Synopsis: Entrepreneurship:

This is an area that presents significant opportunities to leverage the power of European talent by fully engaging stakeholders

and research agenda to foster DSI in Europe, tracing impacts in a rigorous manner 2. Mobilise a big variety of stakeholders and Support a community of civic innovators and users.

and the open data movement. 3. Broad communication with the general public and citizens, reach out

i e. the civil society is considered as a fourth and full stakeholder in addition to the traditional innovation actors,

vibrant picture of social innovation in practice and demonstrates the vitality of this rapidly emerging economy.

Like the social ventures it describes, we want this work to grow and develop. Your comments, thoughts and stories are welcome at the project website:

ideas and resources 124 Section 3 Ways of supporting social innovation 141 1. Support in the public sector 146 2. Support in the grant economy 167 3

. Support in the market economy 180 4. Support in the informal or household economy 195 Bibliography 209 Index 211 Acknowledgements 220 2 THE OPEN BOOK OF SOCIAL INNOVATION

and tools for innovation being used across the world and across different sectors the public and private sectors, civil society and the household in the overlapping fields of the social economy, social entrepreneurship and social enterprise.

and setting up a social venture in a way that ensures its financial sustainability; and that its structures of accountability, governance and ownership resonate with its social mission. 1 We have launched also an accompanying website, www. socialinnovator. info,

services and models) that simultaneously meet social needs and create new social relationships or collaborations.

Civil society lacks the capital, skills and resources to take promising ideas to scale. Rising costs The prospective cost of dealing with these issues threatens to swamp public budgets,

This is as true for the private as for the social economy. New paradigms tend to flourish in areas where the institutions are most open to them,

An emerging social economy Much of this innovation is pointing towards a new kind of economy.

We describe it as a‘social economy 'because it melds features which are very different from economies based on the production and consumption of commodities.

Its key features include: The intensive use of distributed networks to sustain and manage INTRODUCTION 5 relationships,

helped by broadband, mobile and other means of communication. Blurred boundaries between production and consumption.

Much of this economy is formed around distributed systems, rather than centralised structures. It handles complexity not by standardisation

This domestic sphere has previously been seen as outside the economy, as too complex and ungovernable,

In both the market and state economies, the rise of distributed networks has coincided with a marked turn towards the human, the personal and the individual.

(what Jim Maxmin and Shoshana Zuboff call the‘support economy');'it has led to lively innovation around personalisation (from new types of mentor to personal accounts;

With this emphasis on the individual has come an interest in their experience as well as in formal outcomes, in subjective feedback as well as the quantitative metrics of the late 20th century state and economy (hence the rise of innovations like the Expert Patients programmes, or Patient Opinion.

for example, are not always directly transferable to the social economy. Measuring success Measuring success in the social economy is particularly problematic.

In the market the simple and generally unambiguous measures are scale, market share and profit.

In the social field the very measures of success may be contested as well as the tools for achieving results.

We show that many innovations take shape within organisations public agencies, social enterprises, mutuals, co-ops, charities, companies as well as loose associations.

Coalitions and networks Coalitions and networks are increasingly turning out to be the key to successful change (this is well described in Stephen Goldsmith's forthcoming book on civic entrepreneurship in the USA.

perhaps linking some commissioners in the public sector, providers in social enterprises, advocates in social movements,

This is one of many reasons why it's misleading to translate business models directly into the social field.

trial and error and rapid learning that are accompanying the birth of this new economy. But we can be certain that its emergence will encourage ever more interest in how innovation can best be supported,

and venture capital with those from tendering and grant giving. Others are combining ethnography, visualisation techniques from product design, userinvolvement ideas from social movements,

some NGOS are learning from venture capital not only how to finance emerging ideas, but also how to kill off ones that aren't advancing fast enough to free up resources.

funds, agencies, brokers, incubators, and intermediaries. In the social field these institutions remain much less developed than in other fields.

including those within each economy: the public sector, the grant economy of civil society, the private sector,

and the household. Some of these conditions are about structures and laws, others are about cultures.

or unresolved by services organised by the state. Social innovation can take place inside or outside of public services.

and can deal with new relationships with stakeholders and territories.‘‘Social innovation'seeks new answers to social problems by:

identifying and delivering new services that improve the quality of life of individuals and communities; identifying and implementing new labour market integration processes, new competencies, new jobs,

THE PROCESS OF SOCIAL INNOVATION 6 Systemic change 5 Scaling 4 Sustaining 3 Prototypes 2 Proposals 1 Prompts 12 THE OPEN BOOK OF SOCIAL INNOVATION

or through more formal pilots, prototypes and randomised controlled trials. The process of refining and testing ideas is particularly important in the social economy

because it's through iteration, and trial and error, that coalitions gather strength (for example, linking users to professionals)

and identifying income streams to ensure the long term financial sustainability of the firm, social enterprise or charity,

how market demand, or demand from commissioners and policymakers is mobilised to spread a successful new model.

This process is referred often to as‘scaling, 'and in some cases the word is appropriate,

and innovations take hold in the social economy in many other ways, whether through inspiration and emulation,

social movements, business models, laws and regulations, data and infrastructures, and entirely new ways of thinking

private sector, grant economy and household sector, usually over long periods of time. In this part of the book we explore each of these stages in depth,

INSPIRATIONS AND DIAGNOSES 15 competitions for the crowdsourcing of innovations say that it is the stage of framing a good question

which is the key to the competition's success. 1 All of the methods that follow are not only prompts,

Triggers and inspirations Here we describe some of the triggers and inspirations that prompt innovation, that demand action on an issue,

The need to cut public expenditure often requires services to be designed and delivered in new ways.

The right kinds of systems thinking can open up new possibilities. 2 3) Poor performance highlights the need for change within services.

or deliver services more effectively. Examples include computers in classrooms, the use of assistive devices for the elderly,

and visibility generates ideas. 7) Mapping needs to estimate the existence, nature and distribution of the actual and potential need for goods and services,

and patterns. 1 18 THE OPEN BOOK OF SOCIAL INNOVATION These sites show how to run competitions for‘mash up'ideas from citizens using government data, such as Sunlight Labs and Show Us a Better Way

Within the social economy, especially amongst artists, entrepreneurs and community groups, there is a long tradition of taking advantage of empty, abandoned or derelict buildings and spaces.

identifying empty spaces and opportunities for reuse. In Croatia, for example, Platforma 9. 18 mapped out

Userled research has developed especially amongst long term users of health and social care services. Service users are responsible for all stages of the research process from design, recruitment, ethics and data collection to data analysis, writing up, and dissemination.

therefore spend time with them in their various physical and social environments. The primary method of the ethnographer is‘participant observation'.

and social environments. 15) Action research is designed a method to encourage reflective and collective problem formulation and problem solving.

Rather than merely detailing an environment in descriptive form, action research is geared normatively toward prescriptions emerging out of the data

and front line staff understand the needs of users and better tailor services accordingly. In industry and commerce the capacity to collect

and chart their own behaviour and actions. 20) Holistic services include phone based services such as New york's 311 service which provide a database that can be analysed for patterns of recurring problems and requests. 21) Tools

and are likely to be critical to future productivity gains in public services. 11 24) Changing roles.

It is an opportunity for the walkers and villagers to share and reflect on innovative practice.

There are also prizes there are biodiversity competitions, recipe competitions and a felicitation ceremony for creative villagers. 30) Media Spotlight.

Commanding attention In today's media-intensive environment one of the most valuable resources is attention.

or Deming, E w. 2000)‘ The New Economics for Industry, Government, Education.''2nd ed. Cambridge, MA:

University of chicago Press. 11. Nooteboom, B. 2000)‘ Learning and Innovation in Organisations and Economies.''Oxford: Oxford university Press. 12.

Laderman Ukeles, M. 2001) On Maintenance and Sanitation Art. In Finkelpearl, T. Ed.)‘Dialogues In public Art.'

Some of these methods are designed specifically to encourage creativity and new ideas such as competitions and prizes, online platforms and idea banks.

'Increasingly, some of these approaches are being used within the public sector to redesign services. 37) User-led design.

'with designers and professionals still playing key roles as orchestrators and facilitators. 38) Redesigning services with users

and doctors can develop and prototype new processes for improving service delivery. In another project, Hilary Cottam led a multidisciplinary team including prisoners, prison officers,

and customers of goods and services); knowledge of variation (the range and causes of variation in quality,

Mali and Vietnam. 4 49) Reviewing extremes such as health services or energy production in remote communities.

Design for extreme conditions can provide insights and ideas for providing services to mainstream users.

as resources, assets and opportunities for social innovation. Assets can be reclaimed and reused and, in the process,

environments can be revitalised, social needs can be met, and communities energised. One example is the work of‘activist architect',Teddy Cruz.

Image courtesy of Geoffrey Greene 2 38 THE OPEN BOOK OF SOCIAL INNOVATION spaces within a dense, urban neighbourhood into a liveable, workable environment.

and then provides support to the winners. 54) Competitions and challenges can be an effective means of uncovering new sources of social innovation.

however, competition is not always the driving force behind the development of new innovations in the social economy.

This means 2 that competitions need to be structured in such a way that participants have the opportunity to collaborate,

Examples of successful projects include setting up social enterprises, and lowering hand straps in the Metros for shorter passengers. 57) Video booths to capture the views and ideas of the public.

Michael Young established a national suggestion box in 1968 as part of a programme to promote citizen-led innovation in public services.

Famous US examples include Brookings and the American Enterprise Institute. The most visible tend to focus on policy innovation.

such as the New Economics Foundation and Forum for the Future. 80) Design labs. In Finland, the national innovation agency SITRA has set up the Helsinki Design Lab,

E-Communications Strategy.''Unpublished. 8. Mccardle, H. 2008)‘ The case of the sneaky wiki.''Unpublished. 9. Boal, A. 1998)‘ Legislative Theatre:

This section also looks at various funding tools for emerging ideas and prototypes. Prototypes, pilots and trials As an idea progresses through multiple stages of rapid prototyping,

it faces many challenges: the feasibility of making the product, delivering the service, how to deal with particular issues,

what the economics look like, and how it could be made cheaper. The driving principles at this stage are speed, keeping costs low,

but is used increasingly to refer to services as well. 82) Fast prototyping emerged first in the software field,

and concept testing and moves testing out to the users'actual environment for a‘real-world'test.

Dialogue Café is a not-for-profit organisation which brings people together from all around the world in conversation through the use of Telepresence screens.

Images courtesy of Dialogue Café. 3 PROTOTYPING AND PILOTS 53 89) Whole System Demonstration Pilots attempt to test out interconnected elements rather than the discrete services

The combination of social learning and technological advancement that open testing demonstrates has many applications in encouraging sustainable and systemic innovation that is both supply and demand driven.

like the Singapore Prime minister's Enterprise Fund, or the UK's Invest to Save Budget.

One of the traditional arguments in favour of prizes and competitions is the way in

Indeed, with competitions, it is the participants who are expected to foot the financial risk. In the social economy,

however, there are arguments for sharing, rather than shifting, the risk. This can be achieved through a stage-gate process

where participants increase the level of investment as they pass through the various stages. This is how NESTA's Big Green Challenge was organised.

The Big Green Challenge, aimed at the not-for-profit 3 PROTOTYPING AND PILOTS 55 sector is the first challenge prize of its kind.

