White House Perspective: In Conversation with Sonal Shah

Speakers

• Sonal Shah, Director, Office of Social Innovation and Civic Participation, The White House
• Kara Hurst, Vice President, BSR (Moderator)

Highlights

• Government can and should play a catalytic role in promoting innovative business models. Companies need to push governments to change the way they approach funding and evolve tax models to align with today’s approaches to philanthropy and social entrepreneurship.
• To move toward more impactful investments, it is important to focus on solving problems rather than on reporting numbers.
• More investment in leadership in communities is needed to solve local problems. This investment is often overlooked in the nonprofit sector, leading to high levels of turnover, and ultimately, limiting the effectiveness of organizations.

Memorable Quotes

“As money gets tighter, we will need to have the conversation on how to leverage funds more effectively and whether we are really impacting the problem.” —Sonal Shah

“We are operating with a tax model from the 1940s, but the models of philanthropy have changed and so should our tax model.” —Sonal Shah

“You, as business, need to push us and say that you want things to change, that you want social innovation to be done differently. Some governments are saying that no one is asking for this.” —Sonal Shah

Overview

Hurst kicked off the session by highlighting Shah’s diverse experience in the private, public, and nonprofit sectors and recent role as the director of the White House Domestic Policy Council’s Office of Social Innovation and Civic Participation (SICP). The mission of the SICP is to increase investment in innovative community solutions that demonstrate impact and identify ways that the government can catalyze change.

In a bureaucracy such as the federal government, change can be difficult. Shah explained, “We in the Office had grand ideas in the beginning,” but she and her colleagues quickly discovered the limits to changing policy. In particular, the restrictions on shifting money from one program to another presents considerable barriers to promoting new and innovative business models. To overcome these barriers, the SICP took advantage of stimulus funding to put flexible-funding structures in place in numerous departments in government.

Shah is convinced that some people in government are pursuing innovative solutions in government, but that the key is finding the right people and encouraging them to join forces. Shah explained, “They don’t have a BSR for government so we, in the SICP, started pulling people together.” She shared an example of one of the innovation officers from the Health and Human Services Department who consolidated the department’s data and made it public. This act encouraged other departments to do the same and presented opportunities to work across sectors. Leadership is also critical, and investment in training leaders is lacking in both the public and nonprofit sectors. From Shah’s experience working for and with nonprofits, she’s found that many people often max out. She argued that “If we want to scale in the nonprofit sector, we are going to need to invest in leaders.”

One of the greatest changes Shah would like to see in the way government supports community initiatives is to start asking questions about impact and encouraging community initiatives to change course if their models are not working. Hurst probed Shah to share her thoughts on how far away we are from arriving at catalytic philanthropy. Shah said that there are still a lot of examples where we are funding programs that are not addressing the problems. In Milwaukee, the high school dropout rate has actually increased despite investment in numerous programs to address education in the city. She said that what we need to be asking is “If it isn’t working, why don’t we change the model?” Instead of reporting back at the end of projects, we need to be open to correcting the course in the middle.

During the Q&A period, participants asked whether innovation really happens at the local level, and how business can empower municipalities to support impact investing. Shah explained that many innovative financial models are happening at the mayoral level. The real question for Shah is how do municipalities take the local models that are working and share them, so that other municipalities know what works and try to replicate them.

When asked for some examples of investments that have been scaled successfully, Shah responded that the key to scale is investing in infrastructure and thinking about scale of impact rather than evaluation. Shah added that the government has been collecting so much data from nonprofits, but it has been more of a checkbox exercise. She called on the group to think about how to move toward impact from a focus on compliance. In response to a question about what business could do, she said that business has the capacity to scale, and what government does not know how to do but needs to do is scale.

In her final statements to the audience, Shah encouraged participants to be bold and to “not be afraid to break some china along the way.” She continued, “We have the ability to change these models.”