I applaud the FCC for successfully juggling many diverse interests when it created the National Broadband Plan last year. The plan, as presented to Congress, includes a roadmap for increasing broadband access and adoption throughout America. In October, the FCC announced a new public-private initiative to increase broadband adoption, Connect to Compete. Almost $4 billion has been pledged by the private sector to support this initiative. Next, the FCC will launch a Digital Literacy Corps that will start by helping 5.5 million households with children on free lunch programs and no broadband. This program, the National School Lunch Program, operated by the USDA, identifies students of households at or below 130 percent of the poverty level. Using this established metric, students from families who are part of this group are prioritized to receive discounted broadband and digital services through Connect to Compete. There is a strong identified correlation that households with students who are eligible for the National School Lunch Program do not have broadband at home. 

The Digital Literacy Corps is not a new concept. At Net Literacy (disclosure: I work at Net Literacy), thousands of students have participated in a statewide Digital Literacy Corps since 2003. In 2009, I co-authored an FCC filing with the US Internet Industry Association and later submitted a second filing, both recommending a Digital Literacy Corps. Our recommendation was incorporated into the National Broadband Plan, and we were one of two organizations credited for this suggestion.

These recent FCC announcements have received wide acclaim, but now the hard work begins. To meet the promise of the plan, here are four recommendations:

1. Students should comprise the bulk of the Digital Literacy Corps.
As a seasoned member of the statewide Digital Literacy Corps, I believe that we should tap into the 34 million digital natives—high school and college students—to form the volunteer base. Computer labs would not only reside inside schools and libraries as announced by the FCC; students would also remain inside the schools and libraries to serve as volunteers. The benefits of such programs are multifold. A Digital Literacy Corps comprised of student volunteers could match students to parents within the same school district, increasing efficiency and strengthening a sense of community. Students also will have a convenient and safe location to stay after school while volunteering. Through this service learning, student volunteers will learn important soft skills, including teamwork and mentoring, and hard skills such as computer refurbishing and tech support.

2. The FCC should establish a goal for Connect to Compete to connect 300,000 new households with students on free lunch programs to broadband by 2012 and a total of 1.5 million new households by 2014.
Today, no goals or milestones have been established for this initiative. Without them, how can we measure the initiative’s success or strategize efficiency? The first priority of the Digital Literacy Corps is to help the 5.5 million households with students on free lunch programs who are not already online. Connect to Compete has billions of dollars in commitments and a growing number of high-profile stakeholders that will provide free installs, training, computers with a starting price of $150, and $9.95 broadband services. As a first step, I would recommend connecting 300,000 new households with students on free lunch programs to broadband by 2012 and a total of 1.5 million new households by 2014. If at least 1.5 million of these highest-priority households cannot be installed by October 2014, then we should ask why. Furthermore, achieving this minimum goal still leaves more than 4 million of the prioritized households still disconnected.

3. This year, the FCC should develop a plan with goals and milestones to help the remaining 76.5 million Americans who are passed by broadband but remain offline.
I applaud the FCC for prioritizing the first 5.5 million households, but much good work remains to be done. The FCC should continue to show its leadership by developing programs that help rural Americans, senior citizens, ethnic and racial minorities, and the other populations with low broadband penetration as identified in the plan.

4. The FCC should increase the effectiveness and efficiency of this initiative.
Many groups with low broadband penetration have one thing in common: the misery of poverty. For the Digital Literacy Corps to be successful, it needs better tools. Offering a $150 computer is a good first step, but it is not the last step. At Net Literacy, we are able to donate computers to our constituents at an organizational cost of about $15 each because our public and private partners donate them to us. Executive Order 12999 encourages the federal government to donate computers to qualified nonprofits, but most federal computers are sold, often for scrap. Using surplus federal computers could lower the hardware cost to some of the poorest of Americans to under $100. This will help remove cost barriers to the poorest of families that this initiative targets, increasing the effectiveness of the Digital Literacy Corps.

