A Social Capital (Farmer’s?) Market

Jacob Harold, a program officer at the Hewlett Foundation and co-author of the paper, “The Nonprofit Marketplace: Bridging the Information Gap in Philanthropy” has written an article for Alliance Magazine that is currently free to non-subscribers.

The article is titled: Learning From the Farmer’s Market

The global financial crisis has shaken our faith in markets. Wall Street, the City of London and other financial centres asked governments for complete freedom in the capital markets. They claimed it would create value for society. Instead, it has destroyed value, and lives. This begs a question: where does that leave those of us who call for philanthropy to act more like a market? If markets fail the private sector, why should they work for civil society?

In fact, the financial crisis makes it all the more urgent to build a smarter, more open infrastructure that enables donors to make good philanthropic choices. The financial crisis has brought with it urgent need: lost jobs, increased poverty, and distraction from critical environmental issues. It has also brought a reduction in available resources – from both government and private donors. It has never been more important to help funders make good decisions and reward the highest-performing non-profits.

The first image that comes to many people’s minds when they hear the word ‘market’ is the floor of the New York Stock Exchange: frantic traders yelling into phones, countless monitors streaming arcane financial data, a floor strewn with scraps of reports and analysis.

I would like to offer an alternative image: a community farmers’ market.

Jacob argues that there are four points about farmer’s markets that philanthropy can learn from:

First, and most critically, farmers’ markets offer open information.
Second, buyers at farmers’ markets are focused on finding value for money.
Third, farmers’ markets offer simple, intuitive infrastructure that enables smart, safe transactions.
Finally, farmers’ markets offer a culture of frank friendliness.

You can click here for free access to the full article.

My take away: Markets are ancient, natural systems. There is no doubt that markets are a superior system for fairly distributing resources when compared to command and control economic policy. The current crises is not a condemnation of markets in general, but of certain rules (or the lack thereof) that came to dominate the market over time. This isn’t the first time and it won’t be the last, that excesses of various types severely disrupt the market’s functioning.

We are currently in the process of destroying that which was poisoning the system. Just as we always do, we will (over time) discard those parts of the system that did not serve us well, find new elements that we hope will work better and integrate them into a new system. This won’t be “markets 2.0”, it will be something like “markets 99.0”. We’ve been doing this for a long time.

Jacob does us a great service by evoking the image of the Farmer’s Market to remind us that the core principals of markets is not financial derivatives, overpaid executives and excessive debt, it is people coming together to exchange those things which they value dearly.

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socialentrprnr (Nathaniel Whittemore) says:

March 4, 2009 at 7:23 pm

Great post by @tactphil riffing off of Jacob Harold from the Hewlett Foundation’s “Learning from the Farmer’s Market” http://is.gd/lNiD

6 Responses to “A Social Capital (Farmer’s?) Market”

Michael Moody says:

March 5, 2009 at 12:18 am

This is a really interesting analogy for thinking about nonprofit “marketplaces,” and certainly better than any comparison to Wall Street financial markets, I think. But I’d like to offer an alternative interpretation of one part of the analogy as Jacob lays it out.

He says that when nonprofits market themselves by offering anecdotal stories, this is akin to a farmer/vendor saying “we have this one really good orange!” But I’d argue that stories used by nonprofits to illustrate their work–at least when used well–are more like a vendor saying “our oranges are really juicy and sweet and affordable, and here is a good example of the sort of oranges we produce.”

The anecdote is meaningful because it stands an illustration (or, dare I say, partial evidence?) of a pattern, a representative sample of the work being done. An effective anecdote is specifically NOT an exception or unique case. Sure, the kid in the brochure might be cuter or more positively impacted by the nonprofit than others they’ve worked with, but she is put out there to represent those other kids who are helped in similar ways everyday by that nonprofit. To be crass in the comparison, her story is like the tasty sample that a vendor offers.

Of course, as Jacob says, if the nonprofit can present data on those other kids, and how they’ve been similarly impacted, alongside this compelling illustration of one kid, then all the better. But nothing increases sales like a tasty sample.

Renata Rafferty says:

March 5, 2009 at 11:48 am

I love the analogy (as I do farmer’s markets). Herein lies the rub …

“Finally, farmers’ markets offer a culture of frank friendliness.”

The dynamic in the philanthropic sector is anything BUT “frank friendliness,” except in those very rare communities where donors/funders/nonprofit directors and executives/the community at large work as true partners toward an explicit shared vision of community, the successful attainment of which does not necessarily have to be “measured,” because it can be felt/seen/heard.

Would that the funding community would embrace a “farmer’s market” approach to assessing its own work.

So many funders are excellent “grantmakers,” and can point to a variety of indices to support their “success.” But how many trust their own eyes, ears, and hearts to gauge the obvious?

Evaluating true success is often no more complex than determining whether the orange you just bought at the farmer’s market was any good.

The fact that the orange was a brilliant hue, with a beautifully dimpled thin skin, of just the right size, and was bought from a reputable grower from the citrus capital of the state at a good price, does not make that orange a satisfying eating experience — the purchase, and its basis, simply evidence a good and successful transaction.

But if the orange is sour and dry when you take it home to eat, does it matter that it was a well-executed transaction? It doesn’t take a citrus farmer or specialist to know whether an orange is good or bad — even a child can simply taste it and tell you.

To take the breakdown in the analogy even further … I won’t be returning to the fruit stand the following week and asking the vendor to report to ME whether the orange I ate was any good.

But, that’s what we do in our sector. Too often, we don’t look at the obvious — was the orange we bought delicious, satisfying, filling? Evaluating the obvious. We’re too busy counting the dimples, measuring the skin thickness, and asking the vendor to tell US whether it was a good orange.

I’m afraid that the renewed emphasis on establishing quantitative — and even qualitative — measurements of success in our sector may take us even further away from using our common sense in assessing grantmaking and/or charitable success.

Is the community in a better place today because of our funding or work over the last year, five years, ten years? Is it more like what we envisioned our community — or our niche — to be?

P.S. I, too, want to commend Charity Navigator for helping move the assessment dialogue away from numbers and spending ratios.

Sean Stannard-Stockton says:

March 5, 2009 at 2:25 pm

Renata, I tend to agree with you. The most compelling argument I’ve heard against your case is that while you can see, taste and judge an orange, donors cannot know how effective a nonprofit program is without heavy analysis (even if it seems to be working, it might not be on further analysis.

That being said, I do think that in the midst of all the debate about how to measure impact, there is a lot of common knowledge about what works. I’m interest in figuring out how to harness that knowledge without needing to quantify the impact itself.