A critical issue is to combine the investment decision and business support. Typical units for individual projects range from £2k-£250k,

'or more like corporate venturing units whose primary target is the number of spin-off enterprises created. 98) Paying for time.

Taking innovative front line workers out of service roles and putting them into incubators or prestigious time-limited roles to turn ideas into business plans (with the time costs then potentially turned into equity or loans).

99) Vouchers to provide purchasing power directly to NGOS or service providers to buy research in universities;

or to club together to commission incubators (being tested by the ESRC. 100) Collective voice and credits.

public procurement can create sufficient demand to establish entirely new markets for innovation. One example is the Internet,

At other times existing services need to be transformed or replaced. But to move from pilots and prototypes to a securely established public innovation, it is often advisable to set it up as a separate venture,

with public finance and a service contract that can prove itself at scale. Indeed this may be crucial

A business model that runs parallel to the core idea of the venture and which sets out how it can become sustainable.

both start-up capital in the short term and income streams over the longer term. A network and communications model to develop

what we refer to as the venture's‘relational capital'.'A staffing model including the role of volunteers.

A development plan for operational systems including management information, reporting and financial systems, IT, supply chain systems and systems for risk management.

These will be translated into an economic or business plan, which details the service or initiative, how it will be provided, by whom, with what inputs,

Any venture driven by a social mission has an interest in maximising the spread of an innovation beyond the level dictated by the venture's own financial interest.

Most social ventures have to do both to remain open and collaborative, while surviving financially. It is this very openness

It is also this openness, together with the social mission of the venture, that attracts voluntary contributions in terms of volunteer time, resources, and donations.

Social ventures have much to gain from keeping open, yet this is easier said than done.

Ventures are subject to the day to day disciplines of keeping the show on the road. They tend to turn inwards behind their organisational moat.

The idea pulls one way, the daily practice another. 1 Creating a business Turning a good idea into something sustainable outside of the public sector depends on a business model a clear idea of how it will generate a sufficient income

Effective supply and effective demand need to be brought together. Effective supply means that whatever is being provided has been shown to work

Effective demand refers to the willingness of someone to pay for what's on offer, which may be a public agency or the public themselves. 105) Innovative business models.

The business concepts of the social economy require as much care and creativity in their generation as the social ideas The two are developed best together to sustain

and reenforce each other. For social enterprises, the business model represents a strategy for sustainability. It needs to be simple, persuasive and striking,

since along with the social idea, it is a key part of a venture's attraction. Business models that work are themselves a prime area for social innovation.

They are as diverse as business models in commercial markets, ranging from direct service provision to commissioners,

through models that create value for customers to models similar to those around the web that share knowledge and intellectual property. 106) Business strategies.

The context for a business model is a business strategy about how the proposed venture is positioned on the economic field of play.

There will be key points of control in any sector of production. In some it is retailing and distribution;

in others it is a key stage in processing; or in knowledge management systems; or the control of a key input such as a critical site or personnel (as in sport.

There are a range of social business models that involve recognising the potential value of a venture's assets

Systems and services 1. Communities 11. Business plan of benefit 12. Cash These are useful tools

both for managers and investors, that drive attention to the many elements that combine to make a business work any one

Market development Product development Seed Key Concept 4. Business plan 3. Manufacturing 5. Marketing 2. Product 6. Sales 1. Technology 7

along with the business plan, the CEO and the financing axes. The least developed are sales the team, the Board,

For the social economy the issues of control, the team and relations with users are likely to have greater priority,

which a venture is based. In the diagram below we identify 12 alternative axes which may be more appropriate for social ventures. 62 THE OPEN BOOK OF SOCIAL INNOVATION 4 disaggregating its activities to generate alternative income streams.

Particularly instructive for social ventures are the lessons from the business models adopted by web companies which

like social ventures, have an interest in maintaining free access, while at the same time generating revenues indirectly as the result of the response that the free service attracts. 108) Business plans.

Business models together with business strategies then need to be turned into business plans. Although it is rare for a social venture to be a straightforward implementation of a blueprint (it is much more like a process of discovery and unfolding),

plans help to clarify tasks, milestones, and sequencing for example of investment in people, equipment and market growth.

Business plans cannot design the future and few survive their first encounters with reality. But they provide a chart for a venture's theatre of operations

and demonstrate the competence of those engaged in taking the venture forward. 109) Business plan assessment methods.

There are many methods that help to define business models and business plans. The Bell-Mason methods from the field of venture capital, for example, provide a rigorous framework for paying attention to the many elements that together make up a credible business plan,

such as skills, marketing, and finance. Their model for new ventures has shown 12 axes in the diagram below.

For each of them progress is mapped in four stages. First is the concept stage. This is seeded and then developed as a product.

Finally there is the market development stage. They have used this diagnostic model to chart the progress of more than 450 ventures,

in order to identify key areas for further development. Ownership and organisational form There comes a point

when every venture has to decide what organisational form to take, what kind of decision making and accountability processes to adopt,

and which kinds of information and financial management systems to put in place. These decisions can be costly and time consuming.

But getting it right early on provides structures and systems which act as skeletons that help hold the organisation together.

Forms of ownership set out rules related to an organisation's mission, its governance structures, and how its yield is distributed.

SUSTAINING 63 In the social economy, ownership is an ambiguous concept. Its organisational structures are the site of contending pressures of goals and interests.

For some social ventures, simple private company models are the most suitable: they may help with raising equity,

Their limitation is that the founder's influence tends to decline over time (as new capital is brought in),

Most social ventures depend on restrictions Just a few of the houses built by Un Techo para Chile (A Roof for Chile.

and/or to the terms of exit as key design features to ensure investors place the venture's values before maximising financial returns. 112) Adapted private companies.

for example by creating different categories of shareholder; by giving particular groups voting rights; or golden shares.

These arrangements can be fixed through the constitution, a shareholders'agreement, or the terms of a limited partnership. 113) Limited liability Partnerships are a form of legal ownership that gives the benefits of limited liability,

a project to prototype an electric car. 114) Co-ops and Associations tend to be less flexible than private companies,

which they operate, providing work, services, and support. Examples include Japanese food consumer co-ops, and the Mondragon family of co-ops in Spain. 115) Mutuals.

with a further 95 supporters'trusts having shareholdings in their clubs. There has also been a growth of‘New Mutualism,

There are now 125 NHS Foundation Trusts that have been established as multi-stakeholder mutuals; GPS have organised mutuals to provide out of hours primary care;

as well as leisure trusts and social enterprises running public leisure facilities. There are now 109 such leisure mutuals 4 66 THE OPEN BOOK OF SOCIAL INNOVATION with a combined annual turnover of £640 million.

This is a new legal status for social enterprises, and is similar to charitable status. CIC status enables social ventures to access equity investment

while maintaining the social goals of the enterprise as paramount. They do this by having a lock on assets and a cap on dividends,

which partially insulates the enterprise from the private market's imperative for profit maximisation and capital growth.

One example is Working Rite, which specialises in work-based mentoring projects. Based on the idea that‘everyone remembers their first boss'

The best forms of ownership and governance reinforce relational capital, creating a source of resilience for

when the enterprise goes through difficult times. 119) Boards are one of the key design features of any organisation.

As instruments of governance of social ventures, they have a dysfunctional history. They represent a division between moral and manual labour

Yet the success of a social venture depends on an integration of the two. The means of overcoming this division is in part through participation in an active process of formation,

and in part through the engagement of board members in the active work of the venture.

But increasingly social ventures are seeking ways to involve stakeholders that do not depend on representation on a board. 120) Boards for innovation.

of engagement and capital. Most businesses see AGMS as an annoying necessity where small shareholders can vent their anger.

Social movements, by contrast, use AGMS to reinforce commitments to the mission. 122) Stakeholder governance.

There are a number of ways in which core stakeholders can be incorporated in the structure of an organisation and its processes.

These include the constitution a shareholders'agreement, or the terms of a limited partnership. 123) Open guides.

The social sector has started to develop more comprehensive guides to help ventures make decisions about governance models and organisational forms.

These can be used at an early stage to guide negotiations between stakeholders. We anticipate considerable web-based innovation in this field, with websites providing guidance on organisational forms, and governance.

One interesting example is One Click Organisations, an ultra simple web-based tool for creating new organisations, changing constitutions,

and engaging members and stakeholders. 124) Consumer shareholding can be used to involve consumers more directly in the work of a venture,

This was one of the main reasons Cafédirect opted to have a share issue geared to small shareholders as a means of raising finance. 125) Gold standards and Golden Shares.

Much of the social economy is made up of organisations that are not dissimilar to those in the state or private business

The demands of a‘Just in time'system of production, for example, provide the structure and discipline to front line staff formerly supplied by hierarchical managers.

Many social ventures try and avoid strict hierarchical structures by remaining small and by subdividing (like cells)

or collaborating with other similar ventures. Some have adopted a franchised model, to allow each unit to remain relatively small,

while benefitting from economies of scale for the group of ventures as a whole. This is the basis for the expansion of Riverford Organic Vegetables Ltd,

to keep his venture small, and production local. The resulting network now delivers 47,000 organic food boxes a week. 129) Dimensions of management.

There is commonly a tension between the demands of continuing operations and the venture's ability to maintain innovation.

The financial and managerial demands of innovation may put pressure on existing business. There are different management styles that may be appropriate for innovation and operations.

Spin-offs are one way of managing this tension. Careful succession planning is another permitting the initial innovators to move on to new tasks.

Operations The distinctive value and values of a social venture show up not just in its structures but in its operations how it works with others, uses technologies or works in partnership. 131) Socially-oriented supply chains.

Transparent supply chains that reflect the values of the venture are often a key element in sustaining

and expanding a social venture. An organic food box scheme, for example, depends on its certified supply chain.

but once established they need to be maintained with as much care as Japanese assemblers give to their different levels of supply. 132) Socially-oriented demand chains.

For some ventures providing intermediate goods or services the challenge is how to develop a demand chain that processes

or developed multiple grades of compost to meet different types of demand. Sometimes the chain may be linked closely.

But as with supply chains, the goal is to have the demand chain reflecting the social mission of the venture. 4 SUSTAINING 71 133) Shared backroom economies.

Many new ventures carry high overheads because of their small scale, or they fail to invest in financial and operational systems that are important for their effective working.

It is important for ventures to find ways of sharing these overheads, or access part-time specialists,

'CNA, the umbrella body for artisan producers, provides collective services such as booking, accounting, legal advice, and even political representation to its federated artisans. 134) Collaborative technologies.

It is often important for ventures to adopt technologies that are flexible, adaptable, and suitable for distributed activity.

Image courtesy of Danone Communities. 4 74 THE OPEN BOOK OF SOCIAL INNOVATION Relational capital New ventures put much of their energy into securing financial capital money to invest in fixed assets on the one hand

But relational capital is just as important. This is both the knowledge and trust built up between a venture and its users and suppliers,

and the relationships between a venture and its staff and volunteers. Conventional accounting takes little account of this intangible capital,

yet in all social ventures it is the foundation of their strength, and of their distinctiveness.

We use the concept of relational capital to capture the quality of relationships within which economic exchanges take place.

This is the issue of greatest relevance for a social venture as its fortunes depend on the range and depth of its relationships that.