Will the Digital Literacy Corps be a successful 21st Century Peace Corps? I’ll be checking in with some of the impoverished and marginalized families that this initiative aims to benefit, and report back in 2012…

Occupy Wall Street has done a great job of shining a light of truth on the failed leadership of our greedy, crony capitalist business sector. Inadvertently, it shines an equally unflattering light on what’s missing in the leadership of our nation’s social justice sector.

There’s no debate that our business culture has failed Americans. The last time this small number of people held this level of power and wealth while the average citizen felt powerless, we held a revolution to overthrow a monarchy.

Though its members have been lampooned as left wing nuts, OWS has garnered a majority of the American public’s support. However, lacking a clear plan of action, they risk forfeiting their ability to lead. Already, their most embarrassing participants define them. Their messages are lost to a turf war against liberal mayors who will shut them down as public opinion turns against them. They confuse awareness with actual real change, believing that rhetoric is action.

There’s no shortage of brilliant ideas to change our broken world, but there is a shortage of leadership skills to actually implement them.

Polarization makes things worse. Labeling each other as good vs. evil, profit vs. not for profit, the 99 percent vs. the 1 percent, or Republican vs. Democrat do not move us forward. It keeps us from finding common, complex solutions to difficult problems.

A rising new generation of social change agents will defy the labels as border-crossers, oxymorons, paradoxes, jacks-of-all-trades, and masters of none, speaking the language of the free market while giving voice to those suffering from crony capitalism. They will change the rules by collaborating across sectors, demonizing none, and accepting support from all. They will learn the rules, and then change them.

Where will we find this new generation of leaders? Try Wall Street.

Meet Bobby Shamsian, who can easily traverse the most profound teachings of spirituality, cutting-edge green technology, and the state of international markets in a single conversation. Having succeeded in the financial services industry over the past 10 years, Shamsian is using his knowledge to save the environment. Passionate about climate change, he helped launch TerraVerde Capital Management, one of the first hedge funds in the world dedicated to global change that invests in strategies across the entire supply chain of clean tech, renewable energy, and water.

“We are in the early stages of a technological revolution that will see the way in which we produce and consume energy dramatically,” says Shamsian. Harnessing the power of the free market, he believes that this new cycle will be marked with success and failure. “Many companies will survive while many simply won’t make, and TerraVerde can capitalize on both through a diversified portfolio of hedge fund strategies that focus on sustainability.” The more money prudently invested in this sector, the greater the chance that systems changing innovation will be real in our lives.

But Shamsian still faces challenges. He says, “Most socially conscious investors still do not understand how the terms hedge fund and sustainability can be used in the same sentence, and choose to do business the same old way by putting their money into companies that do nothing to improve sustainability. They don’t understand the markets, so they just rail against them. We can create a new model of capitalism to bring more value and benefit into the world, but it’s a hard sell.”

It may be a hard sell, but this boundary-crosser has an action plan, and it’s exactly the kind of new social sector leadership we need.

Back in American Politics 101, we studied the papers of the framers and discussed the danger of direct democracy—“tyranny of the majority” and the unmitigated power of factions. And we believed there was a societal commitment to representative democracy—direct election of representatives who, through discourse and a deliberative process, would make decisions in the interests of the whole and vote their consciences. Of course this system was biased from the beginning by sexism, racism and classism, excluding who could vote and be represented—but in my lifetime, based upon the struggles and victories of generations past, we had come close to real representative democracy and we took it for granted.

But taking representative democracy for granted was a mistake. Slowly, it’s been dismantled and replaced with an expectation of direct democracy. Our society increasingly replaced the nuance of deliberative process with the absolutism of initiative- and referendum-driven direct votes, poll-driven decision-making, and increased power of factions.

