Can government funding kill nonprofit innovation?

This little light of mine, (the Edward M. Kennedy Serve America Act) gonna let it shine...

Writing in The Wall Street Journal, Howard Husock -- the Manhattan Institute's Vice President, Policy Research and the Director of that organization's Social Entrepreneurship Initiative -- recently wrote:

"This week, the president signed into law the Edward M. Kennedy Serve America Act, which authorizes a huge expansion of the Americorps program, potentially tripling the number of its government-paid "volunteers." The legislation -- which also promises federal funds for "effective solutions developed by social entrepreneurs" -- was heralded as a victory for patriotism and public service...But is it truly good news? Those who cherish the independence of American philanthropy and the nonprofits it supports actually have reason for worry."

He then goes on to conclude::

"Sadly, social entrepreneurs -- who have often started organizations to help us cope with the failure of government programs -- may well be tempted by the big money. But that won't be the best way to serve America."

The crux of his argument is this:

"The Kennedy Act threatens to thwart this creative movement. It will throw so much money at nascent programs that these otherwise independent efforts will lurch after federal dollars and bend toward government directives."

Frankly, I find this idea a bit preposterous. In what other sector would an infusion of capital serve as a barrier to innovation? Yes, there might be some waste -- look at the money that was squandered on funding ridiculous start-ups during the Internet boom of the 90s. However, didn't the flood of angel investors throwing money into dot-coms result in some remarkable breakthroughs in innovation?

Similarly, don't both political parties agree that the government's investment in green technology will drive innovation in the energy economy? Why are we not concerned about the way that these funds will make scientists "bend toward government directives"?

Why is it that we think that nonprofits would not similarly respond with creativity and innovation to this sudden influx of both financial and human capital?

Yes, there will be waste and "money chsing"... just as in any other sector. Let us remember that nonprofits might be charitable in purpose, but they are still businesses: no margin, no mission.

I do not see the Edward M. Kennedy Serve America Act inhibiting innovation. Rather, I think it has the potential to spark an amazing new wave of volunteerism and engaged philanthropy that might not otherwise exist.

What do you think?

Read the article here:
Eating From the Hand That Bites You - WSJ.com

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Podcasts - The Business of Innovation

Innovation makes the world go 'round?

My friend Erik Spurlock referred me to CNBC's series on The Business of Innovation, which is available in podcast here:

Here are Erik's insightful comments, which might make you interested in taking the next step and listening to the podcast:

I watched CNBC's The Business of Innovation. It was an excellent series. Here are the highlights of the panel's 2009 innovation challenges:

1. Challenges with personnel. Innovation is everyone’s job. The message of innovation needs to be apart of everyone's pursuit.
2. Collaboration. Finding the right partners to be apart of your innovation. Getting competitive advantage and mind share from those partners.
3. Leadership – Classic challenge. Making the hard decisions. Making the decisions to take on the right types on innovation. Taking innovation to scale.
4. Learn how to fail fast, listen to customers, Convert lessons into real value for your customers. Learning Curve on your side, not a hindrance.

The episodes' themes:

• The Human Element - All about the importance of people
  
• Innovate or Die - Stay relevant. Listen to your customers Avoid complacency
  
• Redefining Innovation - Enhancing customer experiences, using technology to innovate a customers experience
  
• The Responsibility Revolution - Exploring green business practices as innovation
  
• The Executive Plan - Working innovative strategies that drive business

I hope that you enjoyed the material as much as I did.

Erik ended his email to our group with this important question... which I now pose to you:

"As tactical, strategical and operational managers at your companies, how are you driving innovation?"

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