(a) Findings

Congress finds the following:

(1) Social entrepreneurs and other nonprofit community organizations are developing innovative and effective solutions to national and local challenges.

(2) Increased public and private investment in replicating and expanding proven effective solutions, and supporting new solutions, developed by social entrepreneurs and other nonprofit community organizations could allow those entrepreneurs and organizations to replicate and expand proven initiatives, and support new initiatives, in communities.

(3) A network of Social Innovation Funds could leverage Federal investments to increase State, local, business, and philanthropic resources to replicate and expand proven solutions and invest in supporting new innovations to tackle specific identified community challenges.

(b) Purposes

The purposes of this section are—

(1) to recognize and increase the impact of social entrepreneurs and other nonprofit community organizations in tackling national and local challenges;

(2) to stimulate the development of a network of Social Innovation Funds that will increase private and public investment in nonprofit community organizations that are effectively addressing national and local challenges to allow such organizations to replicate and expand proven initiatives or support new initiatives;

(3) to assess the effectiveness of such Funds in—

(A) leveraging Federal investments to increase State, local, business, and philanthropic resources to address national and local challenges;

(B) providing resources to replicate and expand effective initiatives; and

(C) seeding experimental initiatives focused on improving outcomes in the areas described in subsection (f)(3); and

(4) to strengthen the infrastructure to identify, invest in, replicate, and expand initiatives with effective solutions to national and local challenges.

(c) Definitions

In this section:

(1) Community organization

The term “community organization” means a nonprofit organization that carries out innovative, effective initiatives to address community challenges.

(2) Covered entity

The term “covered entity” means—

(A) an existing grantmaking institution (existing as of the date on which the institution applies for a grant under this section); or

(B) a partnership between—

(i) such an existing grantmaking institution; and

(ii) an additional grantmaking institution, a State Commission, or a chief executive officer of a unit of general local government.

(3) Issue area

The term “issue area” means an area described in subsection (f)(3).

(d) Program

From the amounts appropriated to carry out this section that are not reserved under subsections (l) and (m), the Corporation shall establish a Social Innovation Funds grant program to make grants on a competitive basis to eligible entities for Social Innovation Funds.

(e) Periods; amounts

The Corporation shall make such grants for periods of 5 years, and may renew the grants for additional periods of 5 years, in amounts of not less than $1,000,000 and not more than $10,000,000 per year.

(f) Eligibility

To be eligible to receive a grant under subsection (d), an entity shall—

(1) be a covered entity;

(2) propose to focus on—

(A) serving a specific local geographical area; or

(B) addressing a specific issue area;

(3) propose to focus on improving measurable outcomes relating to—

(A) education for economically disadvantaged elementary or secondary school students;

(B) child and youth development;

(C) reductions in poverty or increases in economic opportunity for economically disadvantaged individuals;

(D) health, including access to health services and health education;

(E) resource conservation and local environmental quality;

(F) individual or community energy efficiency;

(G) civic engagement; or

(H) reductions in crime;

(4) have an evidence-based decisionmaking strategy, including—

(A) use of evidence produced by prior rigorous evaluations of program effectiveness including, where available, well-implemented randomized controlled trials; and

(B) a well-articulated plan to—

(i)(I) replicate and expand research-proven initiatives that have been shown to produce sizeable, sustained benefits to participants or society; or

(II) support new initiatives with a substantial likelihood of significant impact; or

(ii) partner with a research organization to carry out rigorous evaluations to assess the effectiveness of such initiatives; and

(5) have appropriate policies, as determined by the Corporation, that protect against conflict of interest, self-dealing, and other improper practices.

(g) Application

To be eligible to receive a grant under subsection (d) for national leveraging capital, an eligible entity shall submit an application to the Corporation at such time, in such manner, and containing such information as the Corporation may specify, including, at a minimum—

(1) an assurance that the eligible entity will—

(A) use the funds received through that capital in order to make subgrants to community organizations that will use the funds to replicate or expand proven initiatives, or support new initiatives, in low-income communities;

(B) in making decisions about subgrants for communities, consult with a diverse cross section of community representatives in the decisions, including individuals from the public, nonprofit private, and for-profit private sectors; and

(C) make subgrants of a sufficient size and scope to enable the community organizations to build their capacity to manage initiatives, and sustain replication or expansion of the initiatives;

(2) an assurance that the eligible entity will not make any subgrants to the parent organizations of the eligible entity, a subsidiary organization of the parent organization, or, if the eligible entity applied for funds under this section as a partnership, any member of the partnership;

(3) an identification of, as appropriate—

(A) the specific local geographical area referred to in subsection (f)(2)(A) that the eligible entity is proposing to serve; or

(B) the issue area referred to in subsection (f)(2)(B) that the eligible entity will address, and the geographical areas that the eligible entity is likely to serve in addressing such issue area;

(4)(A) information identifying the issue areas in which the eligible entity will work to improve measurable outcomes;

