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Primer

This primer is a living document. Collaboration is encouraged.
To contribute please email Geraldine.
For a deeper dive into social innovation and its related elements, visit our Knowledge Hub. Or download the Primer in PDF format.

What is social innovation?

Poverty, homelessness, violence are all examples of social problems that still need dedicated solution-seeking space. Social innovation addresses these challenges by applying new learning and strategies to solve these problems. For social innovations to be successful and have durability, the innovation should have a measurable impact on the broader social, political and economic context that created the problem in the first place.

Social Innovation Generation: Canada

In the context of changing the system dynamics that created the problem in the first place, a social innovation is any initiative (product, process, program, project or platform) that challenges and, over time, contributes to changing the defining routines, resource and authority flows or beliefs of the broader social system in which it is introduced.

Successful social innovations reduce vulnerability and enhance resilience. They have durability, scale and transformative impact.

For an extensive analysis of the process of social innovation, download Frances Westley’s, Making A Difference; Strategies for Scaling Social Innovation for Greater Impact in the “Dive into Scaling” section of sigknowledgehub.com.

What does social innovation look like?

Micro-finance

Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.

More broadly, it is a movement whose object is “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savingsinsurance, and fund transfers.” (Robert Peck Christen, Richard Rosenberg & Veena Jayadeva. Financial institutions with a double-bottom line: implications for the future of microfinance. CGAP Occasional Paper, July 2004, pp. 2-3) Those who promote microfinance generally believe that such access will help poor people out of poverty.

Decades after Muhammed Yunus founded Grameen Bank, a bank that provides credit without any collateral to the poorest of the poor in rural Bangladesh, microfinance institutions (MFIs) serve about 160 million people in developing countries. As of June 30, 2009, BRAC, one of Bangladesh’s largest MFIs, had a loan portfolio of about US$810 million to 194,000 borrowers and member savings of US$953 million from 536,000 savers. (The World Bank, Microfinance at a glance) Still, the majority of people in developing countries are “unbanked”— they have no access to formal financial services.

RDSP – Registered Disability Savings Plan

The Registered Disability Savings Plan (RDSP) is a powerful savings tool similar to a Registered Education Savings Plan, but designed specifically for people living with a disability. The Plan allows those living with a disability financial security well into older age avoiding the poverty trap and enabling independence.

The RDSP directly addresses poverty. It enables people to accumulate financial assets rather than be dependent on government benefits. It provides them with greater choice and control over their lives. In order to accommodate the RDSP as an asset, most provincial and territorial governments have waived their asset limits allowing people to receive government benefits, and they have eliminated claw-back on RDSP expenditures. Further, there are no restrictions on what the funds can be spent on.

The RDSP helps hundreds of thousands of disproportionately poor Canadians living with a disability to lift themselves out of poverty, overcome isolation, and participate more fully in their communities. More

Roots of Empathy

The absence of empathy underlies war, genocide, neglect, racism, abuse and marginalization of all kinds. Without empathy there is insufficient traction for conflict resolution and altruism is not possible. Empathy – the ability to understand how others feel – is at the core of our humanity.

Roots of Empathy’s mission is to build caring, peaceful, and civil societies through the development of empathy in children and adults. Developing empathy is the key to building understanding and breaking cycles of violence. The Roots of Empathy innovation is the discovery that we can do this most effectively with a tiny baby providing experiential learning for children in their classrooms. More

Included below are definitions some organizations are using to describe their work.

The Young Foundation

Our business is social innovation – finding and developing new and better ways of meeting pressing unmet needs.

Study on Social Innovation, A paper by SIX and the Young Foundation for the Bureau of European Policy Advisors

Social innovations are innovations that are both social in their ends and in their means. Specifically, we define social innovations as new ideas (products, services and models) that simultaneously meet social needs (more effectively than alternatives) and create new social relationships or collaborations. In other words they are innovations that are both good for society and enhance society’s capacity to act. (The Social Innovation eXchange (SIX) and the Young Foundation for the Bureau of European Policy Advisors. (2010). Study on Social Innovation Report, p. 17- 18.)

Stanford Social Innovation Review

A novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals. A social innovation can be a product, production process, or technology (much like innovation in general), but it can also be a principle, an idea, a piece of legislation, a social movement, an intervention, or some combination of them. Indeed, many of the best recognized social innovations, such as microfinance, are combinations of a number of these elements.

