How To Spot A Bargain in Philanthropy

December 8, 2011 • Blog, Philanthropy & Giving • by
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What makes something a bargain in the philanthropic world? Last week, Dean Karlan wrote a post on the Freakonomics blog entitled, Bargain Hunting for Charities. He wrote,

Gosh that sounds so stingy. When we are charitable, we don’t want to be cheap. This is our moment of giving, of generosity, not bah-humbugness. Alas, that is exactly what we should be. If we go to a restaurant for chicken wings, what would you think of the following prices:

  • 4 chicken wings: $8
  • 6 chicken wings: $8
  • 8 chicken wings: $8

Which would you opt for (assuming more is always better)? Naturally, it shouldn’t require much thought. So why not apply this to charity?

Karlan then goes on to highlight GiveWell, a great organization that does some very innovative work in studying nonprofit institutions and makes recommendations about excellent charities. There are a couple of similar organizations, but GiveWell seems to be the most robust. Unfortunately, many of these resources are vastly under-utilized when it comes to an individual’s giving, with only 1 in 10 donors utilizing such resources at all.

I love Karlan’s premise but I’d like to take it one step further, because the issue isn’t really that we go to the same restaurant and are shown the same price for different quantity wings. It’s more like different restaurants offering a burger at different prices. In that case we don’t always go for the cheapest. I’m not going to eat a burger at McDonald’s when I can go to Kuma’s Corner.

As donors we shouldn’t be focused solely on quantity but quality as well. We trade off those things in our consumer purchases all the time, and the same thing can occur in our philanthropic choices as well. A focus solely on quantity leads to ever decreasing overhead which does not always lead to the best quality (think low overhead, large transaction chains like McDonald’s). Quality and quantity are not positively correlated, but they don’t have a negative correlation either. Just because something is more expensive does not make it better.

As we approach our philanthropic decisions let’s think about quantity and quality. Also, check out resources like GivingWell. They help you make good giving decisions.

Charter Cities: The Future or Future Failure?

November 16, 2011 • Blog, Ideas, Public Policy, video • by
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I’ve been fascinated by the concept of “charter cities” since I first saw Paul Romer’s talk on Ted.com (watch it here) describing the idea. The basic premise is that governance is transferable and that rather than waiting for nations to get their act together, they can set up cities that essentially outsource government. These cities can then gradually influence the rest of the country (think Hong Kong to China).

While the idea sometimes gets discussed in academic circles, it looks like it might actually be implemented in Honduras over the coming years. The government in Honduras voted to allow for the creation of autonomous zones, not held to local or federal laws, and Future Cities Development, Inc., has signed a non-binding memorandum of understanding to build a city in one such zone starting next year.

Interestingly enough, Future Cities is run by Patri Friedman, the grandson of libertarian economist Milton Friedman, and the company is largely built upon the ideas his grandfather discussed as an economist.

I think it will be very interesting to follow this development. Building cities from scratch is not new, but the idea of autonomous zones where companies compete for citizens is definitely new. Companies competing for citizens to drive up land values is certainly interesting, and academically it is what nations do, but how this will work outside the classroom remains to be seen.

Thanks to Greg Lindsay’s blog for bringing this to my attention.

 

Interesting Idea in Tax Reform

October 4, 2011 • Blog, bloggers, Measurement & Evaluation, Public Policy • by
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I know, I know. Many of you find the idea of tax reform so intoxicating and constantly complain I don’t discuss it enough. Well today I came across such an interesting idea I thought I’d share it with you.

It’s from Robert Egger, founder of DC Central Kitchen, a social enterprise in DC in a post entitled, Boosting the Economy Through Charitable Tax Deduction Innovation over on the Tactical Philanthropy blog. His basic premise is that nonprofits and social enterprises create jobs too and in a time where we are looking to spur growth and investment we can spur social enterprises on by having the Charitable Tax Deduction code catch up to the times. He writes:

America is no longer a manufacturing economy, with jobs for all. Nor do we produce enough “extra” money to support an unlimited number of charities. Therefore, we must begin to let go of attitudes, ideas and tax policies that rely on the incomes and opportunities of a by-gone era.