The Danger of Initiative Abuse

Initiative processes, which allowed citizens to put a measure on the ballot by filing petitions signed by an adequate number of fellow citizens, were introduced as progressive reform in the early 20th century. They were designed to have high hurdles that required widespread, diverse support to be feasible. Their design did not anticipate online or paid signature gathering we have today, which allows nearly any well-financed interest group to quickly place any policy issue on the ballot. We have seen initiatives used to radically reshape state tax policy across the US. Voter initiatives have passed “defense of marriage” laws and passed harsh anti-immigration laws—just two examples where the human rights of others are put to a vote codifying the tyranny of the majority. And often the use of the initiative or referendum process is used to overturn or reverse decisions of elected leaders, further solidifying the sense that representative democracy has no impact or power.

Votes of Conscience vs. Decision by Poll

Politicians have always been susceptible to public pressure. Campaign promises, appeasing their base and tracking public opinion are nothing new. However, the rapid shifts in policy stands, the use of polls as decision-making tools, and news-cycle drivers combine to erode the principle of representative democracy and to increase the power of factions. It is standard practice for political action committees, industry associations, and other interest groups to commission polling and invest millions in advertising–all to effectively tie the hands of lawmakers before they enter the hearing room.

While this approach may serve as a smart political strategy to shift power, it is a horrible governing strategy. It moves the deliberative process into a proxy initiative where only the most extreme, well-financed, or active interest groups get to vote. The media cycle horse race and the narrative created by commissioned polls (often designed to create the dramatic statistics that advance a proponent’s argument) act as a referendum to set parameters for policymakers.

Beware the Increasing Power of Faction

As demonstrated by the Supreme Court’s decision in Citizens United, which allows corporate campaign expenditures in candidate elections, and the advent of Super PACs, which allows unlimited spending and little transparency, the rules of the game have changed, and factions are a force to be reckoned with. Unlimited spending by corporations and Super PACs places disproportional power with interest groups to influence who runs for office, what issues hit the public agenda, and how debate is framed. This is another challenge to representative democracy. By disproportionately amplifying the voices of a few and removing the limits of disproportionate economic power to influence elections, we make our elected officials beholden to a narrow array of interests and allow the same groups to determine media attention.

In the past 30 years, the disproportion of wealth has taken a quantum leap, with the top 1 percent in 2007 controlling approximately 35 percent of the wealth versus about 20 percent in 1979 (G. William Domhoff, UCSC). At the same time, the amount of money in politics has also created new thresholds for participation; according to the Center for Responsive Politics, the average spending of a congressional incumbent’s race in 1980 was less than $290,000, whereas in 2010 it was more than $2.5 million.

These changes further move decision-making power on who represents us from the voting public to factions and interests at the top of the economic ladder.

It’s Time to “Out” Representative Democracy

We need to reform initiative and referendum requirements in the context of the social media age to restore thresholds that limit their use, and to ensure that the issues that get to the ballot have widespread interest and are priority concerns.

We need to make veracity a household word. In the age of spin, Internet and social media rumor mills, and push polling, factions and interest groups are increasingly framing of issues and solutions. We must increase our collective demand for information integrity, funding transparency, and unbiased analysis of policy impacts before we sign a petition, repeat a narrative, or re-tweet a story.

We need to advocate campaign finance reforms for candidates and initiatives that provide full transparency, limit spending, and close loopholes exploited by Super PACs.

And ultimately, we must demand that our elected leaders engage in deliberative decision-making—the core of representative democracy. We need to reward and publicly acknowledge those who do and we need to hold them to account when they do not.

We live in a time where polarization and adherence to interest group absolutes is the norm. We need the leveling and reasoned influence of true representative democracy to develop solutions that address the complex needs of our states, nation and world. Protecting against the power of factions is part of our nation’s DNA, and it is time for a much broader set of voices to invoke the framers and to restore this critical feature of the great work in progress we call American democracy.

