Innovation Funds

The idea is simple: to find the most effective programs out there and then provide the capital needed to replicate their success in communities around the country that are facing similar challenges. By focusing on high-impact, result-oriented non-profits, we will ensure that government dollars are spent in a way that is effective, accountable and worthy of the public trust.

- First Lady Michelle Obama, May 5, 2009

Background

Our nation is experiencing some of the greatest challenges in a generation, but it is also a time of great opportunity.   President Obama is committed to supporting innovation that will help achieve more transformative change -- as opposed to marginal or incremental progress -- on our social problems. At the same time, we recognize that limited taxpayer dollars need to be directed at efforts that have evidence that they work and are ready to serve more communities in need.  Across the government, the Obama Administration is creating structures and driving resources to create a policy climate that will promote more innovation and better results. 

Progress

Following are the innovation funds that have been created across the Administration:

• $50 million Social Innovation Fund at the Corporation for National and Community Service  included in the FY 2010 enacted budget; and,
• $650 million Investing in Innovation (I3) Fund at the Department of Education  included in the American Recovery and Reinvestment Act (ARRA).

Guiding Principles

These funds will adhere to a set of principles that will define their investments and can provide a frame for funding across the Federal Government.  Specifically, they will:

• Prioritize critical needs of the ultimate beneficiaries or those who serve them; 

• Align investment size with evidence of historic and potential impact and other factors contributing to successful scaling balanced with risk – for example:

  • Large grants to Grow What Works;
  • Medium grants to Validate promising products and practices; and
  • Small grants to build on Early Stage Innovation;

• Utilize selection criteria that emphasize sustained impact at scale:

  • Outcomes – Investments will be made in solutions that produce significant improvement in the priority outcomes (e.g. student achievement) directly or through intermediate variables that have been shown to impact those outcomes (e.g. teachers to student achievement);
  • Evidence – Proposed solutions will have evidence commensurate with the scale of the investment (i.e. large grants requiring the most rigorous evidence to limited evidence for small grants)
  • Learning – Funded projects will be designed to produce learning that addresses key gaps in the knowledge of the field using a methodology (s) rigorous enough to guide future decisions about whether to make future investments in the proposed solution and how to maximize the productivity of those investments.
  • Sustainability – Funded projects must demonstrate financial and political sustainability well beyond the grant period.
  • Scalability – Proposed solutions must be cost effective and scale to serve thousands if not millions of the intended beneficiaries. 

• Leverage private funding to complement government funds or fill critical gaps created by the limitations of government funding; 

• In selecting organizations, create a process that allows for assessment of management teams running programs or organizations; ' 

• As appropriate, support and utilize intermediaries to provide capacity, flexibility and further leverage.