I found such an exciting TED talk the other day, and I was all pumped to blog about it... Then I realized Adam beat me to the punch with his tweet last week. Well, I found one aspect, in particular, so interesting that I just can't imagine blogging about anything else right now, so here we go. Here's the talk: http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html
In the for-profit sector, risk is considered an essential part of any company's ability to grow. It really comes down to three things: 1. People like, and need, and will spend money on new things. 2. New things cost lots of money to create. 3. Just because you dump a lot of money into a new thing doesn't mean people will like, and need, and spend money on it. So, every year start-up companies use their own money and investors' money and try to develop a product that will really revolutionize the market, and every year some of them fail. However, some of them become the Googles and Facebooks and Pinterests of the world. There's just no way companies like that could have become what they did by making risk-less financial decisions. I found this blog post by Derrick Feldmann that really breaks down how he thinks charities should think about 'risky' business decisions: http://pndblog.typepad.com/pndblog/2012/08/why-risk-is-an-unloved-word-in-philanthropy.html
So now, I'm really torn in 3 different directions. The first is the somewhat natural instinct to give money to organizations that will spend it on "the cause". So far, this one actually seems to be the worst strategy. While it's nice to know that the money you invest is going to "help" who you want it to help, organizations with extremely low overhead are likely not to have any research to back up that they're getting anything accomplished. The second is to give to organizations that are using established, research-based tactics and funnel money into "the cause" as well as R&D. This seems pretty good, but all the well-established strategies in the world haven't really made a dent in poverty, so maybe we're barking up the wrong tree there. The third is to donate to organizations who have a wildly innovative way of attacking a social problem and plan to use funds for programs that have the potential to either grow the program enormously or completely flop.
So, what do you guys think? Would you feel differently if we had $100,000? How about $1 million?
I feel that this is just a part of how people work. Some people want to see a direct result from their giving and some people are okay with allowing themselves to have an indirect impact on the cause. I believe that this is what drives people when they are deciding what charity to give to. Most people would not choose to buy a risky stock, although some people have gotten rich buying those types of stocks.
ReplyDeleteAlong the same vein, people don’t want to risk their money on an up-and-coming, unproven charity that has no results to show. I am not a risk taker with my money; I like to know where my money is going and have a record of how the company has been doing before I will give them my money. This is why I would need to see data and outcomes from a charity before I would feel completely comfortable giving them my money. I would feel the same way with any amount of money.
I think this is type of choice is due to a person’s character and personality. Someone who is a risk taker would be more willing to give money to a charity that has not proven itself. I do not think that this is a unique problem to charities, although it may gain more attention when a risky charity is successful than a risky business. I would definitely fall into the second category Melissa gave or, if not the first, I would be willing to fund research and data gathering in an organization such as the Urban League so that they could collect data on their outcomes and as a result hopefully give more of the general public a reason to donate.
I feel like this is an issue that has been discussed in class, but I like the angle that you've taken in this post. I feel like people would tend to be more conservative with their own money than they would be with someone else's money. with that being said, I also think that people will only invest (as you pointed out in your post) in an organization that has some type of proven results. I think that these are the kinds of people who want to be able to see the tangible results of what their work and money has done. I think that this is why people don't want to invest in up-and-coming organizations, since they don't want to be associated with an organization that failed somehow.
ReplyDeleteI think in terms of our ability to donate, and that our money could truly make a difference, I believe that our attitude would be different. I don't think that our class would be paying as much attention to every dollar, and every cent, as we inevitably will in a few short weeks. If we had more money, we would not be paying this much attention to the amount that we have, and the amount that each organization needs. I think that in our particular situation, money gives people a sense of difference-making-ability, and the more money we have, the bigger of a perceived difference that our class can make in the society around us.
I also found this TED talk and thought it was extraordinarily thought provoking. When dividing up strategies of giving into these three categories, I can see how all three can be appealing. Love and emotion are strong motivators to give, and as Dan Pallotta states in his talk, "philanthropy is the market for love.”
ReplyDeleteNonprofits, of course, pull at your heartstrings to get you to donate, with sad pictures of babies and puppies in despair, but if you actually want to make a difference in these issues, your strategy will probably have to fall into one of the other two categories. Giving to the well-established and results-oriented organizations is one step better than blindly giving to the organization that can make you cry the quickest, but as Melissa said in this post, despite the fact that a lot of well-established strategies are making progress and have good results, sometimes it seems like it will take centuries to really eliminate these problems.
This is where I think the third strategy of giving to risky organizations with high potential is important. High potential is key here. Giving blindly based on emotion is just as ineffective as funding something just because it is risky. I think most people avoid giving to risky organizations because they just don't know enough to be able to analyze them and decide if they have the all-important high potential. I don't play the stock market because I don't know enough about business to trust my risk assessment. I think this is the same for those who donate to nonprofits. It takes a knowledgeable, interested, and dedicated person to do the research and know the facts to determine if this risk is worth taking, and to delve deeper than the glossy pictures and potentially unrepresentative anecdotes.
Ultimately, I think it will be a risky idea that flourishes into poverty-ending action, but the trick is being able to pick out that risky idea among the thousands if not millions of risky ideas already out there. It takes education, experience, and a good handle on nonprofit structure to be able to do this assessment, and I think our class is on our way to gaining these necessary philanthropic skills.
Also, for some hope on the poverty front, take a look at this TED talk by Bono… I know you love those TED talks! http://www.ted.com/talks/bono_the_good_news_on_poverty_yes_there_s_good_news.html
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ReplyDeleteThanks for giving me credit for first stumbling upon the TED talk, but I have to transfer that credit to Dana because she did tweet it earlier than me (I didn’t know). Regardless, I thought that this video was very interesting. He provided a lot of logic as to what is wrong with the non-profit sector, but what I found most interesting were the comments about the video. Most said how inspiring this was and that everything he said was spot on, but there were those that criticized Pallotta for singlehandedly running his non-profit organizations into the ground and that his ideas are a disservice to the non-profit sector. When I listened to what he was saying I was inspired too, but I realized I should dig deeper and find out if I was caught up in his speaking skills or if there was more going on than what he said.
ReplyDeletePhil Buchanan elaborates on the main counter argument to Pallotta’s view here: http://philanthropy.com/article/Nonprofits-Need-a-Stronger/134708/.To summarize it, Buchanan says that Pallotta’s assumption that charities aren’t trusted is false and that few institutions are more trusted, that Pallotta doesn’t mention the historical achievements of non-profits, that he doesn’t understand that charities that have more don’t always get better results, and that if non-profits were to aggressively advertise like businesses then they would lose the trust they have due to marketing techniques. As I was caught up throughout his speech due to the logic of it, I think it is necessary to take a step back and observe the counter-arguments like Buchanan’s to fully understand all viewpoints.
My personal opinion is that non-profit organizations are not 100% efficient in the way they go about helping, but it isn’t necessarily the best idea to only help charities that have innovative ways of going about their business. Many charities have great results and aren’t in the need of immense change. So much of this should be taken on a case by case basis that it is hard to say a specific risk is better than another.