The facts–as elegantly stated in a Congressional Research Service study, which came to the same conclusion–are these (emphasis mine):
The estimated effects of the cap and other elements of the budget package depend on whether the proposals are compared with the current tax rates of 33% and 35% or the rates scheduled for 2011, 36% and 39.6%. Compared with current rules, estimated effects are between one-half a percent and 1% decline in charitable giving….When compared with tax rate provisions in 2011, charitable deductions are estimated to fall by about 1.5% if only the cap is considered, but if income effects from the entire budget package are included contributions actually rise 2.5%. The relatively modest effects of the proposal arise because (1) the effect of caps on the subsidy value is limited, (2) only a fraction (about 16%) of charitable giving is affected, and (3) because evidence suggests that behavioral responses to changes in subsidies are relatively small.

To paraphrase: The tax subsidy isn’t much reduced; that small reduction doesn’t affect 84 percent of charitable giving; and, in fact, charitable giving isn’t all that tied to tax benefit.

So whether we accept the study’s findings that charitable giving is likely to decline modestly if these tax reforms are enacted, or the CRS findings that it might actually go up, we should realize that everyone who’s hyperventilating about the impact of these changes on their poor, struggling private school, museum, or hospital should just take a deep breath. Given that the reforms will support many of the social programs, environmental protections, educational institutions, and health care options the nonprofits themselves seek to provide, it’s about time for the community to stop whining and agree to pony up.



Of course, the key issue of our day is what is the “public responsibility?” Libertarians such as Ron Paul argue that the list of public responsibilities should be as small as possible—smaller government is what we need, and we should leave business to do as much as possible. For example, today’s NY Times reports that Paul wants to do away with the TSA and have airlines provide security. He believes that market pressures would induce the competing airlines to provide just enough security screening to be safe but not so much as to be intrusive. Given that security is a present day operating cost balanced against a potential future threat, I’d argue that the airlines would cut, slice, and eventually abandon security measures as quickly as possible, as they incur costs against the bottom line.



Yesterday’s Wall Street Journal ran an op-ed suggesting that philanthropists start building bridges and investing in the nation’s physical infrastructure. Just a few weeks ago I had a conversation with two colleagues about the “minimal viable role” of government. Defense spending was in there. So were roads. I guess I overestimated. 



How about loans for businesses? Starbucks is working with Community Development Institutions (CDFIs) to launch what could become a significant loan program for small businesses. The “create jobs” plan is good—it has good leverage, gives everyday people a chance to engage, and could actually provide meaningful resources. But don’t fool yourself into thinking that a $5 donation to your coffee vendor is going to save the economy. CDFIs grew out of the mutual aid efforts of immigrant communities a century ago, they were boosted significantly by government support in the 1960s and have drawn significant private capital ever since. Their existence reflects a relationship between government, private capital, communities, and philanthropy. They’ve become core parts of the nation’s commitment to communities and small businesses (even if Howard Schultz had not ever heard of them until recently). Starbucks’ philanthropy can expand this, build on it, and engage everyday people in it—that’s all good. But it can only do so because of the base of institutions that government itself helped build and the regulations that require banks to pay some attention to communities. 



Philanthropy has a role in the ecosystem of funding for public goods. It is one key way that we use private resources for public goods—volunteering and impact investing are two others. Claims that philanthropy can replace public funding fail to understand its actual scope and potential. Counting on it to provide core public services is, among other things, simply undemocratic.

I launched Innov8Social a few months ago to explore social innovation, with special interest in its intersection with law and policy. The timing coincided with the progress of AB 361 through various stages at the California State Senate and State Assembly. After connecting with the B Lab Policy team, attending a few of the hearings in Sacramento, and writing about the legislation, I began to see things from a unique perspective. The legislation, rather than being stand-alone happenings in the field, seemed to be part of a broader evolution of social innovation. The following walks through one view of that evolution.

A Social Entrepreneur by Any Other Name…
Bill Drayton’s furthered the concept of a “social entrepreneur” in the 1970’s. In 1980, he started Ashoka, which has helped define the term, the field, and the relevance of social entrepreneurship.

