Category Archives: Open Source Philanthropy

Causes, MySpace & ideablob

November 16, 2009 – 8:06 am

In recent days, Causes has left MySpace and IdeaBlob has shutdown. To some, these events were unimportant. In reaction to the Causes announcement, Economist bureau chief Matthew Bishop tweeted “Who knew it was on MySpace?” to which New York Times reporter Stephanie Strom tweeted back “No kidding.”

But to many people active in online social action communities, these events had deeper meaning. This is a guest post from Amy Sample Ward, NetSquared’s Global Community Development Manager

By Amy Sample Ward

The Effect on Community in Community Platforms

There’s something in the wind, other than in-coming winter, that has my attention. It’s something I can only wrap my mind around by talking to others and hope that this is a chance to further a very important conversation. First, let’s start at the beginning:

Causes Leaves MySpace

Two weeks ago, Causes, the application that lets individuals and organizations campaign and fundraise, removed itself and all Causes-related content/data from MySpace. (Read more about Causes leaving MySpace here.) This separation came with no public announcement, either before the move or when it happened, except for a very short email sent a couple days beforehand to account administrators as a warning. The message explained that Causes would be focusing on only providing service to the Facebook platform, encouraging any MySpace users that wanted to continue using the application to migrate, too. and then… 

ideablob Shuts Down

By now, you may have heard about the very abrupt closedown of ideablob, a competition and promotion platform for entrepreneurs. Late last week, registered users, interested supporters and social changemakers participating in a funding competition were all greeted with the message below when visiting the ideablob website:

 ideablobclose

Users (whether they were people with a project in the competition, those that had voted to support an idea, or were general registered users of the site) received no notice that the closure was coming, or even when it happened. The only bread crumbs to find were some business reports about Advanta declaring bankruptcy, like this one, that don’t even mention ideablob. Here’s a bit of John Brennan’s story (an ideablob member who was competition in the competition) from his comment on my original blog post:

"It’s upsetting that companies like this aren’t actually thinking or caring about the real people and ideas they are effecting. This week our idea was up for the sprint and in the top 3. Why did they even start the competition when they already were going through bankruptcy talks?"

and so… 

The Conversation

What’s this mean to you as an activist, supporter, volunteer, changemaker, entrepreneur, innovator or *insert preferred title* online? Well, it means a lot. We can see (and learn a valuable lesson about) the way current ecosystem of social media works in regards to transparency, data, and community. To unpack this, let’s narrow in on each:

Transparency
The lack of communication about the actual decision, but more so in the lack of communication about the development, direction and intention of Causes and ideablob indicates that transparency isn’t a part of the package. There are many who approach the online landscape with very different views than their offline business decisions. For example, if ideablob or Causes were a product offline, and you were a funder, an investor, or a consumer/user of ideablob or Causes as offline products providing no integral communication, you would probably not have ever considered participating/consuming. Just because you aren’t meeting offline, in real-time, in the same room with your supporters and the competitors in the ideablob competition, does not mean likewise that you do not need to know if the platform will even be around for your competition to finish. The transparency issue is a steep mountain to climb with social media. Unless you knew that ideablob was part of Advanta, and you were reading the business sections of the papers last week, you wouldn’t have had any idea ideablob was even considering discontinuing. But, transparency is even more than this, and really is a part of the Data and Community, too.

Data

We can count our Twitter followers or how many people have commented on our blog post, or could have counted the number of supporters on Causes or voters on ideablob, but that doesn’t mean we connect with them. Now that Causes removed itself, it’s content, and any related data from MySpace, organizations cannot connect with their supporters who were using Causes. ideablob participants are locked out from seeing any comments or feedback on their ideas. The fact that access to data, whether it’s supporters’ email addresses, tracking actions taken, or anything else, is instantly gone should be a big alert bell to those working in a "networked" way via social media to grow their community. To connect with supporters, organizations and individuals working on projects will need to be sure that data gets back to them. How are you encouraging your supporters all over the web to connect with you directly? For example, when you post a message (whether it’s on Twitter, Facebook, or even Change.org) telling your supporters that you’re ramping up for some big news, a new project or something else, include a link where they can sign up with you to be on the email/announcement list. When supporters sign a petition or take action on your organization’s behalf in social media platforms, include "thank you" and "learn more" links wherever possible that link to ways to connect directly with your organization, ensuring the contact information is in your database, not just Facebook’s.

