1. This research would not have been possible without The University of Wisconsin-
Madison and The University of York who collaborated for the first time on the
wider study of Social Enterprise and Innovation.
A special thanks is given to Sustain Dane, Community Shares and The Urban
League of Greater Madison for their involvement in managing the project and
involvement throughout the research.
How do Funders in Madison
Support Social Innovation?

2. 2
List of interviewees I was personally accountable for:
• Forward Community Investments – Salli Martyniak (President)
• United Way of Dane County – Sandy Erickson (Director of Community Impact) and William, H.
Monkeymeyer (Senior Director of Campaign)
• Wisconsin Women’s Business Initiative Corporation – Julann Jatczak (Vice President of Impact
Initiatives)
• Wegner CPAs – Scott R. Haumersen (Managing Partner)
• Urban League of Greater Madison – Kaleem Caire (President/CEO), Keetra Burnette (COO),
Peng Her (Project Director of South Madison Promise Zone)
• The YMCA – Cheri Buckner (Interim Financial Development Director)
• South Metropolitan Planning Council – Arvin K. Strange (Executive Director)
• WORT FM – Norman Stockwell (Operations Coordinator)
• Center for Resilient Cities – Cora E. White (Resilience Neighborhood Center Director)

3. 3
Madison, WI, currently stands second internationally for containing the greatest number of non-
profit organisations per capita, behind California. Reasons for this thriving and competitive
industry is due to Madison’s affluence and Progressivism. Madison supports the non-profits
capacity due to the available resource in financial and human capital in additional to the local
resources available in combination with the social needs that require such a demand. Madison’s
Progressivism political position bears towards the left conveying greater socialist concepts of
living whereas the majority of Wisconsin follows strong traditional Conservative values that are
less likely to seek social justice above status quo prerogatives.
• US progressive market-orientated competition state: naturally transpires privately based
social initiatives to address social means indirectly from central government that creates
the networks and infrastructures for a larger non-profit/not-for-profit/third sector
economy to address the market failures and address social needs.
• UK market-orientated state has greater welfare delivery: since the 1950’s a welfare state
was established to address societal needs based upon Keynsian theories of supply and
demand however over time these have transformed into resembling US Competition
State.
• US and UK both displaying signs of welfare retrenchment: Post 2008 economic crisis has
deployed sever cuts in public expenditure and has resulted in increasing social needs
due to previous services and resources depleting, furthermore private sector has had the
most detrimental outcome from all the sectors post-2008.
• New ‘Localism’ Political agenda in the UK: Current UK trends are showing increasing
trends of privatisation whereby the government are encouraging non-profit involvement
and engagement to be accountable for delivering the increasing social needs while
previous national services retrench.

4.
Three research associates from the University of York interviewed a total of 28
different funders and organisations for a 360 degree perspective to identify how
financial requirements limit and excel social innovations within the market the
place.
1. First task was to identify an agreed definition of social innovation within the team.
2. Secondly, understand how funders base their decisions and also how non-profits apply
for available finances.
3. A team of 4 additional stakeholders were involved in analysing and validating the findings
of the data.
4. After many discussions we narrowed down the selection of case studies to three main
organisations we thought were the most innovative.
5. We identified the key funding streams and gave an overview of the organisations financial
structure and how they were able to support their forward thinking innovative approach.
6. We discovered key themes that help explain how organisations succeed and adapt to the
new market. In addition, we identified key barriers to innovation and why organisations
face difficulties innovating.
7. To conclude the report we offered recommendations for funders and non-profit
organisations to collaboratively support one another in creating more sustainable
innovations within Madison, WI.