Against the backdrop of an ending war, a stock market crash and an uncertain economy, periods of high unemployment and inflation, the resignation of a President, the rise of the Peace Corps, and the beginnings of the Internet as we know it—it makes sense that there was an emerging need to connect the dots in new ways. And it makes sense that it would take a luminary such as Drayton to recognize a unique way to engage the social sector with entrepreneurship.

Technology, Out of the Box
Drayton’s concept of transforming society through engaging and expanding the citizen sector began to take shape. And it was happening at a time of profound technological revolution responsible for personal computers, mobile phones, smart phones, tablets, and the rapid expansion and development of the Internet.

In the past few decades, technology has astounded, mesmerized, challenged, sometimes-disappointed, and often amazed us. More than anything, it has served to connect all of us in a way unparalleled to any other period of history. As tech entrepreneurs developed new technologies that shot to fame, social entrepreneurs began to find new ways to harness those technologies to connect business with cause.

Not Business as Usual
Social innovation took another leap forward when Muhammed Yunus introduced the concept of microfinance, slowly shifting the paradigm from philanthropic donation to impact investment. Investing in change connects the investor and beneficiary in a sustained relationship. It builds communities and it enables new kinds of businesses to emerge. Yunus’ 2006 Nobel Peace prize for his innovative approach for creating change inspired broad-scale efforts in microfinance through organizations such as Kiva.org.

The need to see beyond a singular bottom line began to take shape. And new reporting standards began developing ways to account for a triple bottom line—a way to recognize a broader view of stakeholders including as stock-holding shareholders, but also including other sectors impacted by business such as the community and the environment. Those efforts have culminated in development of systems such as the Global Impact Ratings System (GIIRS).

Academia, Governance, and Fellowship
Social innovation continued to evolve and blend into traditional fields. New fellowship programs emerged to try to capture and rising interest in social entrepreneurship. Ashoka, Acumen, Skoll, Echoing Green fellows joined many others participating in and furthering social innovation. Universities followed closely behind with the establishment of courses on social entrepreneurship and centers on social innovation. The rise in interest even reached the White House, with the establishment of the White House Office of Social Innovation and Civic Participation.

Evolving to Policy and Law
Perhaps, then, the logical next chapter of the social innovation story is law and policy. Existing laws tend to draw lines between for-profit and non-profit businesses. Early cases such as Dodge v. Ford made clear that the businesses exist to benefit shareholders. The starkness of that notion and its sometimes unintended consequences gave way to the development of the Business Judgment Rule and state constituency statutes.

And now, in a handful of states, there is a new option for how companies can incorporate, lending a distinct legal structure to recognize social ventures. This type of incorporation can effectively blend social and environmental missions with entrepreneurial motivation. Benefit corporations have become an option in 6 states and have been in existence for over a year in Maryland.

California is the first state to introduce two options for social ventures. Corporations can opt to incorporate as benefit corporations or flexible purpose corporations—a form of social venture unique to California.

Forging a Path
When forging a path, the road ahead is always unknown. Similarly, though we’ll have to wait and see how companies engage with the new legislation—the fact that there is legislation is not the feat of a single effort, but the culmination of an evolving story of social innovation.

Back in 1973 a group of Chicago social entrepreneurs created a bank holding company, believing they could use the bank’s capital to improve the lives of disenfranchised people living on the city’s South Side. Over the next 37 years the holding company grew, and so did the number of for-profit and nonprofit entities that it created. ShoreBank had an immense impact, channeling billions of dollars to poor communities in Chicago, Detroit, Cleveland, and other aging industrial cities, and improving the lives of tens of thousands of people.

Unfortunately, it all came to an end last year when ShoreBank was forced by the government to shut down. Although many of the entities it created live on in other forms, the power and symbolism of that single institution is gone.