These relationships are multifaceted. They include the nature of its connections: to users and investors; to suppliers and distributors;

and with its own staff, board and volunteers. With many of them there will be formal agreements,

for a social venture the boundaries are more porous internal and external interests mesh. It is one of its greatest potential assets that a social venture can attract support and resources from outside itself,

as well as motivation from within, on the basis of its ideas and the way it works to realise them.

'Investing in human resources to ensure a social venture's openness is as important as investing in a building or machine.

For it concerns the formulation and presentation of a venture's identity, to itself, and to the outside world.

for it is from an open and inclusive culture that a social venture draws much of its strength. 136) Systems for user feedback to keep users at the centre.

Social ventures tend to rely on their idea to galvanise funders and users. They place their operational focus more on supply than demand.

But 4 SUSTAINING 75 to ensure that the venture remains generative rather than static, users should remain central a service should know who they are

and who is missing, how the service is used and perceived, and how it could be improved

Just as no venture can operate without a finance and accounting system, it requires a system of user relationships and feedback as part of its operational spine. 137) Web presence.

All social ventures now have to have a website. But their full potential has begun only to be explored.

Many ventures are by their nature information intensive in respect to the quality and tangibility of their work, the stories of those involved in it,

It has therefore become crucial for ventures to have access to the tools wikis, chat rooms, forums, comment boxes, and blogs.

which can act as feeders to the venture's website. Above all, a venture needs to devote resources to the constant updating

and active hosting of their sites. A good example is the site of the cooperative football team Ebbsfleet United (My Football Club

Social ventures, particularly those that are funded tax or grant-aided, have been suspicious of branding. Governments find themselves criticised for spending money on branding.

But all ventures have an appearance and a style. It is part of the way they communicate.

Social ventures should see branding as a flame that indicates a presence and attracts people towards it.

Some ventures go further and make their workplace into a working gallery or museum. They demonstrate much of their work visually, through photos and graphs.

It is always a useful exercise for a venture 4 76 THE OPEN BOOK OF SOCIAL INNOVATION to consider how it could best present its work

and its social purpose tangibly as if it were a gallery 140) Open events to provide an opportunity for organisations to engage a wide variety of people in the work of the organization.

They are an occasion for experiencing the venture's culture. Events of this kind are much more important for social ventures than commercial ones.

They allow a wider group to share in the spirit of the venture. 141) Open forms of intellectual property to maximise the spread and diffusion of the idea or service.

Social ventures have an interest in adopting open forms of intellectual property. They stand to benefit from a shared commons of knowledge

both in what they receive back from a reciprocal economy of information, and in extending the value

and impact of the knowledge they contribute. Bioregional (the social This is a view of the Vauban development in Freiburg, Germany.

Image courtesy of Rolf Disch, Solararchitecture. 4 SUSTAINING 77 venture that initiated the zero carbon development at Bedzed) recently placed its most valuable technical information on the web for open access

Open access or open licensing allows people to build on a venture's knowledge assets and to mix together these assets with others.

For some ventures this may involve the foregoing of possible income streams from the sale of that knowledge,

but there are many alternative means of generating income, not least through the strengthening of the venture's relational capital through a policy of open information. 142) Formation for developing skills and cultures.

The formation or training and shared orientation of those engaged in the venture plays a critical role in providing cohesion to social ventures.

It informs the articulation of the venture's central purpose. It provides meaning for those working for the venture

for investors and volunteers, and it gives to the venture a living, reflexive power that is not limited to particular individuals or levels in the organisation,

but to all those involved. This is important also, for public innovation, through, for example, bodies like the National school of Government (NSG) and the Improvement and Development Agency for local government (IDEA), CELAP in China,

not only for the venture itself, but to create a group of individuals able to put the ideas into practice more widely.

and its operational practices should reflect the venture's mission, and avoid the tensions that can arise between market rates of pay and

and the venture's beneficiaries. 144) Valuing the voluntary. In a volunteer economy, roles, relationships and incentives have to be thought about differently to those where there is a contractual wage relationship.

If the volunteer receives no payment then the experience of the work and of contributing to a social goal has to be powerful enough to persuade them to continue.

but there is great potential value to a new venture if it makes one of its goals the attraction and effective employment of a wide range of volunteers.

with simple goals and a strong ethos. 4 78 THE OPEN BOOK OF SOCIAL INNOVATION Venture finance Every innovation process requires some finance.

For social ventures it is key that the sources of finance should share the venture's social goals as the primary driver of the enterprise.

Raising capital may involve some compromise with the providers of capital, but the goal should always be to find ways for the core finance to come from those who share the venture's mission.

As a rule, the earlier stages require the least money, but they are also the hardest point at

To finance new ventures there are a range of ethical banks and social funding agencies devoted to supporting new and expanding ventures.

All forms of finance bring with them power relationships which can sometimes threaten the values

and relationships which the venture is built on. To guarantee that the initial venture funding remains subordinate to the values of the social mission,

enterprises can raise social equity, limit the quantity of common shares, and seek subordinated loans from sources ready to share early risk without demanding a counterbalancing share in the project's equity. 145) Grant funding is provided sometimes to grow social ventures.

This usually depends on one or two wealthy philanthropists having a sufficient commitment to the project.

A good example is the philanthropic support provided for Australia's Inspire firstly to establish itself in that country,

There are distinct forms of lending within the social economy that include saving and lending circles,

but much of the loans now being made for social ventures are coming from specialised social finance organisations, sometimes seeking security (usually from property),

Loan provision for social projects is now a reasonably mature industry in many countries with typical unit scales from £25k-£500k. 4 SUSTAINING 79 147) Equity is likely to be invested into both creating and growing enterprises,

and supporting spin outs from the public sector. It can be used for various kinds of social enterprises as well as for-profits.

quasi-equity which can be based royalty, or profit based; convertible loans converted to equity linked to trigger points (for example, first equity funding round or turnover targets;

£100k-£5 million, alongside debt. 148) Crowdfunding. Instead of raising funds through banks and other intermediary institutions, the web opens up the possibility of making new types of connections and raising finance from potential consumers.

This is how My Football Club raised enough capital to purchase Ebbsfleet United. 149) Public share issues are most suitable at times of expansion,

when the enterprise has proved itself, and risks are reduced. They sometimes have an advantage over venture capital funding in that they can tap investors who want to make social impact their primary incentive rather than financial returns.

Here is one of Britain's few cooperatively owned wind farms at Westmill in Oxfordshire.

400 shareholders. Image courtesy of Andrew Watson. 4 80 THE OPEN BOOK OF SOCIAL INNOVATION 150) Social Impact Bonds are a financial tool being developed in the UK to provide a new way to invest money

or whether they will be used to finance innovation (see also method 368). 151) Venture philanthropy uses many of the tools of venture funding to promote start-up, growth,

and risk-taking social ventures. It plays an important role in diversifying capital markets for nonprofits and social purpose organisations.

Good Deed Foundation in Estonia, Invest for Children (i4c) in Spain, Oltre Venture in Italy,

and both Social Venture Partners and Venture Philanthropy Partners in the US. Sustaining innovations through the public sector Sustaining ideas in the public sector involves different tools to those needed in markets or for social ventures.

There are similar issues of effective supply (the proof that a particular model works) and effective demand (mobilising sources of finance to pay for the idea or service).

152) Business cases within the public sector. In some parts of the public sector the language of the‘business case'has been adopted.

The supply of ideas and demand for them tend to co-evolve: there are relatively few fields where there are straightforward solutions,

The private economy is structured to reserve the benefits of an innovation to its own organisation

The social economy being oriented primarily around social missions, favours the rapid diffusion of an innovation,

This is one reason why the social economy has less compulsion to organisational growth and more towards collaborative networking as a way of sharing innovation. 1 As a result of these differences,

the successful diffusion of an innovation depends on effective supply and effective demand: effective supply refers to the growth of evidence to show that the innovation really works.

Effective demand refers to the willingness to pay. Both are needed but sometimes the priority is to prove effectiveness

Some of the methods for effective supply include investment in evaluations and research data to demonstrate effectiveness

The tools for effective supply include reshaping of projects to reap different kinds of economy (scale,

To grow effective demand, there may then be need a for diffusion through advocacy, raising awareness, championing a cause,

Advocacy is the key to creating demand for services, particularly from public authorities for example, making the case for public funding for drugs treatment or sex education.

and requires more investment in professional skills. 5 84 THE OPEN BOOK OF SOCIAL INNOVATION Inspiration Some ideas spread because of their qualities as ideas they are inherently inspiring, arresting, and engaging.

and express the idea behind the project becomes a key method for the social economy,

Diffusing demand The promotion of social innovation has tended to focus on the supply side and how innovations can be diffused among service providers through experts,

However, we argue that the design of services should start from the user, and that its diffusion should be approached from the perspective of users,

We also argue that a distinction should be made between services where demand can be expressed in the market (for fair trade or green goods, for example),

those where demand is expressed through the state (lobbying for disability provisions or swimming pools, for example), and those involving intermediate demand (public commissioning on behalf of citizens).

158) Information for consumers. Providing free or cheap information can also be a means of affecting consumer behaviour and demand.

This is the case with smoking for example, or food labelling, or cheap energy auditing. 159) User groups and their campaigns.

User groups create a demand for services, particularly from public authorities by spreading information and lobbying,.

and the public sector to improve their products, services, and processes. As social movements, they constitute an important generator

and diffuser of social innovation. 5 86 THE OPEN BOOK OF SOCIAL INNOVATION 160) Promotion and marketing of innovative services and programmes to encourage behavioural change.

Examples are the‘5 a day'campaign, the promotion of free smoking cessation services, and the new NHS campaign‘Change4life'which promotes healthy activities such as playing football,

and promote a different kind of demand or activity. They encourage innovation in how to meet the target.

or alternative, technologies and services. This removes an element of risk and encourages organisations to invest in specific technologies.

GSM 5 88 THE OPEN BOOK OF SOCIAL INNOVATION and catalytic converters. 166) Creating intermediate demand via the professions for innovative goods and services.

Commissioning and procurement Governments are big customers of goods and services for example, the UK Government purchases £125 billion worth of goods and services per year.

public procurement plays a role in relation to consolidation by purchasing services at scale. 5 170) Commissioning innovative services.

Commissioning has become increasingly important in the public sector, with the increase in contracting out services.

Local government in the UK has used commissioning to experiment with alternative service models provided by social enterprises and grant based organisations,

and to create better services which 5 90 THE OPEN BOOK OF SOCIAL INNOVATION are tailored to the needs of service users.

Government is positioned well to serve as an‘early user'of new goods and services demonstrating their value to the wider market.

and services so that they can compete more effectively in the global marketplace. Often this may involve purchasing more costly options

the aim is to design market structures in public services which create incentives for innovation. It has been one of the driving ideas behind the introduction of choice in the NHS,

which to buy'health services for their population, with Primary Care Trusts (PCTS) continuing to hold the‘real'budget.

services for patients to enable better use of resources. 175) Payment by results in the NHS involves paying providers a fixed price (a tariff) for each particular case treated.

and can also lead to economies in processing tenders. The public sector's procurement portal in the UK is Buying Solutions,

Joint commissioning is particularly important where there are complex needs and multiple services involved. Examples include:

child and adolescent mental health services; or youth offending teams. 182)‘ Share in savings'contracts, as pioneered by the US Information technology Management Reform Act of 1996.

