Social Innovation Fund: we explain it to the Municipalities

Designing social impact innovation

The Public Notice of the Social Innovation Fund as an opportunity for improvement and investment for the Municipalities

  1. Social policies: a cultural leap is needed
  • The context

To date, social policies have been considered as a cost, something that a government, local or national, must inevitably deal with to maintain an acceptable threshold of equity and cohesion within the community, avoiding social imbalances and tensions. Assisting the elderly, caring for the disabled, reintegrating former drug addicts, looking after long-term patients, etc., are examples of necessary public interventions, but normally conceived as current expenditure for the few, withdrawn from investments for all.

This approach, which in fact contrasts social policies and development policies, has proved inadequate: today, incompressible social needs (health, education, etc.) are not only increasing, but have reached proportions that no government can think of managing with the assistentialist approach of the past, nor, even less, with the liberal one.

The numbers that describe the growth of social needs, in fact, are alarming: Istat has certified that in 2017 the percentage of Italians in absolute poverty has exceeded 8%, corresponding to over 5 million people. Not only. Individuals in relative poverty have also grown: over 9 million, equal to more than 15% of the Italian population.

In total there are almost 15 million Italians in difficulty: it is clear that none of the policies adopted so far is able to cope with these numbers, with the harmful consequences that it are easy to predict for the keeping of society.

  • The perspective

To seriously change course and make social policies innovative, and therefore effective, the first step to make, certainly the most difficult, is cultural. In fact, a new way of understanding and financing social policies is emerging, no longer as a mite to pay in order not to leave so-called disadvantaged people behind, but, on the contrary, as a tool to create social cohesion and, therefore, economic growth in cities and territories. If you can get this concept through today, it will be automatic tomorrow to consider public money for the social sector not spent on a few, but invested for everyone.

This is not an abstract idea, let alone a utopian one, but an innovative and concrete way of doing social policies, based on a path already started in different advanced countries, from Great Britain to the United States and Canada. Italy, therefore, must not start from scratch, but take back and adapt the positive examples made abroad with the goal of not limiting itself to stopping emergencies, but to prevent them. It is what is called social impact innovation, which has long been running from one side of the globe to the other.

In Italy, the legislator sensed the importance of linking to the innovation train also in the social field and with law 106 of 2016 provided the regulatory framework and operational tools on which mayors and regional governors can count to start changing the way to design social policies and find resources for them.

  1. What are Social Impact Innovation and Social Impact Investing
  • Social impact innovation

The reasoning underlying the public policies with social impact is simple. Local government, like the national government, has less and less financial resources at its disposal, but at the same time it has to deal with another evidence: if it does not spend today on the incompressible needs of the community (health, education, etc.), it will spend more tomorrow due, for example, to the explosion of social unrest resulting from unresolved poverty and marginalization.

The solution attempted so far, generally, has been to delegate most of the social services to the non-profit world, which, in turn, however, works thanks to public funds or private donations. But public funds – it has been said above – have thinned, while private donations are no longer enough due to the high demand. This means that non-profits will be less and less able, in turn, to guarantee adequate services.

This is where the Social Impact Innovation fits. What’s innovative?

First of all, the terminology: innovation becomes a social impact when a policy is designed and implemented in such a way as to produce a benefit not only for the individual need or emergency, but for the entire community. In putting back an abandoned public building, for example, it is not only those who use it, but the entire neighborhood that benefits, because initiatives will be promoted, people will be attracted, wealth will be produced, a sense of security will increase.

Secondly, the actors. In social impact finance the public and private are no longer seen as alternatives, much less as opposed. Nor do they limit themselves to a relationship of two: public body, on the one hand, and private subject, on the other. Social impact innovation involves bringing together more actors: the public institution, the private investor / financial subject, the philanthropist, the non-profit subject, the evaluator. None of them can think of coping with the social needs of the coming years alone: ​​to be more effective, they must learn to design, finance and work together, with the aim of producing a truly significant social impact.

Thirdly, intentionality and measurability: social impact policies must be designed from the outset with the intention of producing a wide-ranging impact and, above all, a measurable impact.

  • Social impact investments

There is a fourth aspect that distinguishes innovation with a social impact: how to find financial resources.

The great private liquidity also present in Italy is looking for investments in social infrastructure, from schools to hospitals, from the recovery of disused buildings to the regeneration of entire urban and non-urban areas. To attract that liquidity, local administrations must learn to plan sustainable social interventions, that is, that they are able, over time, to walk with their legs also from a financial point of view and, thus, to patiently remunerate private investments. Interventions that, as mentioned above, must also be measurable: like any serious project that wants to affect, they must proceed by progress with intermediate and final assessment not only of the objective achieved, but also of the impact produced at a wide range.

This is why the so-called social impact investments have been generated from social impact innovation.

They are, as is evident, projects, if not difficult, certainly complex. Both because they involve many different subjects, and because they take years.

It is worthwhile, however, to learn and try seriously, if you do not want to remain enclosed within the increasingly narrow confines of grants, which are important, but which do not take you far: public or private money, which is barely enough to restructure the umpteenth roadman’s house, opening its doors with smiling volunteers, tearing up some newspaper headlines, only to find themselves, after a few years, to witness a new decline of the building due to lack of new resources.

Innovation and social impact investments are therefore a challenge for everyone – public and private actors – that no administration can afford to lose, if it is based on the cohesion, balance and growth of its community.

  1. The Social Innovation Fund for Municipalities and the proposal of the Fondazione Etica
  • The public notice of the FIS

In projects with a social impact, the State and local administrations cease to play the role of financiers and hire those of partners, playing a new role as project promoters, coordinators and collectors of financial instruments, from public to private ones (not only philanthropists, but also institutional and private investment funds).

This is where the Social Innovation Fund intervenes, established with the aforementioned Third Sector Reform, and now activated at the Department of Public Administration. In fact, the Fund offers an important opportunity: it finances projects that see a provincial capital city as a promoter and aim to implement a social impact innovation project. However, it should not be a one-off project, but a first experimentation on the territory of that new way of making social policies mentioned above. In other words, the project must develop and consolidate the administrative capacity of the Municipality in this new area.

The Fund finances those projects in which the Municipality is able to activate private lenders, as well as non-profit entities and evaluators.

  • The proposal of Fondazione Etica

As an Ethical Foundation we have committed time, resources and skills to study and build this type of social impact design.

In order to make their usefulness and the great potential they contain easier to understand, we started a social and economic project in 2016 with the general characteristics of the Social Impact Innovation, better described in the attachment.

We now make our preparation and experience available to those Municipalities that want to participate in the Public Notice of the Social Innovation Fund, but have not yet gained the administrative capacity required by the Notice itself.