The ShoreBank saga provides important lessons for people who believe that for-profit institutions can be used for social change. The first lesson is that managers running a for-profit business—even one with laudable social goals—need to pay close attention to the profit side of the equation. ShoreBank had the laudable goal of lending to homeowners and small-business people living in inner cities. But those people and businesses were also among the most economically vulnerable, and when the economy collapsed, so did many of those loans. To protect itself, ShoreBank needed to do a better job of diversifying its lending so that it was not so exposed to a bad economy.

But ShoreBank was not the only bank that made poor lending decisions in the last decade. Which brings us to the second lesson, that people engaged in social change—even those building socially responsible businesses—need to be involved in politics and advocacy. The federal government used hundreds of billions of dollars to rescue many of the same banks that caused the financial meltdown, but it refused to use any funds to rescue ShoreBank.

The reason the government didn’t step in is that right-wing advocates put pressure on the federal government not to do so. It’s difficult to know whether ShoreBank could have secured federal funding by building a broader base of political support for its work, but it is certain that without that support it didn’t stand a chance.

On a final note, I want to point out that this issue of SSIR features our first special supplement—“Innovating for More Affordable Health Care”—a 24-page insert brought to you by the California HealthCare Foundation. The supplement has a terrific selection of articles written by some of the leading investors, academics, and thinkers in health care. I encourage you to read it.

Eric Nee is the managing editor of Stanford Social Innovation Review, published by the Stanford Center on Philanthropy and Civil Society. He is also co-host of the Social Innovation Conversations podcast channel, and serves as a judge for the Social Venture Network’s Innovation Awards.

Unsurprisingly, Hess treats the reader to a thought-provoking discussion of the possible ways to regulate quality and raises serious issues that beg the question of whether our political system will be able to strike the right balance and use online learning to transform the nation’s education system into a student-centric one of high quality. Hess treats seriously the different tradeoffs and recognizes their imperfections. In particular, for those who are not well versed in this topic, Hess grounds the conversation in the possibilities of where technology will go in the future and in a history of regulation, distance learning, and technology that is useful to understand and heed.

The piece, in classic Hess fashion, has some delightful nuggets, including: “While today’s skeptics fret about online instruction, it was once books and the printing press that were feared by educators, who agonized that students would learn the wrong things if left to read on their own. In the seventeenth century, Sir Robert L’Estrange (once a member of the English Parliament and translator of Aesop’s fables) wondered ‘whether more mischief than advantages were not occasion’d to the Christian world by the invention of typography.’ Newness and unfamiliarity create a high bar to clear when assuring parents and the public that technology-infused learning (whether it involves books or iPads) is not a ‘risky’ departure from what they have known.”

Of course, despite the “nattering nabobs of negativism,” the new technology did spark change, although not always in the ways that people expected.

As Hess contemplates how we might shape this latest technology, he suggests three framing mechanisms by which one can judge quality: input regulation, outcome-based accountability, and market-based quality control. Readers of our own work will note the overlap with my recent piece with Innosight Institute Research Fellow Katherine Mackey, “Moving from inputs to outputs to outcomes: The future of education policy,” but Hess treats the reader to a more academic consideration of the benefits and shortfalls of each approach—and ultimately concludes that a balanced one that takes into account the good of each will be the best way forward.

One thing that emerges from this work is that, in places where there is not widespread agreement about what those outcomes should be or how to measure them, input-based regulation will still have a role to play. As such, Hess has (perhaps unknowingly) refined my past encouragement to move beyond input regulations. Although this may still be sound advice, perhaps it’s not that all input-based regulations are “bad,” given where we are today, but instead that many of the familiar and conventional ones—seat time, for example—that we have historically used to govern our system are truly outdated and limiting in a world powered by digital learning.

There will also be questions with Hess’s piece, of course.

Hess explains in detail the challenge with today’s accountability mechanisms in a world of digital learning, when schooling becomes unbundled such that children will be served by providers from almost anywhere in new and customized ways. The permutations and computations appear mind-boggling.