(B) statistics on the needs related to those issue areas in, as appropriate—

(i) the specific local geographical area described in paragraph (3)(A); or

(ii) the geographical areas described in paragraph (3)(B), including statistics demonstrating that those geographical areas have high need in the specific issue area that the eligible entity is proposing to address; and

(C) information on the specific measurable outcomes related to the issue areas involved that the eligible entity will seek to improve;

(5) information describing the process by which the eligible entity selected, or will select, community organizations to receive the subgrants, to ensure that the community organizations—

(A) are institutions—

(i) with proven initiatives and a demonstrated track record of achieving specific outcomes related to the measurable outcomes for the eligible entity; or

(ii) that articulate a new solution with a significant likelihood for substantial impact;

(B) articulate measurable outcomes for the use of the subgrant funds that are connected to the measurable outcomes for the eligible entity;

(C) will use the funds to replicate, expand, or support their initiatives;

(D) provide a well-defined plan for replicating, expanding, or supporting the initiatives funded;

(E) can sustain the initiatives after the subgrant period concludes through reliable public revenues, earned income, or private sector funding;

(F) have strong leadership and financial and management systems;

(G) are committed to the use of data collection and evaluation for improvement of the initiatives;

(H) will implement and evaluate innovative initiatives, to be important contributors to knowledge in their fields; and

(I) will meet the requirements for providing matching funds specified in subsection (k);

(6) information about the eligible entity, including its experience managing collaborative initiatives, or assessing applicants for grants and evaluating the performance of grant recipients for outcome-focused initiatives, and any other relevant information;

(7) a commitment to meet the requirements of subsection (i) and a plan for meeting the requirements, including information on any funding that the eligible entity has secured to provide the matching funds required under that subsection;

(8) a description of the eligible entity’s plan for providing technical assistance and support, other than financial support, to the community organizations that will increase the ability of the community organizations to achieve their measurable outcomes;

(9) information on the commitment, institutional capacity, and expertise of the eligible entity concerning—

(A) collecting and analyzing data required for evaluations, compliance efforts, and other purposes;

(B) supporting relevant research; and

(C) submitting regular reports to the Corporation, including information on the initiatives of the community organizations, and the replication or expansion of such initiatives;

(10) a commitment to use data and evaluations to improve the eligible entity’s own model and to improve the initiatives funded by the eligible entity; and

(11) a commitment to cooperate with any evaluation activities undertaken by the Corporation.

(h) Selection criteria

In selecting eligible entities to receive grants under subsection (d), the Corporation shall—

(1) select eligible entities on a competitive basis;

(2) select eligible entities on the basis of the quality of their selection process, as described in subsection (g)(5), the capacity of the eligible entities to manage Social Innovation Funds, and the potential of the eligible entities to sustain the Funds after the conclusion of the grant period;

(3) include among the grant recipients eligible entities that propose to provide subgrants to serve communities (such as rural low-income communities) that the eligible entities can demonstrate are significantly philanthropically underserved;

(4) select a geographically diverse set of eligible entities; and

(5) take into account broad community perspectives and support.

(i) Matching funds for grants

(1) In general

The Corporation may not make a grant to an eligible entity under subsection (d) for a Social Innovation Fund unless the entity agrees that, with respect to the cost described in subsection (d) for that Fund, the entity will make available matching funds in an amount equal to not less than $1 for every $1 of funds provided under the grant.

(2) Additional requirements

(A) Type and sources

The eligible entity shall provide the matching funds in cash. The eligible entity shall provide the matching funds from State, local, or private sources, which may include State or local agencies, businesses, private philanthropic organizations, or individuals.

(B) Eligible entities including State Commissions or local government offices

(i) In general

In a case in which a State Commission, a local government office, or both entities are a part of the eligible entity, the State involved, the local government involved, or both entities, respectively, shall contribute not less than 30 percent and not more than 50 percent of the matching funds.

(ii) Local government office

In this subparagraph, the term “local government office” means the office of the chief executive officer of a unit of general local government.

(3) Reduction

The Corporation may reduce by 50 percent the matching funds required by paragraph (1) for an eligible entity serving a community (such as a rural low-income community) that the eligible entity can demonstrate is significantly philanthropically underserved.

(j) Subgrants

(1) Subgrants authorized

An eligible entity receiving a grant under subsection (d) is authorized to use the funds made available through the grant to award, on a competitive basis, subgrants to expand or replicate proven initiatives, or support new initiatives with a substantial likelihood of success, to—

(A) community organizations serving low-income communities within the specific local geographical area described in the eligible entity’s application in accordance with subsection (g)(3)(A); or

(B) community organizations addressing a specific issue area described in the eligible entity’s application in accordance with subsection (g)(3)(B), in low-income communities in the geographical areas described in the application.

(2) Periods; amounts

The eligible entity shall make such subgrants for periods of not less than 3 and not more than 5 years, and may renew the subgrants for such periods, in amounts of not less than $100,000 per year.

