Risky Business

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?

Forced Giving

     Earlier in the semester, Peter Singer’s The Life You Can Save sparked a discussion in class about the potential benefits of a business automatically donating a certain percentage of employee paychecks to charity. We discussed how a system in which each person would have to opt out of charitable giving as opposed to opting in would surely increase the amount of contributions, and thus benefit society. However, what would happen if someone could not opt out? There was recently vast controversy regarding a proposed Charity Law in China, which would have required each citizen to donate a certain amount of their paychecks to government-funded charities. Although the situation was ultimately cleared up and deemed a miscommunication, the complete aversion that the public demonstrated towards this proposal showed the strong Chinese resistance to the notion of forced giving.

     According to the article “Why No One Trusts Government Charities in China Anymore” in The Atlantic, the Chinese public’s resistance regarding this policy of forced donation stemmed primarily from their distrust of government-supported charities. Over the past few years there have been several highly publicized scandals involving the misuse of charitable funds for extravagant luxuries from Chinese nonprofits, such as the Shanghai branch of the Red Cross. Consequently, people viewed this forced charity proposition as a “legalized robbery,” because they believed that their money would be contributing to corrupt organizations that would not use the funds for their intended purpose. Additionally, as an article in the New York Times asserted, the philanthropic sector is not well developed in China, so people are even less inclined to be forced into giving to something that may not otherwise have any impact in their lives.

     This stark Chinese opposition to forced giving led me to consider the response that such a proposition would garner in America. Personally, I believe that although Americans are more familiar with nonprofits and have significantly more trust in the good this sector can accomplish, the response to such a proposition would still be negative. The notion of forced charity seems to destroy the essence of what philanthropy should be: doing good freely, out of love and concern for fellow man. Therefore, as people in American often donate to causes that they are passionate about, if this ardor were to be removed from giving, it would lose its significance and simply become another tax. Ergo, while Americans may be more likely to support charities in general, they would likely resent their contributions being dictated by the government, and perceive such a policy as an attack on their freedom of choice. 

     Although the idea of forcing people to donate a certain amount seems to contradict the fundamentals of philanthropy, I believe that a less extreme policy, such as that proposed by Singer, might be very successful. If employers implemented an opt-out policy in which workers are able to select the a cause that they are passionate about, there would likely not be much resistance. Therefore, I believe the key in easing in the notion of a sort of “Charity Law” would be to keep choice involved, thus preventing it from simply becoming another expense imposed by the government. People might resist being forced to give a certain amount, but if they have the option to stop contributing, they will feel as though it is their decision to give and therefore enjoy the feeling of doing good out of the kindness of their hearts. Do you agree that such a policy would be plausible and beneficial, or do you believe another approach would be more effective? Do you think that Americans would be more resistant to the potential installation of a Charity Law than the Chinese were? Is it possible that a less extreme policy, such as one in which opting out is possible, could work in China, or does it seem that the perception of charities as corrupt would halt this as well? 

  If you would like to refer to the articles that I referenced, they can be found at http://www.theatlantic.com/international/archive/2013/03/why-no-one-trusts-government-charities-in-china-anymore/273989/ and http://www.nytimes.com/2011/07/04/world/asia/04china.html?pagewanted=all&_r=1&.

The Super Bowl of Philanthropy

It’s in our blood, our DNA, and our blueprints as human beings. The desire to win, to beat our adversaries, and to emerge victorious. We hate to lose, we don’t like taking no for an answer, and the thought of being unsuccessful sends chills up our spines. So much of our society today is centered around the ideas of monetary and social success. Two of the main outlets by which our society measures success are sports and the media, specifically television shows. These two areas encourage and exemplify the ideas of competition and success. There is no sport in which the sense of competition is not present, nor where a winner in some respect is not crowned. Every professional and college sports league has some type of playoff, culminating in a championship game, in order to crown that particular year’s winner. The majority of professional sports playoff series feature many advertisements and sponsors. One of the caveats of sponsoring  or advertising in professional sports is that part of the advertising money goes towards philanthropic efforts. As such, the professional sports leagues use the idea of competition to entice these companies to buy advertising space, while donating some of the money to charitable organizations. Can we consider the donation of this money philanthropy? Does the fact that this money derives from competition, and the desire to be bigger and better than another advertising company detract from its ability to change lives? The average amount spent on a Super Bowl ad in 2013 was $3.75 million! (http://qz.com/49855/super-bowl-commercial-is-4-million-big-advertisers-make-that-much-in-the-time-youll-watch-the-football-game/) Furthermore, before a championship like the Super Bowl, both teams have championship apparel that is produced in the hopes that they will win. Only one team will win, and it is not uncommon for the apparel of the team which is not crowned champion to be shipped by the ton to underprivileged countries, in the hopes that it will help those individuals who are less fortunate (http://www.christianpost.com/news/nfl-donates-super-bowl-loser-s-gear-to-poor-kids-31069/). Is the donation of this apparel, which is deemed “useless” by American consumerism, a form of philanthropy? I would call this charity out of pity, necessity or even publicity, but certainly not selfless philanthropy.    

In our media as well, television shows consistently pair the ideas of competition and philanthropy. One of my favorite shows seems to have perfectly struck this balance. The Celebrity Apprentice, now back for its 6th season, features 14 celebrities competing to win the title of “Donald Trump’s Celebrity Apprentice.” These celebrities are split into two teams, and compete in various fundraising events. The team who raises more money in the context of that specific week is safe, while the weakest member of the losing team, as deemed by his or her own team is fired, and eliminated from the show. The catch here is that each celebrity is playing for a charity, and all the money from a specific week’s competition goes to the winning team’s weekly “project manager.” This past week was the first episode for this season, and upwards of $600,000 was raised and donated to Project Manager Trace Adkins’ charity, The American Red Cross. Undoubtedly, this money will go to help those people who receive aid from the organization. However, the question that I want to raise is: “Would this money have been donated to this particular charitable organization had this event not taken place?” Personally, I believe that the money would have gotten to the organization, but not at this magnitude, in this timely of a manner. What do you think? Are the charitable donations as results of competitions considered philanthropy, or are they merely fortuitous byproducts of something completely unrelated?