Community

In the Causes move, the issues around community are very clearly focused on the different demographic groups represented on MySpace and Facebook. With ideablob, it isn’t so much that groups are being separated/segregated, but entirely shut off. These events raise many questions and flags about diversity, opportunity, and even corporate decision-making. Communities on both platforms were clearly not part of the development and communications process, yet they were actively using the platform (for example, a grant from ideablob helped Epic Change implement a technology lab in a school in Tanzania). What is the difference between a community actively using a platform and one actively involved in the evolution of the platform? If a platform were to disappear, would the community be able to continue on? Perhaps so if it had been active in the development and direction (or, perhaps that would indicate that the platform would be more unlikely to disappear or at least not without notice)?

What’s Next

I don’t necessarily want to call for the communities on MySpace or on ideablob to call for the return of the tools. We can see by the issues raised above that the platforms weren’t necessarily operating in the best ethos anyway. But, I do want an arena for the communities to describe what they do want and be an integral part of the process to building and sustaining whatever that is.

How can this work? I can’t speak for others working in the "innovation sector," but at NetSquared we can’t emphasize enough that our Community is what drives us – whether’s it’s online or offline. Community feedback shapes everything from our goals to our website and everything in between. We are able to work as a small team on the organization side because of the passionate, collaborative, dedicated Community. For example, you can follow the website redesign process via the blog where the feedback and directives for the redesign, the people who stepped up to implement, and the step-by-step process have all been open and Community centered. This isn’t about creating a new splash page, this is involving the users in the design of the Gallery where their Projects are housed, showcased and voted on; involving bloggers in the design of the collaborative sharing space they contribute to already; involving Community members in telling us both the bad stuff and the good stuff, so we can work to make it everything they want.

As another example, the Net Tuesday network is now up to 56+ groups meeting every month around the world—a global network of events, bringing the NetSquared Community together offline—and growing in an entirely organic way. That doesn’t mean NetSquared’s perfect, by any measure, but it does mean that a quick abandonment isn’t in store. That also doesn’t mean that NetSquared is the *only* or the *best* place for absolutely everyone to find what they are looking for. It is, though, one example of trying to make it work.

Your invitation: Join this conversation. Tell me what the recent Causes/ideablob announcements means for our sector and for you. And share your ideas with your friends and colleagues to further the breadth of the conversation. The more voices the better! Here are some places to start:

  • Evaluate your use of social media tools: do you encourage your supporters on other platforms to register on your website, ensuring you have their contact details?
  • Evaluate your community: are you reaching a diverse community or operating in a silo?
  • Evaluate your relationship with developers: are you using tools that allow you to surface suggestions, ideas, and useful functionality for development? Do you know what the plans are for the tools you are using?

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By Sean Stannard-Stockton | Also posted in Cross-Disciplinary Conversations, Innovation, Philanthropy, Social Media, nonprofits, nptech | Comments (7)

Social Entrepreneur API

September 9, 2009 – 10:25 am

The Social Entrepreneur API from Social Actions launched at the SoCap Conference. The Social Entrepreneur API (Application Programming Interface) is the first open database of information about social entrepreneurs who have won fellowships and awards from social enterprise funders. The current API includes awards made by Civic Ventures, The Draper Richards Foundation, ideablob, PopTech, The Schwab Foundation for Social Entrepreneurship, and The Skoll Foundation.

We live in a world with literally millions of nonprofits and many, many individuals working on social benefit projects that are not registered nonprofits. Shifting through these organizations is a daunting task for any donor. But luckily, there are thousands of foundations and other grantmaking entities with paid staff doing just this work. Unlike in for-profit markets where possession of important information helps secure profits, in philanthropy, sharing important information increases a grantmaker’s impact.

What’s interesting about the Social Entrepreneur API, as I’ve written before, is the way it allows for anyone to access a stream of vetted social entrepreneurs and mash the data up however they like. For instance, Tactical Philanthropy Advisors could build a web interface that displayed vetted grantmaking opportunities that took the API data and then limited the data to projects in need of at least $25,000 so that our high net worth clients would be delivered a pool of eligible, vetted social entrepreneurs that we could then help them look into more deeply.