This new director is given enough start-up capital and decides what he/she needs in terms of staff and equipment.

and provided live audio description services at sporting events. 6 This is an instance where the goals of the organisation to generally improve the quality of life for the blind necessitated a collaborative approach to growth that has changed the organisational field,

Securing a better balance between the supply capacity of fair trade producers with demand has been one of the current issues being tackled by the Fairtrade Labelling Organisation (FLO.

A venture may take it on itself to ensure this synchronisation of growth, but it is undertaken also by an industry body like the Soil Association or the UK's energy efficiency body National Energy Services (NES).

5 SCALING AND DIFFUSION 95 189) Adapting models to reduce costs or improve effectiveness. A good example is the work of ASA (the Association for Social Advancement,

In developing a venture's brand there are two models. There are closed brands which are controlled tightly from the centre,

which invite others to play a part in developing the venture and the way it connects,

Transmitters We look at platforms as the nodes of the new economy, and at other ways in which users and originators can engage in the evaluation

and promote their services ranging from microcredit to housing and sanitation. 193) Trade fairs are an important means of spreading information about new products, services, and organisations.

They also fulfil an important networking function. They can be used as an explicit tool to spread social innovation for example in fields such as eco-building. 194) Diffusion through media.

The project is based on the communication principles of various social groups found in nature such as ants, bees, geese,

One new initiative by Open Business is the creation of a database of open business models. 199) Barefoot consultants.

and scale There are currently pressures to promote mergers and takeovers within the grant economy. However, we suggest that in a distributed economy a different conception of scale is needed, one that focuses on economies of information and communication,

and structures that can deliver that. Organisations within the social economy have less compulsion to organisational growth

and more towards collaborative networking as a means of sharing innovation. 200) Organisational growth is the simplest way to grow an innovation.

Small social enterprises and other NGOS generally find organisational growth difficult: it requires changes to leadership, culture,

or by facilitating adaptation to changing markets and environments. Complex, multidimensional needs are a key site for potential collaboration.

while retaining the advantages of small and medium social enterprises, such as flexibility, drive, and dynamism. 203) The consortium model.

In Italy, small and medium firms have developed consortia to provide collective services where scale is important.

or provide a means for providers of money to judge between alternatives. 208) Standard investment appraisal methods there are a wide range of tools in use in banking, venture capital and other fields of investment

and is used now as standard for assessing transport investment and large development projects. 210) Stated preference methods monetise social value by drawing on what people say they would pay for a service or outcome.

‘option use'(having the opportunity to do something;‘‘bequest use (leaving something for the future; and‘existence use'(satisfaction that things exist

211) Revealed preference methods come from the field of economics and focus on the choices people have made in related fields in order to estimate value.‘

(which is meant to quantify a potential investment‘s social output), methods developed by the Center for High Impact Philanthropy (CHIP) and various other individual foundations,

and costs. 217) Social Return on Investment (first developed by REDF), has become increasingly popular within the nonprofit world.

The benefit of SROI is helping stakeholders to recognise all of the potential benefits a project

as 5 104 THE OPEN BOOK OF SOCIAL INNOVATION part of EQUAL, Finland developed an‘SYTA method'for assessing social enterprise activities.

describing them instead as processes for discussion between stakeholders. 218) Social accounting methods have been used by many countries.

France's Bilan Sociétal (literally social balance sheet) is a set of 100 indicators (ranging up to 400) showing how enterprises affect society.

explores the value associated with public policy. 9 Some of these tie value to notions of opportunity cost (that is,

disclosing private information (in return for more personalised services; giving time (for example, as a school governor);

One imaginative study of a regeneration scheme, for example, showed that modest investments in home safety

which cost about 3 per cent as much as home repairs generated four times as much value in terms of life satisfaction. 222) Methods within the built environment.

methods focused on profits, residuals, and replacement costs; methods using multiple regressions and stepwise regressions; methods using artificial neural networks

or competitions such as the Singapore Public service Awards. Another example of this is school inspections inspectors assess and then share good practice.

and user-generated metrics such as the‘sousveys'surveys undertaken by citizens on services provided by the state used to gather chronic disease data in Sheffield

This approach reflects the development of biographical methods as qualitative research techniques in the social sciences. 228) Outcome benchmarks,

Mcleod Grant, H. and Crutchfield, L. R. 2007) Creating High Impact Non Profits.‘‘Stanford Social Innovation Review.'

Tracking the intersects and opportunities of economic, social and environmental value creation.''Available at: http://www. blendedvalue. org/9. Moore, M. H. 1995)‘ Creating Public Value:

2006)‘ Mapping Value in the Built Urban Environment.''A Report to the Commission for Architecture and the Built Environment.

London: CABE. 11. This example is discussed in Seddon, J. 2003) Freedom from Command and Control.‘

Systemic innovation is very different from innovation in products or services. It involves changes to concepts and mindsets as well as to economic flows:

This has required new laws, regulations, business models, habits in the home (separating waste), collection systems, and new ways of reusing

or a new set of investment devices. Systematic approaches to innovation are rare. But the UK health service may be becoming a good case study. It is a huge system by any standards with an annual turnover of £98 billion

It is involved already heavily in innovation through investment in research and development on pharmaceuticals and medical instruments and close links with top universities such as Imperial and UCL,

which whole environments are reshaped to support healthier living. Such top-down efforts succeed only to the extent that they mobilise the enthusiasm and commitment of thousands of practitioners.

The great challenge for bottom-up ventures is how to access the power and money to 6 110 THE OPEN BOOK OF SOCIAL INNOVATION shift big systems.

The idea of a radical decentralisation of formerly centralised production is recasting many services. In energy services, for example, localised energy systems are reappearing,

linked both to domestic energy generation through renewables, or micro combined heat and power, and through the development of community trigeneration systems such as those in Woking and London.

and social care. 231) Changing the‘scripts'around services. The script of a service or practice provides its meaning and rationale.

and led to new regulations, directives, business models, and public attitudes. 232) Prevention. Many new scripts are about investing in prevention rather than financing the costs of neglect.

So is the slow re-orientation of healthcare services from illness to the creation of conditions for positive living.

The modern versions of the 1930s Peckham experiment to create holistic environments for healthier living are a good example,

but to make future services more effective and fulfilling. An example, which could be applied in other fields,

Where these succeed they create a political constituency for public investment in early years'education as well as effective models for delivery. 234) New models of the support economy.

These reorient services around support for the user rather than the simple delivery of a standardised package.

and combinations of professional and mutual support (such as the digital spine for communication and service delivery in rural Maine).

and transport to housing design and finance. 236) Holistic support models for services such as The Key, Ten UK's support service for head teachers

which provides support for every aspect of school management. 237) Personalized support services such as personal health and fitness coaches, increasingly backed up by shared data services and networks.

and 1990s often focused on disaggregating services, creating back offices separate from the front line, and breaking services into modular elements.

In practice this often led to lower These are envac points at the Hammarby Sjöstad low-carbon housing development in Stockholm, Sweden.

It is a working prototype for a new and sustainable way of living. Image courtesy of Liz Bartlett. 6 SYSTEMIC CHANGE 113 SUMMIT Keep Girls on the Agenda BASECAMP Develop Solutions

/Scorecards Girls Count Task force Reports Partners & research initiatives measure girls more broadly Demand Driven System Change,

and investment in community-based solutions focused on prevention. These are part of a‘family'of innovations in criminal justice that see the offender in their social context

This was seen as crucial to creating a holistic set of services to deal with children's needs,

such as feedback sites on public services or M-PESA's platform for phone-based banking. 246) Rewiring economies, connecting sectors like the utilities and automotive industries for the development of plug-in hybrid cars,

giving students the experience of working in small social enterprises. These could play a critical role in training up a future cadre of social innovators. 249) Mutual help and mentoring by users.

253) Establishing working prototypes of the new system, for example the low carbon housing in Vauban in Switzerland,

and Bed Zed in the UK. 254) Designing and trialling platforms to trigger systemic innovation including peer-to-peer models such as the School of Everything and digital learning environments such as colleges in second life. 255) Comprehensive pilots,

and telecare technology (see also method 89). 256) Blocking technology and other investment choices that will impede changes to systems.

Stopping sunk investment, or reinvestment, in an old model can be the key to creating space for investment in new alternatives. 257) Frames for change.

Framing involves linking particular events such as natural disasters, crises of care or of the economy to underlying causes,

and using this as the basis for proposing major systemic change. Here the combination of framing, communications techniques,

and campaigning are critical: for example, using the tragedy of deaths of older people from heat waves to advance radical change in how social support is organised. 6 118 THE OPEN BOOK OF SOCIAL INNOVATION Regulatory and fiscal changes Almost every systemic

from the environment to equality, has depended on recognition of its principles in law. New legislative and regulatory architectures can be the keys to unlocking systemic change

and lead to new demands on systems of provision, that often lead to service and process innovation. 259) New responsibilities such as responsibilities to care for children,

Reduced VAT rates have also been used in Europe to encourage environmental investment, as with home insulation in the UK, biofuels, renewable energy equipment and recycled paper in the Czech republic,

Image courtesy of Akuppa. 6 122 THE OPEN BOOK OF SOCIAL INNOVATION systemic ideas they need different methods to those used for investment in established systems.

or any benchmarks to draw on. Instead, assessments need to include some judgement of the broader direction of change in the field as a whole;

and some rough assessments of the relational capital they bring. Not surprisingly, these tools and approaches are rare

or environment and transport. 274) The creation of new investment flows can do the same,

Changing funding flows can also encourage preventative services. One example is Oregon's Justice Reinvestment programme a local approach to justice decision making

The Opportunity, 2050 Roadmap.''Discussion Paper. London: Department of energy and Climate Change. 3. Allen, R. and Stern, V. Eds)( 2007)‘ Justice Reinvestment A New Approach to Crime and Justice.'

and demand for them, do not automatically link up. In the technology sector a great variety of institutions exist to connect them better.

They include specialists in technology transfer, venture capital firms, conferences, and academic journals which sit alongside consultants adept at looking at companies'IP,

They are one of the reasons why economics has found it hard to understand innovation without a substantial dose of sociology added in CONNECTING PEOPLE,

because their business model draws on the fact that any new venture needs to be based somewhere,

as in private business, we would expect social economy intermediaries to become more explicitly focused on their knowledge and relationships.

supporting a range of social ventures to become more effective in tackling social problems. We've suggested that much social innovation comes from linking up the‘bees'the individuals

They help to establish markets for new services and projects, and to spread innovations by developing networks which highlight,

and then report back through the region's Centres for Real Services. The Young Foundation has employed an experienced investigative journalist to play a similar role in healthcare, scanning for promising new projects,

The cooperative movement has developed a number of intermediaries of this kind. 278) Social intrapreneurs are people who work inside large organisations to develop

Social intrapreneurs apply the principles of social entrepreneurship inside a major organisation. They can also be characterised by an‘insider-outsider'mindset

The social entrepreneur in residence is tasked with shaping the environment of BEN PCT so that innovation becomes embedded

or more social enterprises to improve local health outcomes within the first 12 months of the project.

and able to engage a wide range of stakeholders in the design, development, and evaluation of innovation. 280) In-house innovation units, such as NESTA's Public services Innovation Lab (launched in 2009)

and the Ministry of Employment, to bring together government, private enterprises, and the research community under one roof to promote user-centred innovation.

