How to Set Up an Innovation Fund

Innovation funds (also called seed funds or activation funds) are small regranting funds used to jump start innovation, collaboration and self-organizing in networks. They have proven to be one of the most effective strategies for high impact networks, giving people on the ground a chance to initiate action that they believe will make a difference, and often leveraging many new resources as a result of their successes.

Most funded projects will bring new people into the network. When funding is combined with peer learning opportunities and opportunities to share with the larger network, the lessons learned from this strategy can have substantial positive impact on the network as a whole.

Basic Characteristics of an Innovation Fund

Innovation Funds typically have $15,000 to $50,000 to regrant in a particular round. Grants vary in size from $1500 to $8,000 and usually must be spent within 6 months.

Applicants must be collaborative projects, typically involving 3 or more organizations (or in some cases, community residents). For communities where organizations are not used to working together, this requirement can start to create a culture of collaboration. Funds also restrict grants to new projects, with the idea of incentivizing innovation. In addition, funds may have a specific focus — for example the Resonance Network funded only healing and arts projects in one round.

How to Start an Innovation Fund

The design and implementation of Innovation Funds are network building processes. For example, Leadership Learning Community (LLC), which has implemented 4 Innovation Fund initiatives, first recruits as many as a dozen network participants (none of whom can apply for funds) and holds two sessions in which the group gives feedback on a draft design provided by LLC.

  • Here are a set of guidelines given to a small rural Innovation Fund design group.
  • Here is a powerpoint used to recruit a fund design group for an LLC Fund.
  • Here is an example application form from Go Philanthropic, a donor fund that works to end trafficking in south and southeastern Asia.

The Innovation Fund proposal is usually very short, so it does not become a barrier for community groups.

Sometimes a small group of network guardians are convened to make decisions about which projects will be funded. In another case, 200 people volunteered, and each read and rated 2 or 3 proposals. This was a fabulous way to get many more people involved in, excited about, and owning the project.

Innovation Funds in Practice

Funds are often used for a coordinator/facilitator and/or for a grant writer. Seeing the collaboration as an opportunity to create a plan and/or pilot, when combined with access to a grant writer, means that the project has the potential to leverage substantial additional funds for expansion of the innovation.

We are discovering that bringing the grantees together as a mini-community of practice enhances the learning, while also creating a peer support network among the project participants. At the CoP virtual sessions, the project participants learn basic collaboration and communications skills and tools, share and help each other with challenges, and steal ideas from each other. We find that this encourages much more interaction among different projects between sessions.

Almost all the funds have a final session where the projects share what they have accomplished and what they have learned. We are now encouraging funds to record these sessions and share them with the entire network.

Here is a wonderful video where Miram Persley, formerly part of the Leadership Learning Community, shares the details of one of their funds.

In conclusion, Innovation Funds are a powerful strategy for increasing network impact.

  1. They ignite a culture of collaboration and innovation in communities and enable networks to expand. This is accomplished by only funding collaborations and innovations, and by engaging many people in the design and implementation process.
  2. When combined with a community of practice or sharing sessions, Innovation Funds offer an opportunity to deepen collaboration and communication skills and practices, and create a support network among the project participants.
  3. Innovation funds often enable collaboratives to pilot or try out an innovation. This way they have the opportunity to show funders that the new approach can work, thus paving the way for additional funding and spread of the innovation.
  4. Innovation Funds offer a new approach to complex problems: they are created through the initiative of people on the ground, who have a deep understanding of their problems and strong intuitions about how they might be remedied. Especially if project participants are brought together for deep reflection, the process can unearth insights, help identify breakthroughs in understanding about the problem, and unearth patterns for success in dealing with the problem.

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