Knowing that the Draper Richards Foundation or Skoll has funded someone does not automatically make them a good grantee. But it certainly helps to search for organizations within a universe of groups that have already been vetted by well resourced, smart funders.

How else might Tactical Philanthropy Advisors or other organizations use the Social Entrepreneur API?

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By Sean Stannard-Stockton | Also posted in Information Sharing, New Philanthropy, Philanthropic Technology, Philanthropy, Social Entrepreneurship, Social Media, Tactical Philanthropy Advisors, nptech | Comments (4)

Steal This Idea!

April 15, 2009 – 7:32 am

At the Center for Effective Philanthropy conference, one of the most interesting sessions was a discussion of scale between the successful nonprofits Nurse-Family Partnerships and Homeboy Industries and funders the Edna McConnell Clark Foundation and the California Endowment. The session was titled Promises and Pitfalls of Going to Scale and examined the different ways that Nurse-Family Partnership and Homeboy Industries had been successful.

Nurse-Family Partnership is the classic case study of a nonprofit going to scale (seriously, you can read the Bridgespan case study of NFP here). Beginning in 1996, NFP took their evidence based program and began to replicate it around the country. They now offer services in 28 states and have over 16,000 families enrolled in their program.

Homeboy Industries is the largest gang intervention program in the country offering many services around their core mission to place at-risk and formerly gang-involved youth in productive jobs. But while they are the largest program in the country, they offer services exclusively in Los Angeles. During the session, founder and executive director Father Greg Boyle explained that they have intentionally resisted the many offers to replicate their program in other cities. However they do act as a model for other programs and help other programs get started. Since “scale” is the constant buzzword of social entrepreneurship in particular and philanthropy in general, it is interesting to hear the counter argument.

One of the reasons scale is pursued in the for-profit space is that many fixed costs diminish as an organization grows. Therefore, the bigger an organization gets, the more profitable it can be. But one of the implications of the fact that philanthropic knowledge is valued differently than for-profit knowledge, is that Father Boyle is “winning” when he helps other groups copy his program. The social impact that Homeboy Industries achieves accrues to the public in the same way the impact that other programs create does. This means that unlike in the for-profit space, where Father Boyle would have to own the other programs to benefit from their success, in the social sector we all win when anyone wins.

So does scale make sense?

In many cases I think it does. But given the assumption that many people make that scale is the obvious goal, I think it is important that we examine when going to scale makes sense and when helping other people steal your ideas is a better strategy.

Luckily this is an idea that is gaining traction. Nathaniel Whittemore wrote yesterday about Scale vs. Diffusion in a report from his Global Engagement Summit yesterday (Did I steal his idea or have I been thinking about this post since the CEP conference? Does it matter?). And the March edition of Alliance Magazine had an article comparing “replication” vs. “propagation”. Alliance Magazine has made access to the article free for Tactical Philanthropy Readers. Check it out here.

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By Sean Stannard-Stockton | Also posted in Information Sharing, New Philanthropy, Philanthropy, Social Entrepreneurship, nonprofits | Comments (11)

Center for Effective Philanthropy: Aligning for Impact

March 30, 2009 – 8:56 am

After a week of writing about the impact creation opportunity available to those who are willing to share knowledge about smart grantmaking, I’m off to the Center for Effective Philanthropy conference Aligning for Impact, where I’m sitting on a panel about information sharing in philanthropy:

Foundations and Information: When to Share What You Know
How open should foundations be? About what? Do foundations have an obligation to share what they know about the successes — and failures — of their strategies? About the performance of the grantees they fund? Or the diversity of their grantees, staff, and boards? Beyond sharing information, what obligation do foundations have to develop the nonprofit sector’s information infrastructure? Panelists from inside and outside organized philanthropy will debate these and related questions about foundations and information.

Speakers: Bill McCalpin, Independent Consultant and former Executive Vice President and COO, Rockefeller Brothers Fund
Mark Sedway, Director, Philanthropy Awareness Initiative
Sean Stannard-Stockton, Principal and Director of Tactical Philanthropy, Ensemble Capital Management
Moderator: Teri Behrens, Editor-in-Chief, The Foundation Review

I’m struck by the focus of the session description on the word “obligation.” My focus in all of last week’s posts was on impact focused reasons to share information. I know that Teri Behrens, the editor of the new Foundation Review, gets that the reason to share information is that doing so can help further a foundation’s mission. But the word obligation in the session description reminds me just how frequently this conversation is framed as a compliance/disclosure/accountability issue.