It has focused on supporting innovation in schools and children's services, the third sector, and local government. 282) Local innovation teams such as SILK at Kent County Council,

including helping fathers to access statutory services, and teaching young women about healthy living and how to cook healthy food on a low budget. 283) Specialist innovation units,

connections, knowledge, experience, and investment. Borrowing from the best of a member's club, an innovation agency, a serviced office and a think-tank,

130 THE OPEN BOOK OF SOCIAL INNOVATION the Hub have created a very different kind of innovation environment:

and develop new ventures; places to access experience, knowledge, finance and markets. And above all, places for making connections.

Another example is the Centre for Social Innovation (CSI) a social enterprise with a mission to catalyse social innovation in its home base of Toronto,

and the right environment. It is this unique approach that distinguishes the CSI model and which forms the basis for the impact it has achieved. 285) Social business parks

'They are creating a business park for social enterprises and cooperatives. The park will include start-ups, regional and governmental organisations,

and welfare by linking small-scale social enterprises and projects to big institutions, laws, and regulations (for example, shifting a city's transport system over to plug-in hybrids).

as well as innovation for the economy. The Department for Business, Innovation and Skills (BIS) in the UK is one example.

It has a wide-ranging portfolio, covering regulation, enterprise and business support, higher education, innovation, and science.

In the 1980's it was instrumental in the establishment of the Finnish Ministry for the Environment whilst at the same time making important progress in the opening of international markets to Finnish enterprises. 288) Specialist innovation agencies such as the NHS

others act as internal public venture funds, such as the UK's‘Invest to Save'budget for crosscutting innovations,

or Singapore's Enterprise Challenge. Some funds are increasingly branching into service CONNECTING PEOPLE, IDEAS AND RESOURCES 133 innovation,

such as India's (NIF) and the Regional Innovation Funds in the UK. 290) Innovation incubators play a critical role:

and grow a social enterprise; provide a space to test out new ideas rapidly in practice, with quick assessments;

The Young Foundation's Launchpad has drawn from the experience of many different kinds of incubator

and innovation agency to develop a model that seeks to create new ventures and back social entrepreneurs with a multidisciplinary team, a staged investment model,

and a business incubator, alongside a social innovation investment fund. Mars is a nonprofit innovation centre connecting science, technology,

networks, and capital to stimulate innovation, and accelerate the creation and growth of successful Canadian enterprises.

It was created in 2000 on the site of the old Toronto General Hospital. Image courtesy of Mars Discovery District. 134 THE OPEN BOOK OF SOCIAL INNOVATION Other examples include the Fuping Development Institute (FDI) in China and Kaiser permanente's Garfield Innovation

and day courses and is generally an animator of new environmental technology. 299) Innovation accelerators bring people together to quicken the initial stages of innovation.

and build a functioning website. 136 THE OPEN BOOK OF SOCIAL INNOVATION Innovation networks Networks can serve as alternatives to formal organisational structures within the social economy‘they can leverage the assets that already exist in a system by connecting them to others'.

'5 The very nature of networks bring a range of benefits that are particularly important within the social economy:

At the European level, The Community of Practice on Inclusive Entrepreneurship (COPIE) brings together a wide variety of stakeholders to discuss issues relating to inclusive entrepreneurship, local development,

and social entrepreneurship. 305) Action learning sets are groups of between four and seven people who come together on a regular basis to reflect on their work,

Examples range from Wordpress to projects like the School of Everything that blurs the boundary between formally accredited professionals and others that provide similar services. 311) Co-production platforms.

and charging customers for a particular service. With platforms, the distinction between customers and producers dissolves as‘customers'produce services themselves.

This is the case, for example, with Lego. Lego have created a web platform Designbyme 3. 0 which enables users (mainly children) to design their own Lego sets.

Here, customers are co-producers and co-creators. 312) Online laboratories equip innovators with the tools to carry out their own experiments.

This includes file sharing services such as Napster, and open-source software such as the Linux operating system, the Mozilla Firefox browser,

However, none of these are of themselves defining features. 140 THE OPEN BOOK OF SOCIAL INNOVATION End notes 1. Sustainability (2008)‘ The Social Intrapreneur:

Brokering Innovation In public Services.''London: Innovation Unit. Other interesting articles on the role of intermediaries in supporting innovation include:

we discussed the emergence of a new‘social economy'which is characterised by the following features:

and other means of communication. Blurred boundaries between production and consumption. An emphasis on collaboration and on repeated interactions, care and maintenance rather than one-off consumption.

This social economy is the source of social innovation. However, while it already plays the key role in developing new models and services to meet social needs,

it could play an even greater role. 142 THE OPEN BOOK OF SOCIAL INNOVATION It has been argued elsewhere that the social economy,

as a source of innovation and production, could stand on an equal footing with the private market economy.

and new kinds of institutions, especially in the fields of finance and formation The french term for the creation of skills and culture. 1 Progress in achieving this has been hampered by the fact that the social economy remains little understood.

So, what is the social economy? The Social Economy The social economy is a hybrid.

It cuts across the four sub-economies: the market, the state, the grant economy, and the household.

Each of these sectors has its own logics and rhythms, its own means of obtaining resources, its own structures of control and allocation,

and its own rules and customs for the distribution of its outputs. But the parts of these economies which we term the social economy are united by their focus on social goals, by the importance given to ethics,

and by their multiple threads of reciprocity. Their production ranges from the micro scale of domestic care in the household to the universal services of a national welfare state.

Although analytically distinct from the private market it includes social enterprises engaging in the market,

as well as some of the activities of private companies that have primarily social goals. 2 If the social economy is a hybrid,

so are the firms, states, charities and households that operate within it. They have a base in one of the four subeconomies,

and social enterprises attract all sorts of voluntary support. But for both private and social enterprises the primary discipline is the market.

Similarly, some charities and other grantbased organisations run their own shops and other market enterprises

and many contract services to the state. Yet organisations like Oxfam and Age Concern are shaped still primarily by the grant economy in how they raise their money,

how they distribute their services, and in their forms of accountability. The shaded area in the diagram opposite represents those parts of the four sub-economies that together constitute the social economy.

The diagram shows that none of the four sub-economies is concerned wholly with the social economy.

WAYS OF SUPPORTING SOCIAL INNOVATION 143 The interfaces Formally, if there are four sub economies, there will be six interfaces.

The first three interfaces are between the state and the other three sub-economies. 3 Central to these interfaces is the way finance crosses the borders,

inwards in the form of taxation and fees, outwards in the form of grants, procurement, and investment.

There are many others, including the regulatory, fiscal and legal conditions determined by the state, and the platforms and tools provided by the state for the actors in other parts of the social economy.

Each of these can be critical for innovation (for example changes in personal tax to allow new forms of caring),

and are subject to innovation in themselves (for example the creation of Community Interest Company status as an element in company law).

The fourth interface is between the private market and grant economy. These relations include, for example, corporate sponsorship, charitable donations, mentoring,

and various types of corporate social responsibility. There are also emergent forms of productive collaboration between private corporations

and NGOS, exemplified in the work of Philips in developing new models of The State The Market The Household The Grant Economy The Social Economy Source:

The Young Foundation 144 THE OPEN BOOK OF SOCIAL INNOVATION healthcare, combining commercial provision of goods and services with mutual support and roles for NGOS.

The fifth and sixth interfaces (along with the third) constitute the household economy's relations with the other three sub-economies.

selling products and services to households, and engaging individuals as workers. In some cases, firms have used the particular relations that characterise households as a channel for selling.

The extent to which social networks and a gift economy operate in the sphere of consumption has long been remarked on by anthropologists for example (from Christmas presents to the purchase of rounds of beer.

Between the grant and the household economies there are also two way movements of donations and volunteering from one direction, to a multitude of services from the other.

One of the most sensitive areas of this interface is when associations and movements from the household economy partially transfer themselves into the grant economy,

appointing professionals paid for by subscriptions or grants. These examples are the tidy analytical depiction of the interfaces.

In practice, however, each sub-economy may relate simultaneously to a number of others. 4 For example,

the state can promote social innovation in the market as well as the grant economy by applying certain policy and regulatory levers such as minimum trading standards,

and apply to the three interfaces between the household and the other sub-economies. First is the development of new systems of support economy as put forward by Jim Maxmin

and Soshana Zuboff in The Support Economy. 5 This is closely linked to the development of co-creation

and co-production representing a partnership between households and professionals. Personal budgets (introduced for people with disabilities in the UK in the 2000s),

Neither the state nor the grant economy has the structure or incentive to innovate in this way.

6 The household on the other hand that most distributed of economic systems generates ideas but on its own lacks the capital, surplus time,

I. End notes 1. Murray, R. 2009)‘ Danger and Opportunity: Crisis and the new Social Economy.'

'Provocation. London: NESTA. 2. This is a wider definition than the more usual one which refers to the social economy as the third sector namely NGOS and social enterprises.

The definition here includes both the public economy whose values and goals have much in common with those of the third sector

and the informal economy of the household. 3. The social components of these three sub economies outside the state are the economic parallel to civil society,

and could be thought of as the civil economy, that is to say that part of the social economy that is outside the state. 4. There are also interfaces within each sub economy,

for example between the private and social markets. This may take the form of joint ventures, as in the recent case of Grameen-Danone and their collaboration in a social enterprise producing yoghurt for low income households in Bangladesh. 5. Maxmin, J. and Zuboff, S. 2004)‘ The Support Economy:

Why Corporations are Failing Individuals and The next Episode of Capitalism.''New york: Penguin. 6. This is the argument of Beinhocker, E. 2007)‘ The Origin of Wealth.'

'Cambridge, MA: Harvard Business school Press. He puts forward an evolutionary model of growth, parallel to that of Darwin, in

but this does not deal with those areas of the economy which are difficult to commodify. 146 THE OPEN BOOK OF SOCIAL INNOVATION 1 SUPPORT IN THE PUBLIC SECTOR In the past,

and parcel various activities and services out to contractors from the market and third sector such as prisons, healthcare, adult education, and so on.

Strategic issues Innovation in the public sector always risks being a marginal add-on smallscale in terms of funds, commitment of people and political capital.

sometimes playing direct roles in redesigning services. Examples include expert patients, groups and mobilising ex-offenders in service design (see method 38). 321) Learning cultures.

and opportunity to design and develop innovative approaches to policy. Its 1 SUPPORT IN THE PUBLIC SECTOR 149 goal is to foster creativity, social innovation and sustainability in public institutions, through community projects, prototyping

and design thinking. Public Finance: methods to generate internal innovation The generation and adoption of innovation within the public sector depends on how money

More broadly,‘Atelier 27'aims to develop a culture of co-creation, creativity, design thinking and visualisation in public authorities.

1 per cent of turnover as a rough benchmark (similar to the proportion of GDP now devoted to government support for technological and scientific research and development).

