio by leveraging a new state-level funding stream tied to improved graduation rates. 

Third Sector Capital has similarly broken new ground helping states and municipalities across the country build a stronger social safety net for Americans facing poverty and other challenges. In California, for example, Third Sector worked with local providers to fund mental health support, while the county committed to make payments to providers if an evaluation found those served are ultimately healthier and make fewer trips to emergency rooms, psychiatric facilities, or jails over a six-year period.

America Forward, a national venture philanthropy organization where I currently serve as a volunteer, invests in breakthrough social entrepreneurs. It has put forward a set of policy strategies that would be game-changers in Washington, state capitals, cities, and counties around the country.

For example, we should be steering top talent to tackle our biggest challenges through government, nonprofits, and cross-sector partnerships. Toward this end, America Forward calls for large-scale national service programs, mid-career programs to enable more skilled professionals to do short-term stints in government, and subsidized college for students who agree to enter government or nonprofit fields experiencing shortages.

Or consider how government dollars would flow if results mattered in funding decisions. America Forward suggests incorporating into every major grant program performance-based payments contingent on achieving measurable outcomes, not complying with rules or counting the number of people served. Improving outdated public data systems and increasing the share of public funding that supports social innovation and evaluation would help, as would special funds or tax credits aimed at supporting nonprofit organizations with proven results.

We also should pilot more promising strategies in struggling communities. While many local initiatives have already been tried, they typically focus on a single strategy, such as economic development, or a single population, such as children and youth, rather than creating the conditions for whole regions to thrive. America Forward proposes a new social innovation zone program to provide funding for governor-designated areas of high and persistent poverty, combined with expert technical assistance and waivers that enable communities to pool federal funding with fewer restrictions. 

The next president and Congress—as well as governors, mayors, and philanthropists—can take America forward by uniting around these lessons and partnering with the social entrepreneurs to improve the odds for low-income Americans.

Shirley Sagawa is a former senior policy adviser at America Forward and a current member of the organization’s advisory board. 

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