Scaling your initiative by handing over to a public authority: in certain areas handing over your philanthropic or social entrepreneurship activities to the public sector may be the most effective way to reach e.g. nationwide coverage. This  scaling mechanism goes beyond commercial interests and is not yet frequent. We are looking for case studies showcasing such  implementation. 

Philanthropists and social enterprises often emerge in areas perceived as connected to public good where government is perceived to be failing or providing insufficient action. They initiate or support actions that utilise the language of the market for social exchanges, and deploy business strategies and methods. This can then lead down two different pathways: a further privatisation of government duties (a shift towards more public procurement and the funding through sales of services rather than grant-based funding of activities has been observed) or the government replacing, adjusting or adding to its own services, taking up the private initiatives.

The latter is of course highlighting an ideal trajectory for scaling. Among the strategies for scaling options can be seen as a continuum ranging from internal organic growth controlled within the organisation to wider dissemination of good practice. This continuum therefore represents a shift from the complete control within an organisation to a situation where the originator of the innovations and developments has limited or in the case of an exit no power over how this is implemented. As the objective is to maximise social impact, considerations go beyond crude measures of organisational growth. However, this model of having the private sector doing the early stage and public sector following up is an idealised model which does not easily work as the state’s commitment to the new ways of policymaking and the delivery of service with philanthropy should not be overestimated. While elements of the state look for new ways of opening up and deconcentrating decision-making, others continue to be committed to older forms of centralised government.

So what are the elements that make it work? On reflection of the recent EVPA Conference with panelists like Madeleine Clark, Founding Director of Genio complemented by literature here comes my key learning:

When starting an activity in response to a need you have identified in an area which has an overlap with government ensure to talk to public authorities right from the start. Acknowledge that you may be perceived as interfering with the policy agenda. Especially if making a public sector exit is your goal, ensure to involve the ones who should follow-up right from the start. So here comes the step by step guide:

1. go to the top officials raising their attention to the problem you would like to address
2. ask them for permission to talk to their staff and make them part of the solution finding
3. invest enough time to actually talk to the staff and try to understand how they see the problem
4. get feedback to any proposed solutions and identify potential barriers to the implementation of the solution
5. go back to the top officials and discuss time plan of what you will be implementing and the basic conditions of handing it over to the public at the end.
6. set targets in terms of output (don’t just stop there), outcome and impact together with the government

Remember to build coalitions with organisations trying to achieve similar goals. Have a clarity of vision and strive for achieving impact together rather than alone. And whatever you do , don’t do harm. Remember that philanthropy or impact oriented entrepreneurship do not have the goal to replace the state but to scale impact. By working with the state you can increase the likelihood of success.

Get involved: Do you have any experience with public sector exit? Would you like to contribute with a case study? Comment on this blog post and/ or contact us here

Further reading:
Alan Abramson, et al. (2012), “Philanthropic Partnerships in the U.S.: A Literature Review of Recent Experiences”, Council on Foundations
http://www.cof.org/sites/default/files/documents/files/GMU-PPP%20Lit%20Review.pdf

Dipti Parashar , (2014),”The Government’s role in private partnerships for urban poor housing in India”, International Journal of Housing Markets and Analysis, Vol. 7 Iss 4 pp. 524 – 538
http://dx.doi.org/10.1108/IJHMA-08-2013-0049

Fergus Lyon Heather Fernandez, (2012),”Strategies for scaling up social enterprise: lessons from early years providers”, Social Enterprise Journal, Vol. 8 Iss 1 pp. 63 – 77
http://dx.doi.org/10.1108/17508611211226593

Malin Gawell , (2014),”Social entrepreneurship and the negotiation of emerging social enterprise markets”, International Journal of Public Sector Management, Vol. 27 Iss 3 pp. 251 – 266
http://dx.doi.org/10.1108/IJPSM-11-2012-0143

Malin Gawell, (2013),”Social entrepreneurship – innovative challengers or adjustable followers?”, Social Enterprise Journal, Vol. 9 Iss 2 pp. 203 – 220
http://dx.doi.org/10.1108/SEJ-01-2013-0004

Michal Almog-Bar Ester Zychlinski , (2014),”Collaboration between philanthropic foundations and government”, International Journal of Public Sector Management, Vol. 27 Iss 3 pp. 201 – 211
http://dx.doi.org/10.1108/IJPSM-03-2013-0036