324) Dedicated innovation funds and internal public venture funds, such as the UK's‘Invest to Save'budget for crosscutting innovations, The Enterprise Challenge in Singapore,

and the $700 million US education innovation fund. In the UK, the NHS has established a £220 million innovation fund over five years to enable ideas to be developed and tested,

with £20 million to be spent on a public competition for medical breakthroughs. 325) Crosscutting budgets that support broad programmes

These are easier to design for technologies than services, and bring all the problems associated with performance incentives,

such as the ITV/Big Lottery Fund competition‘The People's 50 Million'.'Another example is‘Help A London Park,

and run their own services in place of existing state, regional, or national bureaucracies. These can be a powerful driver for innovation

and other services. 340) Tracking public finances may be aided by public balance sheet accounting and greater transparency of public finance (as happens in Estonia).

or windfall taxes from utilities for investment in emerging green technologies and other innovations. 348) Community pledgebanks are a development of the Pledgebank idea:

and hypothecated fees for services by the state. 1 156 THE OPEN BOOK OF SOCIAL INNOVATION 350) Public subscriptions, lotteries,

and competitions provide another source of funding for activities at one remove from the state.

New zealand), lotteries provide a primary source of funding for community ventures. 351) Socialising risk. New forms of social insurance for long term care for example

which will reduce demand for services. Public mediums of exchange and means of payment Most public finance is undertaken in national currencies.

arrange, and pay for their own care and services (see also method 183). 353) Quasi-currencies and environmental permits,

and allow services to be reconfigured, often prompting innovative ways of thinking about services. Cards like the Hong kong Octopus transit card or the London Oyster card have considerable potential for expansion. 356) Loyalty

and incentive schemes can support and promote healthy and sustainable living. Examples include the joint Young Foundation/1 SUPPORT IN THE PUBLIC SECTOR 157 Birmingham East and North Primary Care Trust (BEN PCT)‘ Healthy Incentives'programme

Public investment Financing public investment is complicated by the common difficulty in quantifying the effects of an investment,

This particularly applies to preventative investment. Private funding can be used where there are clear streams of revenue resulting from the investment,

with the public funding element covering the wider social impact elements of an investment and reducing risk. 359) Local bonds,

including Tax Increment Financing (TIF) and Business Improvement Districts (BIDS. These create flows of resources at the local and very local levels,

and can support new functions at arm's length from the local state. 360) Generating revenue from public investment on the US railroad model.

Prior to investment, property rights are vested in a Community Land Trust (CLT) or public body which then benefits from the increased rental value of sites after the public investment has been undertaken.

The Greater london Enterprise Board financed its operational expenditures for many years through the sale of industrial property it had bought during the recession of the early 1980s.1 158 THE OPEN BOOK OF SOCIAL INNOVATION 361) Social investment funds

such as the proposed Social Investment Bank to be funded from unclaimed bank accounts, which would act as a wholesaler for a range of financing needs (see method 475). 362) Social enterprise investment funds,

such as the Social Enterprise Investment Fund launched by the UK's Department of health with around £100 million,

using a mix of loan and equity finance. 363) Endowment finance such as the National Endowment for Science, Technology and the Arts (NESTA) in the UK,

or the various endowments established by the Canadian Government in the 2000s.364) Hybrid financing and joint ventures such as the finance models used by Woking Borough Council

and the London Climate Change Agency (LCCA) to develop sustainable energy programmes. 365) Joint project financing leveraging public money with voluntary contributions, sponsorship or community investment. 366) Layered

investments combining tranches with different rates of risk/return and different sources of capital (philanthropic, public, private) such as Blueorchard (Switzerland) or Big Issue Invest in the UK. 367

as with The swiss Re insurance of pollution claims from landfill. 369) Investment guarantees, with any claim on the guarantee being paid out with a one year delay.

This is to avoid the full value of the guarantee being counted in a public authority's current investment programme (Sheffield City council pioneered this delayed payment method in the 1980s.

370) Securitising future payment'streams to provide investment capital, as with the Prime Carbon scheme in Australia which contracts sequestered carbon from microbial treatment of agricultural soils to large companies on a five year basis,

allowing these payments to be 1 SUPPORT IN THE PUBLIC SECTOR 159 capitalised to fund farmers'investment.

or corporate energy efficiency measures. 371) Financial instruments for preventative investment including the UK's‘Invest to Save'budget, the USA's Justice Reinvestment programme,

and provide better incentives for public agencies to make preventive investments. They were endorsed in a government white paper in December 2009.373) Health Impact Contracts are a potential new financing device to connect the NHS in the UK with other agencies (primarily local government),

with investments by local authorities (for example in home based care for the elderly) tied to future payments by the NHS determined by

whether the investment leads to lower pressure on hospitals and acute services. 374) Bonus payments on spending aligned to social outcomes such as the UK Government's Performance Reward Grant for local area partnerships

. 375) Public investment aimed at social innovation growth strategies such as the proposed Social Investment Bank, the Toronto Atmospheric Fund,

and Enterprise Boards. 376) Public Finance Initiatives, also referred to as‘public-private partnerships, 'have been used mainly to finance physical structures and infrastructures,

and improving prospective post-tax rates of return. 377) Exemptions and assistance such as tax relief along the lines of the Enterprise Investment Scheme (EIS) for social enterprises,

or property tax holidays for early-stage social enterprise and charities. 378) Experimental zones are geographic areas

These zones provided a range of tax incentives to attract foreign investment and paved the way for the sweeping reforms and the unprecedented economic growth of the past three decades.

More recently there have been experiments in health insurance in Chongqing, and democratic deliberative polling in the Wenling Municipality of Zhejiang Province.

credits, allowances and estate duties for personal public investment, such as those for higher education, elder care and environmental investment. 380) Charitable status extended to allow tax allowances on investment funds,

as with charitable investment in Community Interest Companies, or the L3c model in the US

which allows for programme-related investments from foundations. 381) R&d tax credits for the design and development of innovations.

R&d tax credits have been extended to cover design, and although they are designed primarily for commercial companies, they could be adapted to fit the economics of social businesses.

Legislation and regulation Governments shape the conditions in which social entrepreneurs businesses, nonprofits, and others operate.

and support social innovation. 382) Policy instruments to remake markets to promote the social economy such as compulsory targets,

) 385) Planning and tax rules to promote creative economies such as subsidised rent in art districts,

Through its prestigious annual awards competition, the programme has served to highlight innovative projects within fields as diverse as youth justice, environmental management, education, public health and e-governance,

and testing a series of prototypes to try out alternative methods of exchanging 1 SUPPORT IN THE PUBLIC SECTOR 165 information.

These prototypes were refined and adapted as a result of feedback from the nurses. The new system proved very successful

000 volunteers contribute to the UK NHS. 401) Secondments of public sector employees to community organisations and private enterprises,

IDEA (2005)‘ Innovation in public services: literature review.''London: IDEA; Mulgan, G. and Albury, D. 2003)‘ Innovation in the public sector.'

ii) service or product innovations (new features and design of services;(iii) delivery innovations (new ways of delivering services

and interacting with service users);(iv) process innovations (new internal procedures and organisational forms; and (v) system innovations (including governance structures.

2. Murray, R. 2009)‘ Danger and Opportunity: Crisis and the new Social Economy.''Provocation. London:

NESTA. 3. See for example, Murray, R. op cit.;Mulgan, G. 2007)‘ Ready or Not? Taking Innovation in the Public sector Seriously.'

'No. 7, Winter 2008.1 SUPPORT IN THE GRANT ECONOMY 167 2 SUPPORT IN THE GRANT ECONOMY Civil society and the grant economy are the most common sites of social innovation in campaigns

The more recent waves of interest in social entrepreneurship and venture philanthropy have also been better at supporting individual projects than making them more than the sum of their parts,

We describe this sector as the grant economy because grants play an important part, even though much of the income received within this sector comes from other sources, such as contracts with governments and other kinds of trading income.

but visible, trend has been the growth in venture philanthropy, with much greater involvement of donors in projects and organisations.

and encourage the generation and adoption of innovation within the grant economy, there need to be new kinds of finance, platforms, packages of support,

and what mix of funding for individuals, teams The State The Market The Grant Economy The Household 2 SUPPORT IN THE GRANT ECONOMY 169 and enterprises works best,

and procurement'(see methods 170-183) for ways in which the public sector can support innovation within the grant economy.

and others are treating grants more like investments alongside project involvement, technical support, continuous funding, and the coverage of core costs. 4 403) Direct funding for individuals, including the grants given by Unltd, The Skoll Foundation,

such as the Skoll Awards for Social Entrepreneurship, the Social Entrepreneur of the Year Award (organised by the Schwab Foundation for Social Entrepreneurship),

In addition, the teams have to prepare business plans which demonstrate how the car can be taken to market immediately.

Image courtesy of the West Philly Hybrid X Team. 407) Competitions and challenge funds can be an effective means of spurring social innovation.

and connectivity to villages in the developing world. 2 SUPPORT IN THE GRANT ECONOMY 171 408) Intermediaries who allocate grants for specific projects on behalf of the donor,

are used now by nonprofit organisations to secure longer-term funding with a detailed pledge to provide a social return on the‘investment'.

and Teach for America. 411) Grants as investment including tapered grant funding, public equity, and preference shares. 412) Grants as complements to innovation investment packages.

Grant funding for off-balance sheet expenditure, for example Cordaid's investment and development packages for commodity development projects,

or the UK's Department for International Development (DFID) Frich grant programme for UK market development for African supply chains. 413) Inverse tapering:

New Philanthropy Capital in the UK and Geneva Global in the US perform this role. 414) Giving

and social investment circles such as the Funding Network, United Way, Social Venture Network, or the North Virginian Giving Circle of HOPE (Helping Other People Everydy).

Experiments in‘crowdfunding'potentially enrich the gift relationship, and democratise the sector's source of finance. 416) Intermediaries for contributions in kind provide labour

such as the Taproot Foundation's Service Grant programme which provides not-for-profit organisations with pro bono marketing,

human resources and IT consulting services. 417) Philanthropic‘ebays'.'Philanthropic platforms such as Volunteermatch which help people find volunteering opportunities in their local area. 418) Donor platforms, such as Globalgiving, Altruistiq Exchange, Network For good, Firstgiving and Guidestar.

Internet donor sites dramatically reduce the cost of fundraising (estimated at between 15 per cent and 33 per cent of funds raised in the US.

and z). Mission-related investment Philanthropy has moved increasingly to softening the distinction between grant and investment viewing funds as supporting projects that contribute to a specific mission,

including transformations of whole sectors for social ends. 419) Strategic investments to transform sectoral provision, for example, the Bill and Melinda Gates Foundation's investment in small high schools across America;

and the Prosperity Initiative; which creates sectoral partnerships to stimulate industries that create income and employment for the rural poor. 420) Venture philanthropy focused on innovation in particular sectors,

such as the Robert Wood Johnson Foundation's (RWJF's) Pioneer Portfolio which specialises in health and IT. 421) Philanthropic mutual funds such as the Acumen Fund and the Global Fund for Women. 2 SUPPORT IN THE GRANT

ECONOMY 173 Governance and accountability Too often within the grant economy, governance and accountability structures do not resonate with the organisation's social mission.

and whether the innovation itself and the process surrounding it meet their needs. 2 SUPPORT IN THE GRANT ECONOMY 175 424) Members and associates as sources of innovation and review,

providing independent perspectives. 425) Metrics for venture philanthropy such as those developed by Homeward Bound, a project to end homelessness in the US,

or‘blended value'measures and‘social return on investment'measures used for stakeholder communications (for more information on metrics see methods 208-229). 426) Effective philanthropy methods,

which allow recipients to rate philanthropic foundations. 427) Providing extensive information on NGO performance, such as Guidestar's services and databases in many countries worldwide,

and New Philanthropy Capital in the UK. Packages of support A network of support services for grant-based organisations has developed,

some are specialist private firms, some are social enterprises, and some are charities themselves. They provide legal and business advice, offer free mentoring services,

and help to raise funds. 428) Support services for innovators including mentoring, information and advice, connections and networks,

and public visibility, such as Cleveland's Civic Innovation Lab in Michigan and the Social Innovation Generator in Toronto, Canada. 429) Capacity-building support.