5.
• Leadership and Approach
Leadership and vision are essential instigators within a team or individual that continually seeks new methods,
opportunities or processes of greater efficiency and effectiveness in line with accomplishing the organisational mission(s).
This is known as the Fresh Eyes perspective required to ensue social innovation whereby a team or individual is required to
be the visionary in the process to have a creative perception that breaks away previous preconceptions in order to see a
new order.
• Creative Destruction
A popular economist Joseph Shumpeter and his theory surrounding Creative Destruction is essential to legitimizing the
potential success of socially driven organisations and assessing the potential of whether organisational aspirations are
enough to renovate and remove pre existing service deliveries. The process of Creative Destruction is when a new
innovation becomes an accustomed norm within market infrastructure and capitalism. The micro-financing is an example of
how a new innovation 30 years ago has transformed the banking industry to internationally supply micro-lending to highly
risk-adverse citizens, a creative destruction pattern here conjures the ability to alleviate poverty to individuals who would
previously never be able to gain financial support due to negative equity and bad credit.
• Systematic Approach
Structural adjustments and adaptations evident in the organisation are key qualifiers for being identified as socially
innovative. If organisations apply the fresh eye perspective alongside creatively destructing previous methods of
operations this should transpire in a new way of addressing a social need that has not been considered before. Social
entrepreneurship is one socially innovating systematic approach to address social needs via alternative means.
T h e S o c i a l O p p o r t u n i t y
Social innovation will not be possible without the opportunity to address the social need that public goods do not meet.
The key three ingredients that help individuals create the foundation for sustainable social innovation is to identify the
social opportunity. To find a gap in the market where social needs are not being met. The social opportunity has to
contain all three of the following dynamics in order to transpire into an innovative market alternative.
• Social Need: Whether local, national or global, a clear social need is required to determine the social
purpose for the organisation and is the focal point of innovation.
• Financial Support: Nothing can be made possible without the capital to support and maintain any innovative
programme, this includes financial, human, cultural and social capital and everything in between depending
upon the resources required to aspire towards the aim.
• Creative Ideas: Encapsulated within the human resources that includes the leadership and expertise within
the team that encompass the visionary design elements to drive the initiative, to combine the resources
efficiently and effectively in order to aspire towards the innovating aims.
W H A T I S S O C I A L I N N O V A T I O N ?

6.
Relationships & Networks
Key to any organisations success is the social capital and human resources available, we are often told it’s not about what you but
rather who you know. This is significant for the success of a non-profit organisations and sustaining funding streams. Successful non-
profits require diverse funding streams that can be achieved by a wider network of affiliates. Furthermore problems arise with elitist
notions of networks and niche circles due to veto influence and autocratic control that larger funders often transpire.
Furthermore, the theme of relationships is wider encompassing and should also include how trusting the relationship between
funders and leaders/social entrepreneurs are, currently there is limited evidence of trusted expertise from funders.
Return on Investment in Double & Triple Bottom Lines
The measurement and undiscovered social metrics is, and can be an increasing social ill within the industry of non-profits as
currently many non-profits are struggling to quantify subjective social outcomes due the longevity required in attaining effective
results. Common market practice identifies larger funding pools providing financial assistant to reputable organisations who are
politically impartial and have been established for a long time. Often because smaller innovative organisations are more risk adverse
because of the lack of ROI, whether social or financial. Many small start-ups lack the resources to conduct on-going research of their
operations, to provide evidence for funding criteria. As funders require greater financial and social returns because of increasing
competition, this poses increasing beauraucratic and administrative obstacles that prevent SME from attaining the credibility to be
credit worth and expand operations.
Efficiency & Funding Criteria
Due to the nature of the current market in post 2008 organisations across sectors are expected to run more efficiently. The majority
of funding streams have decrease their spending in the past decade, hence the social need and demand for social services has
increased, subsequently leaving non-profit organisations needing to do more for less. Funders will therefore continue to fund
organisations that have shown adaption through economic retrenchment, good financial strategy and increasing or sustaining
services as before. Unfortunately, many have closed as a consequence. This has also increased the need for innovative approaches
in organisations structure. Ironically, funding streams are rigid and discourage social innovation from adapting to new markets.
Capital & Resources
Many organisations are struggling to expand or socially innovate current practices as current operations are restricted by lack of
additional funding and trust in human skills and leadership. Many organisations are operating at maximum capacity with limited
resources and within the last decade. Innovative productivity has decreased as most administration procedures are taken up with
business development and fundraising to sustain current operating expenditure to remain in existence and maintain current
infrastructures.
E M M E R G I N G T H E M E S