And yet, perhaps this complicates the picture too much. If we really, truly held schools accountable for results in exchange for public dollars and gave them significant freedom around their inputs, one wonders if they wouldn’t have the incentive to reach out for different solutions and providers to educate the children they serve. And wouldn’t they, in turn, have all the incentive to monitor and reward those providers that were successful in a way that was more fluid—changing with advances in technologies and measurement techniques—than a complicated government accountability system would be? Merit badges and other systems that Hess discusses to create a competency-based system centered around outcomes might be more successful in this scenario (although I still contend that these are more likely to gain adoption first in the realm of post-secondary and informal education, as they align with the various real needs of one of the end consumers of the nation’s education system—employers).

Or has the experience with supplemental education service (SES) providers from No Child Left Behind taught us that although in theory this might be true, realistically we won’t get to that ideal accountability framework any time soon, which means that schools won’t follow the above behavior? If so, we will have to force public dollars to follow students down to any course or module level—and figure out a way to make these different providers accountable, as it probably would be easier to put a true outcomes-based framework on these emergent and still-pliable disruptive innovations than to impose them on the rigid old system.

And here, Hess could have done a better job of grounding his discussion in the reality of how the country regulates this emerging disruption today. Unfortunately his analysis largely ignores this, but it would help the reader understand even better the promises and perils of each approach, as well as what is and what is not realistic. Without a discussion of Texas’s decision to regulate digital learning based on inputs—including the logjam and administrative burden it has created in approving providers and online courses for the Texas Virtual School Network—or a profile of successful regulation by the Florida Virtual School based on its outputs for nearly a decade, the paper misses a bigger opportunity to break new ground based on where we have been.

Furthermore, there is a legitimate question around whether Hess’s delineation between an outcomes-based system on the one hand and a market-based system on the other—while steeped in the usual rhetoric reformers use—would be better framed as an outcomes-based system versus a student and parent choice system. The reason is that an outcomes-based system would in fact also create a robust market for different products and services along the criteria that the true customer—the public and the government, which is after all the payer—said was important. Even today, public education exists within market mechanisms—they just happen to be stilted and tired input-based ones. A student and parent choice system is also a market-based one, but here, as Hess points out, the criteria—or the “job to be done” that students and parents have—might not quite match up to what the public customer thinks it should be, and there are both advantages and disadvantages to that. What became clear to me through reading this is that while inputs create homogenization in the process and the “how,” outcomes create another kind of homogenization—of the “what”—even as they are quite liberating on the “how.” A market-based system where students and parents act as true consumers, however, protects against both potentially—an interesting advantage if we consider with some humility that we may not always know which outcomes are and which are not important in preparing students to lead productive and fruitful lives.

More likely though—and semantics aside—as Hess points out, the right answer is likely in a combination of all of these approaches, and his ultimate proposal is a thoughtful one for how to navigate the future of digital learning, while being honest about the public policy questions that surround how to get there and how to continually strike the right balance.

The hard Right has long argued that government services are unnecessary because nonprofits can step into the breach. This claim was always nonsense, but at least its exponents didn’t also take on themselves the task of interfering with the charities’ overwhelmed attempts to do so. Wisconsinites will pay the same Federal taxes whether or not the state receives Federal grants to support its nonprofit sector. So clearly the point is not to shelter the state’s citizens from confiscatory taxes but to punish people who need help. Governor Walker’s ideology apparently requires not just that people in need of assistance seek private charity but that private charity be deprived of the means of assisting them.

And let’s be clear about the legal antecedents of what’s going on here. Groups of citizens of a single state are being deprived of access to something available to all other citizens of the United States—just as groups of citizens of the states of the Old Confederacy were once deprived of the vote. Then, “states’ rights” was a buzz-phrase meaning “the opportunity to mistreat black people without interference from those durned Feds.”  Now, in Governor Walker’s view, the phrase is even more expansive, meaning “the opportunity to mistreat unhealthy and/or poor people of every race to make the point that those durned Feds have no right to interfere.” Anyone who’s enthusiastic about the states’ rights claims in the governors’ lawsuit against the Affordable Care Act should check out Wisconsin for a foretaste of what states’ rights really mean to the rights of states’ citizens.

