(Gabriel Kasper and Justin Marcoux are part of the Monitor Institute, a consultancy and think tank focused on philanthropy and social change that operates as part of Deloitte Consulting LLP.*)
As philanthropy has gotten more strategic over the last decade, many foundations have begun to lose their appetite for risk and experimentation. But a small number of funders have begun to intentionally seek out and support high-risk, high-reward innovations with the potential to truly transform our most intractable social challenges.
In our recent article, "The Re-Emerging Art of Funding Innovation," we explore the processes and practices used by these “innovation funders” and look at how funding breakthrough innovation differs from more traditional grantmaking approaches. The article is the cover story for the just-released Spring issue of the Stanford Social Innovation Review and can be found here on their site.
In the article, we share a process for intentionally injecting two interrelated innovation principles — transformation and experimentation — into philanthropic processes and systems in order to bring a greater degree of risk-taking, openness, and flexibility into funders’ work.
Although these approaches often take a different shape within each institution, innovation can typically be introduced at five different stages of the funding process: sourcing, selecting, supporting, measuring, and scaling. The article shares a series of stories illustrating what these activities look like in practice.
While a formal innovation strategy requires thoughtful choices around structures, processes, networks, culture, and many other considerations, there are some simple ways that funders can begin to embed innovation principles in their work. Here are a few steps that a foundation could take to get started:
1. Make deliberate out-of-strategy grants. Dedicate 10 percent of your grantmaking budget to support projects that seem promising but don’t fit neatly into your strategy. Each quarter, hold a meeting to discuss what has been learned from this "out-of-strategy" grantmaking and how it could influence the rest of your work.
2. Ask your grantees. Grant recipients bring a perspective on the field very different from foundation staff's. Solicit ideas from your grantees about emerging ideas and who is doing work that is pushing the envelope.