Centre for Social Innovation: Toronto

Social innovation refers to the creation, development, adoption, and integration of new concepts and practices that put people and the planet first. Social Innovations resolve existing social, cultural, economic, and environmental challenges. Some social innovations are systems-changing – they permanently alter the perceptions, behaviours, and structures that previously gave rise to these challenges. A social innovation is an idea that works for the public good.

Réseau québécois en innovation sociale

Social innovation refers to new ideas, strategies or interventions; new services, products or laws; new types of organizations that meet specific social needs in more effective and sustainable ways than before; solutions that have been championed within institutions, organizations or communities, producing measurable results for everyone, not just select individuals. The scope of social innovation is transformative and systemic. Inherently creative, it breaks away from what came before.

Wikipedia

Social innovation refers to new strategies, concepts, ideas and organizations that meet social needs of all kinds – from working conditions and education to community development and health – and that extend and strengthen civil society.

British Council

Social Innovation refers to new ideas that work in meeting social goals.
Social innovation is to meet unmet social needs through the development of new products, services and organisations.

USC Stevens Institute for Innovation

Often, people mistake “innovation” for being synonymous with “technology.” Innovation goes beyond science and engineering – it’s the process of translating new ideas into tangible societal impact. Just as importantly, most agree that innovation is critical to economic competitiveness, as well as to the well-being and improved quality of life for people worldwide. In this way, the nonprofits participating have shown tremendous creativity and pragmatism to affect societal change. (Krisztina “Z” Holly, USC Vice Provost for Innovation and Executive Director)

Public Innovators

Social innovation is defined here as the practice of responding to market failures with transformative and financially sustainable innovations aimed at solving social problems. These three essential components – 1) response to market failures; 2) transformative innovation; and 3) financial sustainability – are discussed in more detail here.

See also Social Innovation Notes for further definitions

What is the adaptive cycle?

This model of innovation can be represented in the four-box cycle below. This is known as the “adaptive cycle,” and it provides a way to understand the dynamics that drive both continuity and change. It could represent the evolution of a single innovation from idea to maturity, or the organization that designs and delivers that innovation.

It is important to the idea of resilience – that capacity to adapt to shocks and changes, while preserving sufficient coherence to maintain identity – that the four phases are not represented as linear but rather as an infinity loop. Once an idea or organization reaches the maturity (conservation) stage, it needs to release resources for novelty or change and re-engage in exploration in order to retain its resilience. The release and reorganization phase is often termed the “back loop,” where non-routine change is introduced. The exploitation and conservation phases are often termed the “front loop,” where change is slow, incremental, and more deliberate.

Adaptive Cycle

The Adaptive Cycle: a theory of the relationship of transformation to resilience in complex systems.

Source: Peterson, G. (2009) Ten Conclusions from the Resilience Project. The Resilience Alliance

What is resilience?

From a social innovation perspective resilience is, like sustainability, linked to the capacity to balance a healthy environment with a vibrant economy with social justice. It suggests, however, a focus on a continuously changing balance rather than a stable state. Systems that are better able to introduce novelty (new products, services, ideas etc) are more resilient and in turn better able to withstand and adapt to large shocks.

Suggested links: Resilience Alliance

What is vulnerability?

From a social innovation perspective, vulnerability is a measure of those cultures, social groups and ideas that are disenfranchised from resources and are threatened with extinction. Much of social innovation addresses their re-engagement; reintegrating the poor, the homeless, the mentally ill, and the lonely into a community. Social innovation not only serves vulnerable populations, however, but is also served by them in turn. They represent a key source of diversity that could be lost and are an important resource for social innovation. (Re) engaging vulnerable populations increases the diversity of the whole system.

What is social entrepreneurship?

Social entrepreneurship is the work of a social entrepreneur.

Change-maker organization, Ashoka writes that, “The most effective way to promote positive social change is to invest in social entrepreneurs with innovative solutions that are sustainable and replicable, both nationally and globally.” (Noga Leviner, Leslie R. Crutchfield, & Diana Wells. Understanding the impact of social entrepreneurs: Ashoka’s answer to the challenge of measuring effectiveness, Published in Research on Social Entrepreneurship: Understanding and Contributing to an Emerging Field, edited by Rachel Mosher-Williams, 2007)

Social entrepreneurship is the practice of responding to market failures with transformative and financially sustainable innovations aimed at solving social problems

Who is a social entrepreneur?

A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change. Whereas a business entrepreneur typically measures performance in profit and return, a social entrepreneur assesses success in terms of the impact s/he has on society as well as in profit and return.

