There's never been a time when the nation didn't face big challenges, although it may seem that they're coming at us faster than ever given the deadly novel coronavirus pandemic and intensifying concern about racial and economic inequality. More than ever, tackling societal challenges will require federal, state and local governments to turn to innovation that's supported by credible evidence. But how, during a time of such severe budget pressures, can governments afford to develop new and innovative approaches and test whether they actually work?
An important step that public agencies should take is to carve out a small portion of their budgets—say, 1% of program dollars—to create an innovation fund within every major program or portfolio of related programs. That might include innovation funds focused on reducing opioid addiction, boosting high-school graduation rates or lowering prison recidivism, for example.
Innovation funds should be structured so that agencies can use a variety of strategies, depending on the types of problems being addressed and the specific situation. Those strategies could include:
“Tiered-evidence” grants to test, validate and scale effective policies and interventions. This approach draws on successful models at the federal level, such as the Education Innovation and Research (EIR) program at the Education Department and the U.S. Agency for International Development’s Development Innovation Ventures program, which was co-designed by Nobel laureate Michael Kremer. Tiered-evidence grant programs take a page from venture-capital firms by placing bigger bets where they see more likelihood—more evidence—of a big return, while placing smaller bets on less-tested but promising approaches. This kind of grant program led, for example, to agencies spend little