Personally, I believe that it is a good thing that private foundations are “private” and free to act in the way they believe is most appropriate. I don’t think that foundations have an obligation to share knowledge anymore than an investor has an obligation to make smart investments. I think most foundations should want to share their knowledge because it is an effective way to further their mission.

Frankly I don’t care of a foundation posts its 990 on its website. I don’t care if they list the salaries of their executives. That’s a disclosure issue and while compliance and appropriate disclosures are important, they are issues that should be decided upon and then required of everyone.

But knowledge sharing, there’s a subject for a hearty debate! How far can we push the envelope? How much can we learn? To what degree can we figure out how to harness the accumulated knowledge of institutional foundations and combine it with the massive capital flows provided by individual donors to revolutionize philanthropy in the 21st century?

This is about impact, not accountability.

Note: If you are twittering from the conference, use the tag #CEP to indentify your tweets as conference related.

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By Sean Stannard-Stockton | Also posted in Effective Giving, Foundations, Information Sharing, New Philanthropy, Philanthropy, Transparency | Comments (0)

Why Philanthropy Wins in a Web 2.0 Culture

February 12, 2009 – 10:01 am

The business world hasn’t yet figured out how to deal with the way that the web makes sharing information incredibly easy. From newspapers, to music labels to anything that can be digitized, the web has destroyed business models that rely on ownership and control of information. Almost all profits comes from the control of certain types of information.

There’s nothing wrong with this. When I say “control of information” I don’t mean some devious withholding. Great musicians have knowledge of how to make great music. Great stock pickers have information about how to pick stocks. Great entrepreneurs have information about an exciting new business opportunity. The incredibly easy sharing enabled by the web means that suddenly only difficult to digitize information is valuable. That facts you learned in high school? Worthless. Your ability to synthesize new data and interpret new situations? Priceless.

Guess what? All this is outstanding news for philanthropy.

I often use examples from financial markets when I write about philanthropy. But there is a core underlying element of philanthropy where financial market framing breaks down. As a for-profit actor, you only care about the returns that accrue to you from an investment. If you have reason to believe that a stock will go up and you share the information so that other investors profit, none of their profits accrue to you.

But in philanthropy, all “returns” accrue to the public at large. If I have information about a great nonprofit, I can share that information widely and if other philanthropists make successful investments in the nonprofit I get just as much benefit from their returns as if I had been the only investor.

This dynamic changes everything.

In philanthropy:

  • The best philanthropist is not the one who makes the best grants. It is the one whose activities creates the most impact regardless of who actually makes the grant.
  • Sharing information increases your impact by helping other funders act on your ideas.
  • A funder who quietly finds a great nonprofit or program, but doesn’t have the resources to fully capitalize it fails unless they attract other funders.
  • The top philanthropists of this generation will not be the ones with the most money, they will be the people who are best able to influence where the big money goes. That will be the people who most effectively share high quality information.

Check out the video below (hat tip Lucy Bernholz) and every time you hear the word “science” replace it with “philanthropy”. Social media is destroying long successful business models as we speak. But the issues it raises have the opposite affect on philanthropy.

Have you shared valuable information today?

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By Sean Stannard-Stockton | Also posted in Cross-Disciplinary Conversations, Effective Giving, Grantmaking, Information Sharing, New Philanthropy, Philanthropic Technology, Philanthropy, Social Media, Transparency, nptech, video | Comments (7)

IssueLab Wins Fidelity Charitable Gift Fund Grant

January 7, 2009 – 9:28 am

Last week I announced that the Fidelity Charitable Gift Fund had offered me a $100 charitable “Gift4Giving”.

I wrote:

I’d like to give the funds to a philanthropic intermediary. A nonprofit group who is improving the state of philanthropy in some way. I’d like your help to decide where to give. If there is a nonprofit group who you think is improving the field of philanthropy, leave a comment to this post with the name and your argument (short or long, it is up to you) as to why you think they are improving the field. The explicit mission of the nonprofit does not need to be to improve the field of philanthropy. I want to hear why you think they are doing effective field building.