Venture philanthropists, including Private Equity Foundation and Impetus Trust, are now using the skills of the private equity industry to help‘turn around'charities and build their internal capacities.

The Private Equity Foundation has worked already with more than 30 charities in the UK. Training and formation Some studies have highlighted the need for skills

and formation within the grant economy and identified a lack of training and experience as one of the main barriers to the sector's success. Leaders of nonprofit organisations,

and stakeholder management while keeping the organisation aligned to its mission and values. 430) Developing skills within the grant economy.

hands on support to voluntary and community groups in their local areas. 431) Personal assessment tools to understand capacities for leadership and entrepreneurship,

Image courtesy of the Young Foundation. 2 SUPPORT IN THE GRANT ECONOMY 177 intelligence model.

Many MBAS now offer modules on social entrepreneurship, and there is a thriving market in specialist courses. 433) Training for future leaders.

and wider scope for charity operations. 435) Planning and tax rules to promote creative economies such as subsidised rent in arts districts,

models and ideas for building a‘bright green'future. 2 SUPPORT IN THE GRANT ECONOMY 179 End notes 1. Blackmore,

Harpercollins. 4. John, R. 2006) Venture Philanthropy: the evolution of high engagement philanthropy in Europe.‘‘Skoll Centre for Social Entrepreneurship Working Paper.'

'Oxford: Saïd Business school, University of Oxford. Available at: http://www. sbs. ox. ac. uk/centres/skoll/research/Documents/Venture%20philanthropy%20in%20europe. pdf. For large scale developments in this field, see:

Bishop, M. and Green, M. 2008)‘ Philanthrocapitalism.''London: A&c Black. 5. Kasper, G. and Clohesy, S. 2008)‘ Intentional Innovation:

Many businesses now see social innovation as a field for creating new business opportunities: for growing brand equity (through association with well known charities or social enterprises;

attracting talent (particularly younger people who want to believe that their employer has a social conscience;

The most significant development has been in the growth of social enterprises. These are businesses which earn a profit

but are focussed on their social goals. 1 The main challenge for social enterprises is to maintain their commercial position in the market

whilst staying true to their social goals. Many, being small, lack economies of scale and scope. Where their innovations are successful,

In some cases, clusters of social enterprises have developed a network for collaboration and joint services

which has enabled them to access services normally available only to large firms while remaining small themselves.

Increasingly though, there are examples of social enterprises establishing themselves in the mainstream. Inspirational examples and more information on successful business models 3 SUPPORT IN THE MARKET ECONOMY 181 are critical for the growth and sustainability of the social enterprise sector.

There need to be diversified more capital markets, packages of support for social entrepreneurs, and more supportive regulatory and legislative frameworks.

Social business models Social business models are enabling organisations to tap into new sources of funding, and organise governance

and organisational form in the Sustaining section in Part 1). 442) Social enterprises operate in the market to achieve social goals.

There is currently no universally accepted definition of social enterprise. This is because social enterprises can take numerous forms,

are engaged in multiple spheres of activity, and because legal structures vary from country to country.

For example, in Italy, social enterprises are constrained by a non-distribution clause that is, all income has to be reinvested in the enterprise.

In the UK, the Community Interest Company (CIC) was created as a new legal form in 2004 to reduce the tensions between finance and mission.

There is an asset The State The Market The Household The Grant Economy 3 182 THE OPEN BOOK OF SOCIAL INNOVATION lock,

'There is also a limit on dividends of 35 per cent of profits. The term also covers a wide range of organisations from cooperatives to public service providers,

Social enterprises can generate income in a myriad ways. Some may generate their income through direct provision of a service

For example, Turning point in the UK provides among other things rehabilitation services for those affected by drugs or alcohol.

Others sell goods and services to customers while working towards their objectives behind the scenes

Image courtesy of Michael Valli. 3 SUPPORT IN THE MARKET ECONOMY 183 which is sold a magazine by homeless people. 443) Social enterprise mutuals as providers of joint services for their members,

or Work Ventures in Australia. 444) Consumer co-ops such as the Japanese food co-ops which have 13 million members.

for example welfareto-work services, prisoner rehabilitation or disability services. 447) Extending the cooperative economy in production,

including MONDRAGON and Peruvian coffee co-ops. 448) Foundations as owners of corporations, such as the Bertelsmann Foundation and the Robert Bosch Foundation.

which give part of a company's profits to a separate foundation, or the US model where an entrepreneur becomes rich through one business

Some are more‘hands on'such as the provision of services for social good and others are more‘hands off'such as providing resources such as proprietary technology. 449) Corporate social responsibility (CSR) that involves a mix of grant giving,

or TNT's distribution of food to disaster areas. 450) Hybrid business models that combine business capacities with 3 184 THE OPEN BOOK OF SOCIAL INNOVATION social goals such as Vodafone

in addition to its users in east Africa. 451) Corporate not-for-profit management of social provision such as Academy Schools in the UK and Charter schools in the US. 452) Partnerships between social enterprises and corporations

with not-for-distributed profits such as BASF-GAIN initiative for Vitamin a in Africa, the Danone-Grameen yoghurt enterprise in Bangladesh and the BASF Grameen venture, also in Bangladesh,

and business opportunities for those on low income in the country. 453) Market commitments such as Cadbury's commitment to buy only fairtrade cocoa for one of its products.

Finance One of the big challenges for social enterprise is growth. Partly, this is because they face limited access to risk and growth capital,

but it is also a reflection of the fact that as social enterprises grow, they often face difficulties in balancing conflicting pressures.

Much has been written about social returns on investment, triple bottom lines and‘blended value'2 but how to ensure that the interests of investors remains subordinate to the social mission remains a critical question for social enterprise.

Social finance Increasingly, there are a range of financial instruments and packages which take into account the particular needs of social enterprises and businesses with social goals.

A number of these, like public share issues, funding through cooperative subscription and crowdfunding are discussed in section 4 on Sustaining.

Here we look at other emerging channels of social finance. 456) Ethical investing also known as‘socially responsible investing',covers a broad range of financing strategies which seek to maximise both social

and financial returns on investment or at least, reduce the negative impacts of investments. Investments can be screened negatively to exclude, for example,

companies and organisations which are responsible for exploitative labour practices, cause harm to people and planet or are at odds with the values and mission of the investing organisation.

Investments can also be screened positively to include companies which further social and environmental goals. For example

the Norwegian Government Pension fund follows a series of ethical guidelines issued by the Ministry of Finance these include the stipulation that the fund cannot make investments

'The website Your Ethical Money provides advice on how to direct personal investment into green,

sustainable and ethical products. 457) Mission-connected investment is a form of ethical investing it allows organisations to tie their investments closely to their missions

and fair trade. 458) Social enterprise funds including the new venture capital fund, set up by Triodos Bank,

which invests in high impact and commercially sustainable social enterprises. Their aim is to help grow a dozen

or so social enterprises in the UK. 459) Social venture funds that use equity-like investments for start-up and early-stage social ventures where loan financing is unsuitable.

Examples include Bridges Community Ventures in the UK, which invests in businesses based in regeneration areas

and in sustainable business sectors, including the environment, education, and healthcare. 460) Microcredit for microproduction. Grameen, BRAC and ASA in Bangladesh,

These bonds enable investors to release 20 per cent of the value of their 3 SUPPORT IN THE MARKET ECONOMY 187 investment for charity

In the UK it has recently been agreed that charities can invest in the start-up equity of social ventures,

as with the Mustard seed charity's investment in the fair trade Community Interest Company, Liberation Foods. 465) Investment-readiness support aims to get projects

or promising enterprises to a stage where traditional investors can make investments. This can include

Other useful elements include standardised due diligence packs (business plan, accounts, legal information, etc) to enable approaches to any funder. 466) Philanthropic investment for growth such as the CAN Breakthrough Social Investment Fund

which provides strategic support and growth capital to established social enterprises with the ambition and potential,

both to scale up their businesses and maximise their social impact. Breakthrough was founded by CAN (formally known as Community Action Network) and the private equity firm Permira in 2005.

runs CAN Social Investment, leveraging business support from leading private sector companies, as well as CAN Mezzanine,

which provides shared office space for more than 115 charities and social enterprises in sites in central London (see also method 487). 467) R&d mentored funding prior to start-up lending, such as MONDRAGON

which are now catering to the specific needs of social enterprises and businesses with social and environmental goals. 468) Ethical banks including Triodos Bank and the Cooperative bank in the UK, RSF Social Finance in the USA, GLS Bank in Germany, the Alternative Bank

the active involvement of shareholders and savers in the company's decision making process must be encouraged;

furniture, engineering, food, etc) and they give their judgement on the quality of the proposal and the prospects of the enterprise.

the committee then promises to guarantee a bank loan to the enterprise, backed by a small capital reserve and the personal guarantees of each member of the consortium.

In many cases investors are looking for projects that combine social and financial returns. 473) Bank-based funding for social enterprises

and not-for-profit organisations including Banca Prossima in Italy which is part of the larger banking group Intesa San Paolo. 474) Business angels provide finance for social ventures, often with advisory roles,

and sometimes supported by networks to link investors and potential projects. 475) Social wholesale banks,

seeking a blend of social and financial returns (see also method 361). 3 476)‘ ebays'for social investment, for example, Clearlyso,

an online market place for social enterprises and lenders that takes a small margin on the financial transaction.

For example, a GP's practice in Tiverton, Devon, awards a kite mark to local shops and restaurants that provide healthy food and services. 480) Consumer guides and reviews.

They remain critical to the social economy, both in assessing products and services on the basis of social criteria,

and in providing publicity to social enterprises. Countries like Cyprus have used the model of a‘Good Food Guide'to upgrade the quality of the island's food

and restaurant industry. 481) Social movement campaigns around corporate conduct such as the Nestlé baby milk campaign.

They create their own protected economies with discounts for particular products and services from specified places.

The growth of parallel mechanisms to favour the social economy has been geared primarily at promoting the local economy.

There remains scope for a considerable expansion of these methods to promote social and environmental goods and services. 482) Local trading currencies.

Local business can then decide to give customers special offers for using the money (see methods on Informal Trading Systems and Currencies, methods 507-510.

Image courtesy of Bill Knight/www. knightsight. co. uk 3 192 THE OPEN BOOK OF SOCIAL INNOVATION Training and formation There is growing interest and investment in the development

of financial resources for social enterprise. As yet, very few resources have been devoted to labour market development. However, developing skills within the field of social enterprise is critical to the growth

and development of the sector. 483) Specialist academies linked to social economy initiatives, such as: the University of Mondragón in Spain;

the Sekem Academy in Egypt for the research and study of agriculture, pharmaceuticals and medicine from a bio dynamic perspective;

which has grown out of the slow food movement. 4 484) Retraining of business leaders to play roles in the social economy,

sector leaders and others. 486) Lessons in social entrepreneurship such as the programmes offered by INSEAD and the Skoll Centre for Social Entrepreneurship at Oxford's Saïd Business school.

