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Policy for social innovation: Five ways policy can support social innovation

To start the Social Innovation Community project we reviewed what social innovators and researchers have said so far about the relationship between public policy and social innovation.

Across Europe there are many initiatives operating nationally and transnationally that have been designed to support social innovation, but we’re still some way from a well-developed field of ‘social innovation policy’. Nevertheless, from this work so far we can start to sketch out what this might look like.

Public policy can both enhance supply of and demand for social innovation, as well as creating a wider environment in which social innovations can thrive. Picking up on each of these objectives, here are five areas of activity where public policymakers have a clear role to play in supporting social innovation.

1. FUNDING FOR EARLY-STAGE INITIATIVES, SCALE-UPS AND INTERMEDIARIES

Unsurprisingly, funding tops the list of needs for many social innovators, including grants (widely seen as important for early-stage seed funding) and investment. Policymakers at both European and national government level have prioritised this issue. EC actions have included the Social Business Initiative to support social enterprise, and greater prioritisation of social innovation within structural funds. It has also invested in intermediaries to support social innovators - like incubators and accelerators - through the TRANSITION and BENISI projects.

At a national level, there have been a number of innovations in the last few years. The UK government, for example, set out a strategy for growing the social investment market in 2011 and since then, has put in place several measures to encourage more supply of and demand for social investment, including establishing Big Society Capital as a ‘wholesale’ social investor (it provides funds to other investment intermediaries), trialling social impact bonds as a new form of financing designed to bring different types of investors into the market and promoting community shares as a way of crowdfunding investment for community projects. More recently, the UK government has launched a matched crowdfunding scheme for arts and heritage projects, in association with Nesta and Crowdfunder. Meanwhile, in Portugal, the government has started to look at ways in which European Structural Funds can be used to support all stages of social innovations, including through grants, debt and equity investments.

2. SUPPORTIVE REGULATION AND LEGAL FRAMEWORKS

Socially innovative organisations often don’t fit traditional institutional forms well, which can cause problems - for instance, not all social economy enterprises can access Horizon 2020 and COSME funding. In places like Estonia and Ireland, social innovators have expressed a need to have legal frameworks that better meet their needs, and some national governments have already taken steps to do this. Examples of this include establishing the Community Interest Company (CIC) model in the UK, while in France the Loi Economie sociale et solidaire (ESS 2014) brought about a number of different commercial frameworks for social or solidarity-based businesses.

Regulation can stimulate or inhibit social innovationl; for example around new forms of financing (like crowdfunding) and new business models being developed in collaborative economy initiatives. People in these sectors have called for ‘smart regulation’ that allows space for innovation while still protecting consumers and citizens. In the UK for example, the Financial Conduct Authority has created a ‘regulatory sandbox’ to provide a ‘safe space’ for innovators to test out the impacts of new models without immediately incurring the usual regulatory requirements. Meanwhile, those in the digital social innovation community have called for a number of regulatory measures to encourage innovation, such as promotion of open access to research, open standards and interoperability (so that devices and services produced and delivered by different companies can communicate with one another).

3. OPENING UP PUBLIC PROCUREMENT PROCESSES

In Europe, public agencies are important potential ‘customers’ for social innovation. In their role as commissioners, funders and providers of public services, public agencies have the ability to help social innovators develop and test solutions, get them working and take them to scale. But this can only work if procurement processes are open to social innovators of a variety of organisational forms - small organizations or large, community sector, social economy as well as private sector or public organizations. One approach is to require social value to be considered as part of procurement decisions. In 2014, the EU published a new public procurement directive which asks public authorities to consider social value in their procurement decisions - member states were given until April 2016 to enact national legislation taking on these principles, although by May 2016 most were still to do so. Amongst policy examples which make explicit use of social innovation principles, challenge-based procurement models, like the Barcelona Open Challenge, are also gaining traction.

4. USING PUBLIC ASSETS IN SOCIALLY INNOVATIVE WAYS

Opening up access to public assets can stimulate social innovation. For example, the report Policies for Shareable Cities recommended that European policy makers should facilitate the sharing economy at a local level through interventions like allowing residents to lease residential parking spaces for shared

vehicles, designating lanes for ridesharing, creating incentives for urban farming on vacant or unused land, and facilitating the temporary use of empty commercial spaces. In Baltimore, USA, the Mayor created a scheme through which residents could apply to turn vacant housing lots into community spaces, amending planning regulations and working with utilities providers to help residents create parks, community gardens and a range of other non-commercial projects on otherwise unused land. Meanwhile, initiatives like Voidstarter in Ireland and SpareSpace in the Netherlands, which attempt to open up unused space to benefit young people and microentrepreneurs, present new opportunities for policymakers to partner with social innovators to address a number of local economic and regional development issues.

This doesn’t just apply to physical, but also virtual assets. Digital social innovators have called for more opening up of public data to stimulate innovation - alongside measures to increase citizens’ control of their own data.

5. RAISING AWARENESS AND BUILDING SKILLS

Policymakers can help to improve the legitimacy and visibility of social innovation through initiatives that map and measure activity, and attempt to measure its impact and contribution. The EC-funded Tepsie project, for example, set out a blueprint for measuring social innovation, that would give national or regional policymakers a good evidence base to inform new policy measures. Meanwhile, other research has shown how awareness raising is also important within and between social innovation actors. For example, research on crowdfunding for good causes found that few voluntary and community organisations were aware of different crowdfunding models and how they could be used, and so recommended that policymakers and sector bodies promote training and resources that could help build capacity to use these new fundraising approaches.

WHAT NEXT?

Some parts of the social innovation community have engaged a lot with policymakers and have a good idea about how public policy could support them better. In other areas - for instance, where social innovation networks are less developed or formalised - there’s been less work done to date. Through the Social Innovation Community project we’re looking to reach out to social innovators across sectors and involve them in policy discussions. If you’re interested in our work, we’d love to hear from you.

You can reach out to us on Twitter @SICommunity_EU using the hashtag #socinnpolicy or email us directly at policy@siceurope.eu