Having reviewed nine entries, I’m pleased to announced that the $100 grant goes to IssueLab. As I stated in the originally post, this is based strictly on the argument presented in the entry (although I did verify the facts presented).

IssueLab’s entry came from Gabriela Fitz, co-director of IssueLab:

I am going to advocate on behalf of an organization and a mission that I believe wholeheartedly in. IssueLab is filling a critical gap in the sector’s infrastructure, enabling nonprofits nationwide to disseminate their research findings to a much larger audience than they could on their own.

The web provides easy access to a vast array of information but notably this is not the case with nonprofit research. IssueLab.org solves this problem by pooling the collective knowledge of thousands of nonprofits in its online archive and then working to bring that research to a broader audience.

Valuable information about the causes of and solutions to our society’s most pressing problems, like homelessness, voting rights, access to health care, and child welfare, is just waiting to reach the right researcher, foundation officer, or legislator.

When we pool our knowledge about social issues we better coordinate our approaches to social problems. Funders avoid supporting the same research over and over. Advocates get access to quality information about what lies behind some of the toughest questions we face. Nonprofits can share experience about what works and what doesn’t.

In just the last year, hundreds of new pieces of research have been added to the IssueLab collection, and more than 10,000 other web sites, blogs, and online communities have linked to the IssueLab library!

And just in case you were looking for one more reason to support IssueLab? We make $100 go a long way!

There were lots of other good entries, but I found Gabriela’s arguement regarding the critical gap in the information infrastructure and IssueLab’s solution to be the most compelling. Check IssueLab out. You can even subscribe to an rss feed or get email alerts of all their research here.

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By Sean Stannard-Stockton | Also posted in Information Sharing, Philanthropy | Comments (3)

Online Grant Applications

June 25, 2008 – 10:10 am

Flaw #9 from the Project Streamline report:

More than 80 percent of the grantmakers who responded to our survey reported that they have taken steps to make their information gathering practices “more efficient and streamlined for nonprofit applicants.”

…Many streamlining strategies have turned out to be useful to foundations and their grantees. Yet others, notably online applications and common grant applications, have produced mixed results, creating new issues for grantmakers and grantseekers alike.

…Common grantmaking forms for application and reporting (here, generically referred to as CGAs), which provide a single set of application and/or reporting questions that a substantial number of funders in a region (or funding area) will accept, have seemed like a logical time and resource saving tool for philanthropy. Yet our research found surprisingly little support for common grantmaking forms as a strategy for effective streamlining. CGAs are accepted (or, much less frequently, required) by 34 percent of foundations that responded to our survey.

Common grant applications is one of those ideas that make so much sense on the surface. But then I think about how any investment manager would reject the concept of having a standard template of information on which to base their decisions. Every person has at least slightly different criteria for making an investment or grantmaking decision.

But investors do have a very important infrastructure in place that philanthropy lacks. Investors in publicly traded markets know that every company will file their financials with the SEC. Unlike nonprofits’ 990s, SEC filings are not documents focused on compliance and IRS driven issues. SEC documents are designed to inform investors (the recent changes to the 990 did move them in this direction). In addition, companies host quarterly conference calls to discuss their business. While every investor has their own criteria for investing, they have a common set of information they can obtain about any company.

But here’s the critical difference. A common grant application means that there is a standard set of information that nonprofits can send to funders. In the stock market, the common set of information is available for investors to go get. This switch from passive receiving of information to proactively going out to find what you want is one of the core changes that the internet (and especially web 2.0) bring to the world. A common grant application misses the whole value of the internet. Instead of having nonprofits fill out and submit lots of grant applications, why don’t they just post a single set of common information for any funder to download? The 990 could serve this purpose, but why should funders let the IRS dictate what information is important? Why can’t the philanthropic community design their own “impact report” template that every nonprofit could complete and keep updated? (I asked Brian Gallagher, CEO of United Way of American, this question in a recent podcast.)

