Introduction

Michele Kahane Introduction OVER THE PAST FEW DECADES, GLOBALIZATION HAS TRANSFORMED the econom ic, political, and social landscape. Governments are responding to the economic challenges globalization poses by chang­ ing their orientation from social welfare and the provision of social services to a focus on fiscal prudence and economic competitiveness. And as the state has retracted, private actors including businesses, foundations, NGOs, social entrepreneurs, celebrities, and civic orga­ nizations have either by default, pressure, or their own initiative becom e a growing force in shaping econom ies, cultures, values, governments, and civic life. It is within this context that the following three papers explore the changing roles and strategies of private actors in public problem­ solving. The papers help us see how the financial and human resources of private actors can be tapped for public problem-solving in transfor­ mative ways, but they also raise hard questions about the changing nature of the social contract between citizens and states. Reflecting on a continuum of private actors—from powerful institutions to those who are disempowered—the papers reveal critical differences and dilemmas in how social needs are met and how social innovation can be fostered. Helmut K. Anheier and Diana Leat explore the rapid growth of foundations over the past few decades and consider the rationales and roles of these institutions in society. The essay explores the basic arguments for and against the continued existence of foundations in modern democracies. The authors, drawing from experience in the United States, Britain, and Germany, ask a number of provoca­ tive questions: Do foundations exist as a solution mainly to address social research Vol. 80 : No. 2 : Summer 2013 44S the problems of the rich (estate management, legal tax shelters) or the poor? Do foundations interfere with the democratic process or do they add value by fostering innovative solutions, giving voice to those who are unheard and advocating for pluralism? The authors’ reflections on these questions provide a jum ping-off point for, as they state, “a much needed and em pirically grounded debate to better understand these unique institutions.” Indeed, such research would not only help diverse stakeholders to better understand the value of foundations but also assist foundations to better achieve their aims. The growing trend of “philanthrocapitalism” is the topic of the next article by Matthew Bishop. Philanthrocapitalists bring a new set of approaches to public problem-solving that are influenced by prac­ tices in the business sector. Of particular importance is the concept o f leveraging resources across all sectors to create scaleable impact. Among other intriguing examples, we learn how the Gates Foundation has leveraged the research and development budgets of big pharma­ ceutical companies by giving incentives to encourage them to develop drugs for neglected diseases in the developing world. In New York City, a recent cross-sector collaboration involving Goldman Sachs, the City of New York, Bloomberg Philanthropies, and MDRC has raised $10 million in private sector capital to finance a program to reduce the recidivism rate for adolescent offenders at the Rikers Island correctional facility. W hile the amount is small by capital markets standards, it is the first example in the United States of a new security called a “social impact bond” that shows great promise in facilitating the raising of large amounts of new capital for public services and the nonprofit sector. In fact, JP Morgan estimates that there is as much as $1 trillion in potential capital to fuel the new trend of “impact investing.” These examples and others in Bishop’s paper illustrate the promise of leveraging markets for public good and unleashing large amount of much-needed new financial resources. Tina Rosenberg’s paper shifts the discussion from well-resourced and powerful institutions and donors to ordinary citizens as private 446 social research actors who contribute to public problem-solving in important, albeit often less noticed ways in communities around the world. In so doing she adds to the important efforts of Ashoka’s founder Bill Drayton to encourage the idea that everyone—notjust a small group ofsocial entre­ preneurs—has the latent capacity to be a changemaker. Rosenberg’s paper explores the psychological motivations for social action, exam­ ining the...