While social entrepreneurs often work through nonprofits and citizen groups, many work in the private and governmental sectors

“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.” Bill Drayton, Founder of Ashoka

“Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they’re serving.” (David Bornstein. (2004). How to change the world. Oxford University Press)

Skoll Foundation

Entrepreneurs are essential drivers of innovation and progress. In the business world, they act as engines of growth, harnessing opportunity and innovation to fuel economic advancement. Social entrepreneurs act similarly, tapping inspiration and creativity, courage and fortitude, to seize opportunities that challenge and forever change established, but fundamentally inequitable systems.

Distinct from a business entrepreneur who sees value in the creation of new markets, the social entrepreneur aims for value in the form of transformational change that will benefit disadvantaged communities and, ultimately, society at large. Social entrepreneurs pioneer innovative and systemic approaches for meeting the needs of the marginalized, the disadvantaged and the disenfranchised – populations that lack the financial means or political clout to achieve lasting benefit on their own.

What is intrapreneurship?

Intrapreneurship is known as the practice of a management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques that are more traditionally thought of as being the province of entrepreneurship.

Intrapreneurship refers to employee initiatives in organizations to undertake something new, without being asked to do so. Intrapreneurship is an example of motivation through job design.

Who is an intrapreneur?

A social intrapreneur is
1. Someone who works inside major corporations or organizations to develop and promote practical solutions to social or environmental challenges where progress is currently stalled by market failures.
2. Someone who applies the principles of social entrepreneurship inside a major organization.
3. One characterized by an ‘insider-outsider’ mindset and approach.

(The Skoll Foundation, Allianz, IDEO, & Sustainability (2008, April). The social intrapreneur: A field guide for corporate changemakers. SustainAbility Ltd.)

The intrapreneur focuses on innovation and creativity and transforms a dream or an idea into a profitable/beneficial venture, by operating within the organizational environment. Thus, intrapreneurs are inside entrepreneurs who follow the goal of the organization.

Employees, perhaps engaged in a special project within a larger organization can behave as entrepreneurs, even though they have the resources, capabilities and security of the larger organization to draw upon. Capturing a little of the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc.) adds to the potential of an otherwise static organization without exposing those employees to the risks or accountability normally associated with entrepreneurial failure.

What is social enterprise?

A social enterprise is defined by its purpose: its social and/or environmental outcomes and its mission informs the structure and governance of the enterprise.

Within the definition of social enterprise [email protected] uses 2 distinct categories:

Social enterprise
A social enterprise is a business operation commonly run by a charity or not-for-profit organization. Revenue raised by the business operation is reinvested into the charity or NPO to support the programs and operations of the organization.

In addition to revenue generation, the social enterprise will often engage the services of the clients that their organization is supporting. The skills that the clients develop in sales, business operations and administration are crucial to accessing job opportunities outside the enterprise.

Social enterprise encourages greater resiliency and independence within the non-profit sector by helping organizations to stabilize and diversify their funding base while enhancing their programs or services. 
The result: stronger non-profits and healthier communities. (enp-TO)

Social Business
A social business is a profit-making enterprise that has a positive social and/or environmental impact. A term often used to describe their business model is blended value. The blend is the combination of profit, social and environmental return on investment. The social business model is also often referred to having a double or triple bottom line.

The broad social enterprise space can be seen on a continuum as demonstrated below:

For more information on the social enterprise continuum, see the Social Venture Finance White Paper on the MaRS website

What is a B Corp?

B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk.

B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.

Today, there is a growing community of more than 1,000 Certified B Corps from 33 countries and over 60 industries working together toward 1 unifying goal: to redefine success in business.

Who is the not-for-profit sector?

In Canada:

  1. 170,000 registered Charities and not-for-profit Organizations
  2. The sector represents 8.1% of the GDP
  3. In the latest stats a total of 2 billion hours were volunteered, the equivalent of 1.1 million full time jobs. 47% of Canadians (or over 13 million) aged 15 and over volunteer.
  4. 84% of Canadians aged 15 and over (about 23.8 million Canadians) donated to charitable and nonprofit organizations.

More information about the non-profit sector in Canada can be obtained from the Imagine Canada website.

What is the enabling environment?

The enabling environment is a term used to describe a community or society that allows for programs, services, investment and support cultivating and encouraging social innovation.

On a practical level, this can mean changing policy, creating tax incentives or opening up capital markets to social innovation initiatives.

Who are enablers?