Personally I think that most funders should do away with even accepting most grant requests. I think it would be boring to be deluged with requests, most of which I wasn’t interested in. Sounds like spam to me. I’m much more interested in proactively identifying and researching the investments (for-profit or nonprofit) that I am interested in. It sure would help if I could pull up good information about nonprofits on Google Finance the same way I can pull up good information on stocks!

Update: I should be more clear when I say foundations should not accept grant applications. What I believe is that the system of philanthropy should switch from a system of where nonprofits ask for money to one where funders proactively seek out grantees. I layed this thesis out in a Financial Times column earlier this year. But within the current context, I realize there are ramifications if a single foundation stops accepting requests.

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By Sean Stannard-Stockton | Also posted in Effective Giving, Foundations, Fundraising, Grantmaking, Information Sharing, New Philanthropy, Philanthropic Technology, Philanthropy, Social Media, Tactical Philanthropy, nonprofits, nptech | Comments (2)

connec+ipedia

June 23, 2008 – 6:00 am

For some time now I’ve been talking about the need for large foundations to share their knowledge base with the general public. While some people have made this argument from the standpoint of obligations that foundations have to the public, I’ve thought that foundations will find that they are able to more effectively further their own mission by sharing their knowledge base. Since individuals give seven time more money each year than all the foundations in the country combined, it stands to reason that foundations who share their knowledge with the public might influence some of these vast flows of funding to support the mission of the foundations.

Recently the Meyer Memorial Trust, a $700 million+ foundation that has proven innovative in a number of ways, launched an attempt to share their knowledge base with anyone who is interested. The project is called connect+ipedia. Rather than explain the project myself, I asked Amy Sample Ward – Communications and Learning Associate at MMT and author of the foundation’s New Media Blog – to share her thoughts with Tactical Philanthropy.

By Amy Sample Ward

If you are looking for some introductory information about after school programs, for example, and you do a Google search for that term, you would get 40,200,000 results. But, if you use connec+ipedia, you get 111, all of which are cards on the topic or organizations involved in such work. So, what is connec+ipedia?

Let’s start at the beginning: A few years ago, Meyer Memorial Trust (a private, regional foundation based in Portland, OR) recognized the need to explore the world of knowledge management. A full program staff turn over in a short amount of time (with program officers retiring after decades of service) meant an irrevocable loss of institutional knowledge, and the adoption of a knowledge management tool could ensure that such loss did not happen again. Marie Deatherage, Director of Communications & Learning, was tasked with the investigation and discovered that foundations around the country were investing a lot of dollars (millions, even) to develop tools that only the organization could use and that often faced little-to-no staff buy-in.

MMT had shown a commitment to both supporting open source software and to supporting the broader philanthropic and nonprofit sector through grantmaking and other projects, so, when Marie met the two great minds behind Grass Commons who were working on an open source wiki tool that incorporated database functionality, the choice seemed clear. What was also clear to the Trust, was that this wouldn’t be a tool for internal use only, but would be completely open. Other foundations, nonprofit organizations and state agencies were often all working on the same kinds of programatic work, so it would make sense that they should be able to collaborate online, in a way that allowed for sharing of best practices, data, standards, and other information—that these parties should all have access to the same information when working to make informed decisions about work that effected the field.

Wagn is the free, open source software that connec+ipedia runs on, combining the editable functionality of a wiki (like Wikipedia) with ‘tagging’ or referencing functionality of a database. Anyone (with Intern access) can view, search, and read the site. Users (request an invitation!) can edit, create and contribute content, all organized through people, places and things, as well as the intersections between them. Back to the initial example: If you wanted to find out about after school programs, searching Google may be too much information. Searching on connec+ipedia, instead, could mean a more easily digestible avenue to tailored information. Users from across MMT’s service area and beyond, in foundations, nonprofits, state agencies, as well as corporations and public citizens are already making connec+ipedia a resource. The Oregonian has even gotten behind it!

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By Sean Stannard-Stockton | Also posted in Foundations, Information Sharing, New Philanthropy, Philanthropic Technology, Philanthropy, Social Media, Transparency, nptech | Comments (2)

Google, Information & Philanthropy

February 7, 2008 – 9:25 am

Google.com lets users create custom search engines. Here’s an interesting example of how Google technology can be used to create more efficient information distribution in philanthropy.