(3) Applications

To be eligible to receive a subgrant from an eligible entity under this section, including receiving a payment for that subgrant each year, a community organization shall submit an application to an eligible entity that serves the specific local geographical area, or geographical areas, that the community organization proposes to serve, at such time, in such manner, and containing such information as the eligible entity may require, including—

(A) a description of the initiative the community organization carries out and plans to replicate or expand, or of the new initiative the community organization intends to support, using funds received from the eligible entity, and how the initiative relates to the issue areas in which the eligible entity has committed to work in the eligible entity’s application, in accordance with subsection (g)(4)(A);

(B) data on the measurable outcomes the community organization has improved, and information on the measurable outcomes the community organization seeks to improve by replicating or expanding a proven initiative or supporting a new initiative, which shall be among the measurable outcomes that the eligible entity identified in the eligible entity’s application, in accordance with subsection (g)(4)(C);

(C) an identification of the community in which the community organization proposes to carry out an initiative, which shall be within a local geographical area described in the eligible entity’s application in accordance with subparagraph (A) or (B) of subsection (g)(3), as applicable;

(D) a description of the evidence-based decisionmaking strategies the community organization uses to improve the measurable outcomes, including—

(i) use of evidence produced by prior rigorous evaluations of program effectiveness including, where available, well-implemented randomized controlled trials; or

(ii) a well-articulated plan to conduct, or partner with a research organization to conduct, rigorous evaluations to assess the effectiveness of initiatives addressing national or local challenges;

(E) a description of how the community organization uses data to analyze and improve its initiatives;

(F) specific evidence of how the community organization will meet the requirements for providing matching funds specified in subsection (k);

(G) a description of how the community organization will sustain the replicated or expanded initiative after the conclusion of the subgrant period; and

(H) any other information the eligible entity may require, including information necessary for the eligible entity to fulfill the requirements of subsection (g)(5).

(k) Matching funds for subgrants

(1) In general

An eligible entity may not make a subgrant to a community organization under this section for an initiative described in subsection (j)(3)(A) unless the organization agrees that, with respect to the cost of carrying out that initiative, the organization will make available, on an annual basis, matching funds in an amount equal to not less than $1 for every $1 of funds provided under the subgrant. If the community organization fails to make such matching funds available for a fiscal year, the eligible entity shall not make payments for the remaining fiscal years of the subgrant period, notwithstanding any other provision of this part.

(2) Types and sources

The community organization shall provide the matching funds in cash. The community organization shall provide the matching funds from State, local, or private sources, which may include funds from State or local agencies or private sector funding.

(l) Direct support

(1) Program authorized

The Corporation may use not more than 10 percent of the funds appropriated for this section to award grants to community organizations serving low-income communities or addressing a specific issue area in geographical areas that have the highest need in that issue area, to enable such community organizations to replicate or expand proven initiatives or support new initiatives.

(2) Terms and conditions

A grant awarded under this subsection shall be subject to the same terms and conditions as a subgrant awarded under subsection (j).

(3) Application; matching funds

Paragraphs (2) and (3) of subsection (j) and subsection (k) shall apply to a community organization receiving or applying for a grant under this subsection in the same manner as such subsections apply to a community organization receiving or applying for a subgrant under subsection (j), except that references to a subgrant shall mean a grant and references to an eligible entity shall mean the Corporation.

(m) Research and evaluation

(1) In general

The Corporation may reserve not more than 5 percent of the funds appropriated for this section for a fiscal year to support, directly or through contract with an independent entity, research and evaluation activities to evaluate the eligible entities and community organizations receiving grants under subsections (d) and (l) and the initiatives supported by the grants.

(2) Research and evaluation activities

(A) Research and reports

(i) In general

The entity carrying out this subsection shall collect data and conduct or support research with respect to the eligible entities and community organizations receiving grants under subsections (d) and (l), and the initiatives supported by such eligible entities and community organizations, to determine the success of the program carried out under this section in replicating, expanding, and supporting initiatives, including—

(I) the success of the initiatives in improving measurable outcomes; and

(II) the success of the program in increasing philanthropic investments in philanthropically underserved communities.

(ii) Reports

The Corporation shall submit periodic reports to the authorizing committees including—

(I) the data collected and the results of the research under this subsection;

(II) information on lessons learned about best practices from the activities carried out under this section, to improve those activities; and

(III) a list of all eligible entities and community organizations receiving funds under this section.

(iii) Public information

The Corporation shall annually post the list described in clause (ii)(III) on the Corporation’s website.

(B) Technical assistance

The Corporation shall, directly or through contract, provide technical assistance to the eligible entities and community organizations that receive grants under subsections (d) and (l).

(C) Knowledge management

The Corporation shall, directly or through contract, maintain a clearinghouse for information on best practices resulting from initiatives supported by the eligible entities and community organizations.

(D) Reservation

Of the funds appropriated under section 12681(a)(4)(E) of this title for a fiscal year, not more than 5 percent may be used to carry out this subsection.