Enablers are networks, organizations, individuals and institutions who have spurred the growth of Canada’s Social Economy.  A thriving social economy that includes for-profit and non-profit blended value enterprises need to work together with government, community programs, academic institutions, and investors to open, operate and scale revenue generating enterprises that provide a social and/or environmental benefit as part of their core operations. (www.socialfinance.ca)

More broadly, enablers are individuals, organizations, academic or philanthropic institutions that enable an idea, enterprise or organization to succeed.

Enable:
1a. To supply with the means, knowledge, or opportunity;
b. To make feasible or possible
2. To give legal power, capacity, or sanction
3. To make operational; activate
(The American Heritage Dictionary, 4th Edition 2000)

Enablers may be referred to as capacity builders or intermediaries. Although the definitions are different, they are often used interchangeably.

Capacity building often refers to assistance provided to develop a certain skill or competence, or for general upgrading of performance ability. Most capacity is built by societies themselves, sometimes in the public, sometimes in the non-governmental and sometimes in the private sector.

Many international organizations, often of the UN-family, have provided capacity building as a part of their programmes of technical cooperation with their member countries. Bilaterally funded entities and private sector consulting firms or non-governmental organizations, (NGOs) have also offered capacity building services.

Capacity Building is, however, not limited to international aid work. More recently, funders are using capacity building to support and/or enable community and industry experimentation on social and environmental problems.

An Intermediary is a third party who facilitates a deal/interaction between two other parties.

What is social finance?

Social finance is a sustainable approach to managing money that delivers social, environmental dividends and economic return through social enterprises operating in the non-profit or public benefit universe, and social purpose businesses in the for-profit universe.

Traditionally, non-profit organizations dominated the social sector and were financed by government grants and philanthropy.  There was no financial return, and the measurement of social return to the community was loose and inconsistent.  Today we are seeing a different approach to social investment, largely led by successful investors with experience in finance, technology, and start-up operations.  They are working at new funds, developing new financial tools, and looking for new kinds of deals.

These investors are interested in both non-profit and for-profit social and environmental enterprises, and have invested in the following business sectors: Affordable Housing, Clean Technology and Green Energy, Community Development, Education, Fair Trade, Health and Home Care, Microfinance, and Sustainable Agriculture.
In an attempt to enhance capital flowing to this sector, the new investor class is developing innovative financing instruments and structures that recognize social, environmental, and financial returns (“blended value investments”).

Since these blended value enterprises (“BVEs”) are rooted in the discipline of operating a sustainable business model, some of the invested capital can be reused.  As a result, the capital available for social investment is considerably enhanced and a cycle of success is created which further drives social and environmental impact.

What is social venture capital?

Social Venture Capital is a form of venture capital investing that provides capital to businesses that are deemed socially and environmentally responsible.  These investments are intended to provide attractive returns for investors and to provide market-based solutions to social and environmental issues.

What are social capital markets?

A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. The capital market includes the stock market (equity securities) and the bond market (debt).

A social capital market is a new concept gathering momentum globally. The social capital market would function in the same way as a traditional capital market, however the capital would be traded and/or invested solely in social enterprise.

What is a Program Related Investment?

Program-related investments (PRIs) are investments made by foundations to support charitable activities that involve the potential return of capital within an established time frame. PRIs include financing methods commonly associated with banks or other private investors, such as loans, loan guarantees, linked deposits, and even equity investments in charitable organizations or in commercial ventures for charitable purposes

In Canada, PRI’s must be implemented under the terms of Canadian charity law and within the requirements of the Income Tax Act.

What is Impact Investing?

According to the Monitor Institute, Impact Investing is actively placing capital in businesses and funds that generate social and/or environmental good and at least a nominal return to the investor.

According to the Global Impact Investing Network (GIIN) impact investments aim to solve social or environmental challenges while generating financial profit. Impact investing includes investments that range from producing a return of principal capital to offering market-rate or even market-beating financial returns.

Although impact investing could be categorized as a type of “socially responsible investing,” it contrasts with negative screening, which focuses primarily on avoiding investments in “bad” or “harmful” companies – impact investors actively seek to place capital in businesses and funds that can harness the positive power of enterprise.

In an article by Forbes Magazine, Jed Emerson described Impact investing as that category of investment, which is viewed as “sustainable,” generating financial returns by integrating consideration of social and environmental factors into the investment strategy. 15

Much has changed in the Impact Investing sphere in just a few years. For an up-to-date analysis of terms and a state of the nation, visit www.impactinvesting.marsdd.com

What is Socially Responsible Investing?