Developed by E-Democracy.org, the custom search tool is described this way by the creator:

To assist E-Democracy.Org’s grant prospecting efforts I put together a little (big actually) Google Custom Search covering foundations, some government funding sites, and sites with fund raising advice for non-profits.

You can use E-Democracy’s custom search engine here and create your own here.

(hat tip: Lucy Bernholz)

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By Sean Stannard-Stockton | Also posted in Philanthropic Capital Markets, Philanthropic Technology, Philanthropy, Social Media, nptech | Comments (0)

Breaking Frames in Philanthropy

January 28, 2008 – 10:12 am

Humans have a remarkable ability to categorize information and then quickly compare new data to prior experiences. This allows us to absorbed massive amounts of new data quickly in ways that computers are still unable to do. For instance if I show you a picture of a dog that you’ve never seen before, even a photo that is blurry or otherwise difficult to analyze, you will immediately recognize it as a dog based on your prior experiences.

This can be a trap.

This remarkable skill can prevent humans from recognizing the differences in things. We are often startled when individual do not stick closely to the broad categories in which we’ve stuck them. That’s why we get confused by democrats that are for an aggressive military, physicists who are in rock bands, or surfers who read the Economist.

I’ve been talking about efficient markets in philanthropy and I think that some people are making a number of assumptions that are not valid, although understandable, about my broader message. I’m going to quote from a number of recent comments and post my response:

Phil Cubeta:

Do you think, Sean, at all about civics, citizenship, about the nonprofit sector as “soul making,” or about how we as a people learn the difficult art of democracy?

I see nothing about efficient markets in philanthropy that is at odds with civic engagement. Efficient markets in philanthropy is about widely distributed, useful information. A more efficient market would allow for more philanthropic capital to flow to its best use as well as allow volunteers to find high engagement volunteer opportunities where they could truly “learn the difficult art of democracy” rather than stuff envelopes. Information efficiency and hyper-capitalism are entirely different ideas.

Young Staffer:

When did it become a choice for the sector between most efficiently solving problems and nurturing the higher callings of our community?…

This discussion seems to me to pit two histories of the independent sector against each other – the early 20th century philanthropy of Carnegie and Rockefeller and Ford against the 19th century of de Toqueville’s associations. We shouldn’t (nor do I think we can) do away with either legacy. Both are part of the nonprofit sector and both color it. The paradox is that they have contradictory aims. The first, the one which would benefit from an efficient market, see its own destruction as its ultimate end. The second, which rests on civic engagement, sees its own expansion as almost endlessly beneficial.

I see no contradiction between efficiently solving problems and nurturing the higher callings of our community. I think that is a false choice.

I also reject the comparison of efficient markets to the efficiency sought by early 20th century philanthropists. Efficiency as defined in the industrial age (highest number of widgets at lowest possible cost) is not the same as efficient information that allows people to direct their resources in ways that promote the most good (however each person defines “good”). The first type of efficiency is generally concerned with quantity while the second kind is more multidimensional and takes into account quality as well as value judgments.

Michael Moody:

The qualitative folks need to become comfortable with the numbers (they really have no choice in the nonprofit world today, frankly–and this is probably a good thing in the end, though there are growing pains!). And the metrics folks need to be comfortable with retaining some of those other forms of valuation (e.g., people recommending trusted nonprofits to each other, people giving because they are committed to a mission) that have been around, for good reason, for a long, long time.

Yes! Efficient markets certainly do not value quantitative information over qualitative. I’ve consistently rejected quantitative measures such as overhead expense ratios. Great Nonprofits (people recommending trusted nonprofits to each other) is certainly the type of tool that will make philanthropic markets more efficient.

All that efficient markets in philanthropy imply is that the resources of donors (money, time, knowledge, etc) are allocated to nonprofits so that the most “good” is created (with good being defined by individual donors following their own hearts). It would be The World We Want, with the emphasis on “we”. In a philanthropy with information efficiency, a donor could sit in an office crunching spreadsheets or head out in the wilderness to cut trails. Information efficiency empowers people to make informed decisions about the best way to further their values and beliefs; it does not dictate what sorts of actions are “best”. Only each individual can make that decision for themselves.

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By Sean Stannard-Stockton | Also posted in Effective Giving, New Philanthropy, Philanthropic Capital Markets, Philanthropy | Comments (5)