Fostering social innovation
In our fifth episode, Gorgi Krevl and Dominik Domnik discuss what it takes to foster innovation that benefits society. We delve into what social innovation is, and what role public policy and specific funding instruments play for the growth of the sector. Gorgi is an assistant professor of sustainability at ESCP Paris. He has conducted a study comparing and assessing approaches from 10 different countries to support social innovation. Dominik works for LMU’s Innovation and Entrepreneurship Center. He has previously worked for a foundation and a family office and set-up his own social business. They discuss the rationale for factoring in the long-term benefits for society when investing into innovative solutions to societal problems, whether you are a policy maker or an investor. We also address jargon and how to bridge cultural differences between the private sector, the public sector, and civil society to jointly promote social innovation.
- Social innovation is the process of developing and bringing into practice solutions for challenges faced by today’s society. This can include a wide array of challenges, ranging from the social to the ecological, that need a systemic approach to be addressed effectively.
- Social innovation is not always rewarded with a competitive edge in capital markets, but there is a huge spectrum in this regard. For example, innovations in green technology may be easier to fund through capital markets than effective solutions to tackle homelessness or integration.
- Given the potential benefits of effectively tackling social challenges at scale, several countries have experimented with policy incentives to channel long-term funding to this type of innovation. This includes building quasi-markets for social service delivery, paying premiums for approaches that demonstrate impact, or providing guarantees to crowd in private investment.
- Gorgi conducted the study “Financing Social Innovation” on behalf of SEND, the German Social Entrepreneurship Network.
- Portugal Social Innovation is a government initiative aimed at stimulating the social investment market in Portugal. It mobilizes around EUR 150 million from the European Social Fund through 4 financing instruments: capacity building for social investment, partnerships for impact, social impact bonds, and the social innovation fund.
- Power Up Scotland develops early stage social businesses through investment, business support and cross-sector partnerships. It has been launched by Big Issue Invest in partnership with the Scottish Government and the University of Edinburgh.
- The Finnish Innovation Fund Sitra received an endowment capital fund of approximately 84 million euros from the Bank of Finland and the Finnish Parliament. Sitra’s work is funded by the returns from its capital. Investments up and running and underway include Social Impact Bonds (SIB), e.g. with a focus on Type 2 diabetes prevention.
About Financing Impact
Financing Impact is a podcast about funding and scaling societal impact. This podcast is brought to you by SciFi, the Societal Impact Financing Initiative at ESMT Berlin. SciFi is supported by the Bill & Melinda Gates Foundation, among others.
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