This background paper offers an overview of social innovation and three case studies of successful social innovation projects. The paper is intended to illustrate the principles of social innovation for organizations which may be considering an application to the Innovation Fund, the Australia’s Federal Government’s primary policy tool to stimulate innovation in employment services. The government wanted to maximise its returns on public investments and it realized that its return on investment is restricted by a top-down, prescriptive approach to provider behavior. In response to that, the Fund is a $41m allocation to support localized solutions which build employability for highly disadvantaged job seekers. It seeks to drive innovation in two ways: by asking providers to generate innovative ideas prior to government intervention and by making scarce capital available for innovation startups. Its target groups include indigenous Australians, the homeless, the mentally ill and job seekers in jobless households. It will seek to support projects which integrate access to related services like health and housing, and those which demonstrate in-built flexibility.