According to SIO, Socially responsible investing is the integration of social responsibility and environmental sustainability with investment.  It includes all the financial decision-making processes that are a part of a prudent investment management approach, but it also includes the selection and management of investments based on issues of sustainability or social responsibility. (Find more here)

What is the Blended Value Proposition?

According to Jed Emerson, The BVP states that instead of operating in terms of non-profit and for-profit constructs or a “double bottom-line,” there is a single, blended value proposition for both for-profit and nonprofit firms, as well as philanthropy and market-rate capital investments, with multiple value components and generated returns.

Within a BVP Framework value is understood to consist not simply of economic or extra-economic elements (such as social or environmental factors), but rather as a natural blend of economic, social and environmental elements, which together generate multiple returns. (Find more here)

What is Triple-bottom line?

According to Mercer, triple-bottom-line is a holistic approach to measuring a company’s performance on environmental, social and economic issues. The triple bottom line focuses companies not just on the economic value they add, but also on the environmental and social value they add or destroy. (Find more here)

What is the Global Impact Investing Network (GIIN)?

The Global Impact Investing Network (GIIN) is a global group of investors and intermediaries who put capital to work at scale to generate social and environmental value in addition to financial return. The GIIN is a platform for leaders of the emerging impact investing industry to incubate the activities and institutions that can accelerate the impact investing industry’s maturation, and ultimately drive substantial capital to solve previously intractable social and environmental challenges. (Find more here)

What is Social Impact Measurement?

Social impact measurement is the measurement and assessment of the effect of implemented activities on the social fabric of communities and the quality of life of individuals and families within communities. This can be used to assess the effectiveness of an investment against its aims and objectives and as a tool for implementing organizations to review, assess and adapt their models and programs according to feedback and lessons learnt.

What is Corporate Social Responsibility (CSR)?

The idea that businesses should not function amorally, but instead should contribute to the welfare of their communities.

Further definitions include:

CSR is about how companies manage the business processes to produce an overall positive impact on society. (http://www.mallenbaker.net)

Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. (Lord Holme & Richard Watts. (2000, January 1). Making Good Business Sense, The World Business Council for Sustainable Development.)

Corporate social responsibility means operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. (Business for Social Responsibility)

Corporate social responsibility is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. (Commission of the European Communities. (2006, March). Implementing the Partnership for Growth and Jobs: Making Europe a pole of excellence on corporate social responsibility. Brussels)

What is Global Sustainable Impact Investing?

The Global Social Investment Exchange (GSIX) initiative, lead by GreaterGood South Africa and SASIX, emerged out of the experience, learnings and success of the SASIX initiative coupled by numerous requests for support around its replication in other developing countries and strengthened by extensive global research over the past decade.

The concept of a global social investment / stock exchange and a related / governing Federation of Social Investment / Stock Exchanges was elaborated during a meeting in early 2009 organized and hosted by GreaterGood South Africa Trust with the support of The Rockefeller Foundation and its Bellagio Conference Centre.

Early efforts at a Social Investment Exchange have come a long way. Since this Primer was first produced in 2009, we have seen more Exchanges open, including the Toronto-based SVX, which you can learn about here.

What is IRIS – Impact Reporting and Investment Standards?

IRIS is the catalog of generally-accepted performance metrics that leading impact investors use to measure social, environmental, and financial success, evaluate deals, and grow the credibility of the impact investing industry. Further reading see the IRIS website

What is Corporate Social Innovation?

Corporate social innovation (CSI) bridges business innovation and social innovation. CSI uses market- based solutions to generate profitable business opportunity while addressing social needs and ecological imperatives. It thrives utilizing new technology and the burgeoning opportunities of boundary-spanning social networks.

At the farthest end of the spectrum are those corporations that are willing to participate in what John Elkington of Volans calls: Breakthrough Capitalism. Still in its infancy and working on developing their program, the Breakthrough participants admit in their progress report that their business case is still weak however:

“…‘Change-as-Usual’ CSR and ‘sustainability’ approaches are flawed—and ultimately doomed— where they do not link out to efforts to transform economics, valuation and accounting, which represent the DNA of modern capitalism. Key to this critique is the argument that the efficient market theory, which has become virtually all- pervasive, is flawed, even bankrupt. Tomorrow’s leaders will need to both draw on and co-create new political, social and economic frameworks better suited to the emerging agendas.”

In 2014, SiG and KPMG teamed up with Volans to produce the first Canadian-focused report, Breaking Through: How Corporate Social Innovation Creates Business Opportunity. This area of focus will continue to be of interest to SiG and its partners are we try to shift to more cross-sector, multi-actor partnerships.

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