The Voting Rights Act of 1965 made clear that citizens’ right to vote trumps states’ rights. Thus—and despite many recent efforts to enact barriers to that right—there’s a reasonable chance that Governor Walker will lose his legislative majority in the next few weeks, whereupon the appropriate state-federal balance can be restored.

The Constitution can be restored.

That quote, attributed to former Atlanta Police Chief George Napper, pretty well sums up the state of nonprofits in America today. So focused on short-term funding for survival, the nonprofit sector is losing its ability to implement innovative solutions to the world’s problems.

Decreased donor giving and cuts in government spending have created a perfect storm that is wreaking financial havoc on the nonprofit sector—today, 1 in 10 nonprofits report having no cash reserve.

Chasing money is the name of the game in the nonprofit sector.

Short-term fundraising prowess has trumped the ability to effectively scale innovation as the most important skill set for nonprofit leadership.

When headhunters call me for referrals for executive directors, they tell me, “First and foremost, they’ve got to be good fundraisers.”

Nonprofit leaders know this. Ask what keeps them up at night, and you’ll often hear it’s the pressure to raise more money. As one nonprofit leader recently told me, “I feel like I’m doing the doggy paddle just to keep my head above water.”

It’s time for a new model. We need a new sustainable strategy; we need to invest early in long-term public policy that changes the entire system.

Answering one crucial question can begin the shift: “What one piece of legislation or regulation can we change that will completely transform the system so that it dramatically improves the lives of those we serve?” The answer to that question will drive sustainable solutions.

Here’s a hypothetical example that illustrates the contrast in the models:

Imagine two innovative social entrepreneur leaders who have developed a successful model to teach students in low-income communities how to start a business—we’ll call them Mr. Fundraiser and Ms. Policychange. Each receives a $500,000 grant to “invest,” allowing them to scale their innovative models nationally.

Mr. Fundraiser uses the traditional model, setting a goal of launching 20 new high schools over the next five years. His big questions are: “Who has money?” and “Who knows people who have money?” After five years, Mr. Fundraiser is considered a huge success when he reaches his 20th high school.

But instead of celebrating, Mr. Fundraiser is more stressed than ever. Each of his twenty high school sites cost around $500,000 to operate per year. He must now raise more than $10 million per year just to keep the organization afloat. Fundraising is prioritized over innovation. There’s demand across the nation for his model, but he and his staff are too busy raising critical funds to develop new sites.

In addition to raising money, he needs to keep the principals of his current schools happy. Every time a new principal takes over one of his schools he must restart the sales process of gaining their support for his program. He experiences an attrition rate of one or two high schools each year as the leadership changes.

Though he’s only meeting 5 percent of the nation’s need for his model, Mr. Fundraiser is exhausted with pleasing donors and is looking for a new career.

Now let’s compare that with Ms. Policychange. Her organization asks, “What policy might we change that would change the rules to change the system?”

She invests her funding into revising federal regulations by building her own policy team and hiring consultants to help her engage on Capitol Hill. She also trains her regional sites in the skills of advocacy.

After five years, her hard work has changed the rules. She’s added “teaching business skills” to the list of requirements in national education regulation. Today, her model is replicated at thousands of high schools across the nation. Her organization serves 60 percent of the nation’s need.

Ms. Policychange’s role has evolved as well. Instead of working on program delivery and site-by-site growth, her organization now provides consulting and training services to high schools across the country that seek to replicate her successful model.

It is time for the nonprofit sector to change the rules that change the world. It must become the sustainability it seeks from others.

Until there’s a shift from scarcity to sustainability, we will never drain the swamp.