'and peer-learning. 487) Mutual support networks such as Community Action Network (CAN) which promotes social entrepreneurship

and social enterprise across the UK (see also method 466). 3 SUPPORT IN THE MARKET ECONOMY 193 Markets for social goods New markets for social goods (or‘bads'can also play a role in accelerating social

Currently a number of social enterprises trade shares through matched bargains between registered buyers and registered sellers on the basis of a price recommended by the Board of directors.

The Rockefeller Foundation has announced recently a study to investigate the viability of a social stock exchange for social enterprises in the UK. 492) Social indices such as the FTSE4GOOD Index Series,

This index can be used as a basis for responsible investment, as a way of identifying environmentally and socially responsible companies,

and to track their performance over time. 3 194 THE OPEN BOOK OF SOCIAL INNOVATION End notes 1. For more information on social enterprises

and social entrepreneurship see, Nicholls, A. Ed.)(2006)‘ Social Entrepreneurship: new models of sustainable social change.'

Gregory Dees, J. 2001)‘ The Meaning of Social Entrepreneurship.''Reformatted and revised, May 30, 2001; Defourny, J. and Nyssens, M. 2008) Social Enterprise in Europe:

Recent Trends and Developments.‘‘Social Enterprise Journal.''Vol. 4, Issue 3, 2008; and Defourny, J. and Nyssens, M. 2008)‘ Conceptions of social enterprise in Europe and the United states:

convergences and divergences.''Paper presented at the 8th ISTR International Conference and 2nd EMES-ISTR European Conference, Barcelona, July 9-12,2008;

Borzaga, C. and Defourny, J. Eds)( 2001)‘ The Emergence of Social Enterprise.''London and New york:

Routledge. 2. Emerson, J.,Spitzer, J. and Mulhair, G. 2006)‘ Blended Value Investing: Capital Opportunities for Social and Environmental Impact.'

'Geneva: World Economic Forum. 3. For more information see: Office of the Third Sector (2009)‘ Social Investment Wholesale Bank:

A consultation on the functions and design.''London: Cabinet Office. Available at: http://www. cabinetoffice. gov. uk/media/224319/13528%20social%20bank%20web%20bookmarked. pdf 4. For more information on the Slow Food Movement, see:

Rizzoli International. 3 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY 195 4 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY Many innovations begin in the informal life of households a conversation around a coffee, a kitchen table,

Over time what they do may become more formalised and shift into the grant economy and subsequently into the public or market economy.

The informal household economy has generally been recognised under as a source of innovations. But it has played a critical role in fields including the environment and health

usually leading ahead of government and business, and is set to become even more important as issues of ageing

Within the household economy, we can see a number of emergent trends. One is new forms of mutual action between individuals whether in the form of open-source software,

and tools that underpin the new systems are developing innovative business models to cover the costs involved this is especially the case where services are provided for free.

donations, charging for some services to cover the costs of 100 400 350 300 200 150 50 250 0 Germany Italy UK France Finland USA Paid work

Paris. 4 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY 197 providing others, selling information on users and so on. 1 In the field of opensource software,

However, this is not just a virtual economy. It is also about care and support in the home and the neighbourhood,

This question is of course central to current discussions of urban and rural policy (from lighting, The State The Market The Household The Grant Economy 4 198 THE OPEN BOOK OF SOCIAL INNOVATION to curfews

But to spread the benefits of the social economy, we will need to rethink many of the ways in which the household economy relates to the two main sources of finance the market and the state.

Issues such as the distribution of working time, the valorisation of voluntary labour, the content and channels of life skills learning, the role of many of the social and educational services, the arrangements for retirement and unemployment, the size

and location of public service centres such as schools and hospitals, and the organisation of public safety all these will need radical changes.

which provides an online publishing platform for tens of thousands of citizen reporters. 4 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY 199 498) Hosts and moderators as online guides.

Propertising not privatising In the social economy, rather than restricting access to knowledge and information, there is value in diffusing and sharing ideas and information as widely as possible.

and of means to strengthen a reciprocal economy by limiting free riders. Examples include open licences. 500) Open licensing has redrawn the traditional battle lines between the interests of society

or the rights to sabbaticals provided in some professions. 505) Flexible terms of formal employment to enable a sustainable informal economy,

such as the right to request flexible working time. 4 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY 201 506) Training for volunteers the provision of training and incentives for volunteers,

They create an economy based on direct household time and can serve as alternatives to mainstream currencies

OR HOUSEHOLD ECONOMY 203 514) Extending public spaces for domestic production such as allotments and opening parts of parks or schools for residents and students to grow flowers, fruits, and vegetables.

Prosumption There has been marked a development of users becoming more engaged in the production of services.

In the words of Alvin Toffler, they have become‘prosumers'producers as well as users of services.

Image courtesy of Mike Russell. 4 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY 205 517) Users as producers such as the Expert Patients Programme,

that has been replicated in several countries. 520) Group services for networks of households, generalising the principle of sheltered accommodation.

These are having profound implications on services and models of collective action. 522) Developing new models of care and support.

Image courtesy of San Patrignano. 4 SUPPORT IN THE INFORMAL OR HOUSEHOLD ECONOMY 207 This could include educational coaching services, relief and backup for home carers, health coaches, birthing

the Clissold Park User Group) that become champions for new ways of organizing services. Social movements Social movements have been the source of major waves of social innovations over the past 40 years notably in food, the environment, healthcare,

and in transforming the social relations around gender, race, disability, and sexual orientation. They have been generated largely from within the household economy,

and have developed innovative forms of distributed network organisation and action, further facilitated by the advent of the internet. 526) Grass roots campaigns for social change.

Entrepreneurship, Democratic Action, and the Cultivation of Solidarity, Cambridge, MIT Press, 1999. Geoff Andrews, The Slow Food Story, Pluto Press, 2008.

Jim Maxmin and Soshana Zuboff, The Support Economy: Why Corporations are Failing Individuals and The next Episode of Capitalism, Penguin, 2004.

Ludwig Fleck, Genesis and Development of a Scientific Fact, Chicago, University of chicago Press, 1979. M. P. Parameswaran, Democracy by the People, Alternatives Asia, 2008.

Walter Stahel, The Performance Economy, Palgrave Macmillan, 2006. INDEX 211 INDEX 5 a Day Campaign 86 10:10 Project 87 27e Region 148;

149 311 Services 21 Aalto University 134 Abecedarian Project 111 Academies 116; 192; 185 Accelerators 135 Accountability 3;

68-69; 152-155; 173-175 Accounting 71; 74; 75; 99; 102; 104; 114; 119-120;

86 Bridges Community Ventures 186 Brokers 134 212 THE OPEN BOOK OF SOCIAL INNOVATION Brookings Institute 48 Budgets 92;

156 Business plans and models 59-63 Buying Solutions 91 Cadora, Eric 159 Cafédirect 68 Camp for Climate Action 120;

200 Community of Practice on Inclusive Entrepreneurship (COPIE) 137 Community Shared Agriculture 205 Competitions 38;

32 Creative Commons 200 Credit unions 188 Crisis 15 Crowdfunding 79; 172 Cruz, Teddy 36 Curitiba 14;

De Bono, Edward 32 Demand 13; 70; 83; 85-87; 88 Deming, Edward W 18;

148 Finance For emerging ideas 54-57 For new ventures 78-80 For systemic change 121-122 Public economy 149-161 budgets to promote internal

and means of payment 156-157 public investment 157-160 fiscal moves to promote social innovation 160-161 Grant economy 168-173 grant giving 169-171

improving the grant relationship 171-172 mission related investment 172-173 Market economy 185-189 social finance 185-187 social finance institutions 188

71 Grant Economy 142-145; 167-179 Green Homes 88 Green Valleys 55 Greenpeace 28;

31 The Household economy 142-145; 195-208 Hubs 129; 135 I Want Great care 21;

97 Incubators 133 Information systems 20-22; 89; 119-120 Infrastructure 114-115 Innocentive 134 Innovation Innovation Challenge Prize 54 Innovation Exchange 38;

189 Intrapreneurs 126 Invest to Save Budget 54; 132; 150; 159 Islington and Camden Training Network 176 Italy 36;

166 National Health Service Duty to Promote 162 National Health Service Social Enterprise Investment Fund 158 NHS Innovation Hubs 135 NHS Institute

154 New Economics Foundation (NEF) 49 New Philanthropy Capital 171; 175 New york's Open Book 154 New zealand Police Act Wiki 42-43 Niagara Peninsula Homes 206 Nike Foundation 113 Nobel prizes 169

198-199 Oliver, Jamie 95 Oltre Venture 80 One Click Organisations 68 Open Open Access Journals 200 Open Brands 83;

159 Prime minister's The Enterprise Challenge (TEC) 150 Private Equity Foundation 175 Pro-Ams 139;

84 Regulation & Legislation 161-162 Relational Capital 74-77 Report Empty Homes 18 Research & Mapping 17-20 Risk 54;

139 School, Social services and Policy Cooperation Scheme (SSP) 166 Schumpeter, Joseph 145 Schwab Foundation for Social Entrepreneurship 169 Scripts 22;

132 Skoll Centre for Social Entrepreneurship, 192 Saïd Business school, Oxford university 126; 192 Skoll Foundation 169 Slow Food 109;

202 Sobrato Family Foundation 169 Social economy 4-6; 63; 82; 84; 136; 141-145;

199 Social Enterprise 2; 60; 66; 78; 86; 98; 99; 103; 130-132; 142; 158;

207-208 Social Silicon valley 131 Social Venture Network 171 Social Venture Partners 80 218 THE OPEN BOOK OF SOCIAL INNOVATION Sonoma Mountain

18 Supply Chains 13,62, 70,94-95,171 Support Economy 5, 111,144 Sure Start 111,150-151 Tällberg Foundation 44 Taproot Foundation 172

, 108,117, Venture Philanthropy 80,167-168,172, 175 Visiting 36,205 Vodafone 183-4, 219, Voting 41,65, 153-154, Volunteers 54,59, 64,74, 77,166

Ventures 183 Working Rite 66-67,220 World bank 19,38, 89, Worldchanging 178 WRAP 135 X-Prize 39 Young Foundation, The 2, 17,126

THE AUTHORS ABOUT THE YOUNG FOUNDATION Robin Murray is an industrial and environmental economist. His recent work has focused on new waste and energy systems and on projects in the social economy.

He was cofounder and later chair of Twin Trading the fair trade company and was involved closely in the companies it spun off,

The Young Foundation brings together insight, innovation and entrepreneurship to meet social needs. We have a 55 year track record of success with ventures such as the Open university,‘Which?'

'the School for Social Entrepreneurs and Healthline (the precursor of NHS Direct. We work across the UK

working on over 40 ventures at any one time, with staff in New york and Paris as well as London and Birmingham in the UK.

and tools for innovation being used across the world and across the different sectors the public and private sectors, civil society and the household and in the overlapping fields of the social economy, social entrepreneurship and social enterprise.

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