His idea is to create a return on investment formula so that donors could experience an increasing tax deduction over time if the program they supported succeeded in addressing social problems. This makes complete sense academically. Many nonprofits save tax payers millions through the services they provide and yet though don’t reap any benefits from that.

What could happen is almost like a social stock market where one could invest in a nonprofit in the hopes that the tax deduction you would receive would increase over time. Logistically there are huge hurdles to the measurement and identification of the impact and then putting a number on it but I think it is definitely an interesting idea.

What Are Your Strengths?

August 26, 2011 • Blog, bloggers, Books, Leadership • by
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Leadership requires self-awareness. Great leaders are always self-aware (though not all successful “leaders” are). To be able to lead others you need to know yourself, where you are strong and where you are weak. You need to know your limits and live with a level of character that is unexpected.

One useful leadership tool is StrengthsFinder developed by people from Gallup. I first took the test 4 or 5 years ago. After answering a series of question they let you know your top 5 strengths from a list of 34 that fall into 4 broad categories: Strategic Thinking, Influencing, Relationship Building, and Executing. (Go here for an excellent description)

  • Strategic Thinking
    • Analytical
    • Context
    • Futuristic
    • Ideation
    • Intellection
    • Learner
    • Strategic
    • Input
  • Influencing
    • Maximizer
    • Self-Assurance
    • Significance
    • Woo
    • Activator
    • Command
    • Communication
    • Competition
  • Relationship Building
    • Relator
    • Positivity
    • Empathy
    • Includer
    • Harmony
    • Developer
    • Adaptability
    • Connectedness
    • Individualisation
  • Executing
    • Achiever
    • Arranger
    • Belief
    • Consistency
    • Deliberative
    • Discipline
    • Focus
    • Responsibility
    • Retorative

The premise behind discovering and identifying your strengths is that great leaders play to them, they don’t spend time trying to perfect their weaknesses, they build on their strengths. You will be at your happiest when you are in a position that will allow you to play to your strengths the majority of your day.

The StrengthsFinder exercise is also a great thing to do with a team. It will allow you to see where your team is strong and weak, where you have gaps that should be filled by your next hire. For example, I did this on a team I was on a few years ago and I had not a single relational gift while every other person on the team had at least one and often 2 or 3. (My gifts in order are 1. Futuristic 2. Strategic 3. Competition 4. Activator 5. Self-Assurance) My role on the team was thus crucial to the team’s success and they would sometimes defer to some of my thinking on strategic matters while I definitely did the same to them on relational ones.

If you are in leadership you have to know yourself. Discover your strengths. Find out your Myers Briggs. Read books. Go to conferences. Listen to feedback. You will lead better for it.

Proof

August 24, 2011 • Blog, Measurement & Evaluation, nonprofit • by
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Should non-profits be forced to prove that their interventions actually work? All too often the strategies and programs employed by non-profits seemed haphazard and have no real basis in scientific research. That does not mean however, that proof should be required.

Proof is a tricky thing. For one, attaining scientific proof of something is very difficult, requiring lots of time, money, and people. Second, as discussed in this post from Tactical Philanthropy, proof seemingly declines over time. “For all the perceived precision of a large study “proving” that something is true, the fact remains that over time our understanding of facts and truths change.”

The post quotes a New Yorker article title The Truth Wears Off that is quite interesting.

“The test of replicability, as it’s known, is the foundation of modern research. Replicability is how the community enforces itself. It’s a safeguard for the creep of subjectivity. Most of the time, scientists know what results they want, and that can influence the results they get. The premise of replicability is that the scientific community can correct for these flaws.

But now all sorts of well-established, multiply confirmed findings have started to look increasingly uncertain. It’s as if our facts were losing their truth: claims that have been enshrined in textbooks are suddenly unprovable. This phenomenon doesn’t yet have an official name, but it’s occurring across a wide range of fields, from psychology to ecology.”

This is not to say however, that non-profits shouldn’t strive to understand the effect their interventions are having. All too often non-profits flee from facts and cling to anecdotes. They never step back and examine the impact they are having on the communities, people groups, or issues they are seeking to affect.

Scientific proof should not be the goal, but ignorance is unacceptable. A balance must be struck that seeks to understand affect without necessarily scientifically proving it.