7.
• Risk Adverse
Risk-adversity is a key barrier that discourages many funders to only fund organisations that show reputable causes for
marketing purposes and are likely to spend the money continuing medium or large scale operations, that are recognized to be
a success. SMEs are more likely to show signs of social innovation are least likely to be given the funding required due to the
lack of reputation and evidence to quantified results proving long term sustainability and demand for the service, which
renders them risk-adverse. Funders are unlikely to invest due to the financial risk in not knowing how and if financial returns will
occur, this creates barriers for funders wanting to be more experimental in social innovations as investors in social investment
organisations demand financial forecasts for their money. This attitude is typical of capitalists and is less than likely the
responsibility of non-profit funders.
• Limited Capital
A summery of all barriers can be succinctly defined by the limited capital that currently exists in result of the socio-economic
and political trends Madison-WI has experienced in the last ten years.
• Operating Funds
There exist a significant reluctency for funders to invest in operational costs to support the infrastructure (including staff, office
and basic resource costs) when investing in a social cause. Many funders are stern with a naive attitude towards non-profits
basic business requirements. Many non-profit organisations already operate with minimal operational costs and in many
instances social innovation can only be supported with the financial assistance to cover the costs of all required resources that
are unable to be accessed voluntarily. Many non-profits operate with basic resources and only those organisations that are
already sustainable will be likely to achieve funding for specific social innovations separate from core operations, however
these organisations are less likely to be socially innovative as the will incorporate any new innovations in line with their
organisations history.
• Competition
Post financial crisis all market segments have taken a financial restriction, many closures have occurred and this does not differ
within the non-profit sector. Those organisations remaining are struggling to meet the additional demands as their services are
being constrained. Many organisations now compete for the decreased funding available to sustain their core operations and
maintain their current services. With the restriction of available finance, this hinders all scope for innovation, expansion to the
point of innovation or further collaboration.
B A R R I E R S T O I N N O V A T I O N

8.
W H A T C A N F U N D E R S D O T O
E N C O U R A G E
S O C I A L I N N O V A T I O N
• Incorporating Strategic Funds Through Multi-Year Funding
Non-profits lack often lack the necessary financial expertise required to strategy long-term outcomes with the limited funding
granted on an annual or ad hoc basis. Funders can improve the sustainability of non-profits and social innovation by facilitating
multi-year funding, through dividing the gross donation or other means to aid the longeivity and successful impact of innovating
projects.
• Providing Flexible Expenditure
By increasing the freedom non-profits require to ensue innovative projects through incremental phases that often require a trail
and error approach will not stifle the time capacity or fresh eye perspective required to innovate. Providing flexible expenditure
can release burdensome administrative tasks concurrent that drain core administrative resources that take away from
progressing the social outcome.
• Investing in Trusted Leadership and Expertise
Funders can often know what’s best for those they invest in, there has to be greater tolerance in the trusted leadership and
expertise of those visionaries driving forward the social innovations within the non-profit sector. Greater respect to either
professionals should be acknowledged and more pronounced in order to achieve the greatest outcome for the social objectives
and facilitate effective collaboration and partnerships.
• Change in Attitudes Towards General Operating Funds
Funders should accept the basic requirements for any organisation, non-profits that exhibit the greatest potential for successful
social innovations are often in fetal business stages and do not have consistant funding streams to adequately support central
operations. Funders should be give more consideration and more tolerant in the obstacles small innovation organisations face
when establishing their core operations and who should be responsible for financially support the organisation and what impact
this will have.
• Adapting and Adjusting Towards Systemic and Strategic Approaches
Funders should reflect the nature of social innovations by identifying the social opportunities new organisations are trying to
address. Funders should be more informed of the potential successes and returns of correctly identifying innovative approaches
to addressing social needs beyond local context and with strategic and systematic ideals in mind in order to sustain and support
aspiring innovations.