If not for profit, for what?

nonprofit

I sat next to an older gentleman on my flight from D.C. to Atlanta, GA. While he was quite in the beginning and was absorbed in his newspapers, a quick smile and conversation started him talking. And despite his strong southern accent – he was from Alabama – we managed to discuss a lot of ideas on this short trip.

One of the first things he said when I pointed out that I was working in the nonprofit sector was that it’s all a sham. “It is all about tax write-offs, ultimately, someone has to pay for all that service.” He argued.

While I do meet the occasional Libertarian, who brushes off all feel-good work of nonprofits as just instances of market catallaxy, or the ‘entrepreneur’, who quite genuinely scoffs at the idea of the nonprofit being a sector, the truth is that about 10 percent of Americans are employed in this sector and it is one of the most enduring parts of American work-force and cultural landscape. Nonprofits today are growing and thriving, if anything. There is no denying that this sector is important and worthy of our attention, even if we don’t believe in how it operates or its assumptions.

This conversation brought to mind the famous book by Dennis Young, ‘If not for profit, for what’?  In this book, he has argued for a behavioral theory of studying the nonprofit sector.  In terms of framing the study or discourse of nonprofits, young suggests that the demand side of nonprofits has been studied quite extensively, i.e, how nonprofits provide public goods as studied by Burton Weisbrod and as providers of ‘trust goods’ as offered by Henry Hansmann – where nonprofits ‘asymmetric information led consumers to prefer nonprofits over less trustworthy for-profit providers.’ What this means is that there is a market-gap in most areas, where consumers/ citizens don’t have access to the best information and in the absence of that, for-profits would – given their motivation to make as much money as possible- make use of this gap. On the other hand, a non-profit, which has a service motive is not likely to indulge in this sort of behavior.

Young offers an explanation that the ‘supply’ side of nonprofit behavior has not been extensively analyzed and this can help understand the motivations for why people work in this sector and why it even exists. He uses entrepreneurship as a motivating factor to understand the sector. His framing of the nonprofit sector leadership and motivations as ‘entrepreneurship’ is key to our discussion. Most nonprofit leaders and organizations are trying to solve some social problems for which there is no market solution. Or if there is, it is too expensive or exclusionary.

As Peter Frumkin, writing in this book suggests “The value of his (Young’s) early contribution was and continues to be his focus on the way the values, personal traits, and skill sets of individual entrepreneurs are a useful starting point in understanding where nonprofit ideas and organizations originate.”  By this means that the focus of most scholarship and discourse has been on why market failure has been responsible for the rise of nonprofits, while there hasn’t been much focus on the supply side – meaning why individuals do what they do, in the context of social organizations and institutions. The study of values, motivations and drives is key as well. This also explains the rise of the civil society sector in the U.S., which Alexis De Tocqueville wrote about, in Democracy in America.

Back to the question: if not for profit, then for what? The answer to this lies in both normative and philosophical dimensions. Sometimes profit is not the key motive. It could be service or the desire to make a difference. The motive to serve public and do ‘good’ is inherent in the social sector, of which nonprofits are a part. This also means that we need to take into account other motives, other than pure profit motive, that drives individuals to serve and work in these forms of organizations. The market and government cannot provide all answers to questions before us, hence the need for nonprofits.

Does Bill Gates’s philanthropy make a difference?

I have been reading about the philanthropy of the super-rich or the Hi-Networth individuals ( HNW) as they are called. The media celebrates wealthy people, and their acts. As the saying goes, a wealthy’s man’s joke is always funny and few question the ‘good works’ of the super-wealthy. With the ‘Giving Pledge’ and similar initiatives, the super-wealthy have come together to give their wealth away, to the poor. Noble indeed, but is it all there is to this story?

Not quite, point out some scholars and activists/ thinkers. bill-gates-wide-wallpaper-3790One of the interesting arguments that is out there is that their philanthropy or giving can do good, but also cause harm. How so, you might ask? 

For starters, there are two arguments against HNW doing more ‘good’ for the world.

  1. By picking their own visions of what needs to be done, and setting their own agenda, the HNW individuals may ‘distort’ the priorities of the given location/ country, where they are working
  2. HNW can become a facade for showcasing ‘benevolence’ while ignoring the ground reality in many of these situations and the structural inequality that produced that massive amount of wealth disparities.

Lets look at each criticism, in turn.

Firstly, as this post points out, the fact that the HNW individual/ foundation can set its own priorities, which may, in some cases; go against the policies of the country/ region they are working in, can distort the situation. What if, for instance; the national government wants to implement a certain program, which the administrators there think is far more important than what the ‘experts’ of the foundation think? How do the actions of this foundation reflect? Who is this HNW or foundation accountable to?

Secondly, the involvement of private sector players, that are often driven by bottom-lines and profits in policy making is problematic, as the same article points out. The network can soon become a ‘group-think’ exercise, which may leave out the best solution, and decrease changes that the best solutions will be adopted; in favor of those solutions or ideas that the foundation favors. Redtapism and favoritism can begin to take root, in these contexts.

Finally, the question of priorities comes up. As Bowman points out” Research by Devi Sridhar at Oxford University warns that philanthropic interventions are ‘radically skewing public health programmes towards issues of the greatest concern to wealthy donors’. ‘Issues,’ she writes, ‘which are not necessarily top priority for people in the recipient country.’”   This disparity in power, in putting the priorities on the table is a worrying trend, indeed.

At the same time, there is no denying that several thousands, if not millions of lives have been saved by the Malaria and other vaccines that these foundations have given out.

So, how does one evaluate the work of HNW philanthropists/ Foundations?

There are no easy answers, as in life. The question itself is a political one and the answer one offers depends on one’s  worldview.

The alternative, as many; including the President of Ford Foundation has pointed out – and even Bill Gates acknowledges, is to make sure that the structural issues, that cause poverty are tackled. There is a need to ensure that everyone is able to access healthcare, good quality education and other amenities that make for a complete and ‘free’ life. But this is easier said than done, especially in a system that is skewed towards the rich and well-connected, even in a ‘developed world.’

As long as there is sensitivity to local needs and inputs from the governments/ agencies that are in the regions, then the foundations can actually do a lot of good, ensuring that the local infrastructure is built up and people don’t perpetually depend on the largesse of the rich and famous.

If this is not kept in mind, then such philanthropy can become an exercise in publicity and in an effort to further establish the ‘greater glory of rich.’

 

An artist as philanthropist : Umm Kulthum as an exemplar

For those who know Umm Kulthum , the Egyptian singer and iconoclast, they are also familiar with her role in rallying the entire Arab world together, in times of great need. Her role as the ‘voice of Egypt’ is well known. Not so well known may be her role as a philanthropist.

Umm Kulthum
Photo credit : Al bustan culture center, Philadelphia

 

We recently  attended an event honoring Umm Kulthum in Washington D.C. organized by the National Museum of Women in the Arts, that organized an event as an homage to the great artist. Here are some interesting vignettes from the panel discussion that discussed not just her philanthropy, but also her life, her  career and the forces that shaped it.

  • Umm Kulthum was a peasant girl, who made the transition to Cairo, the big city, with a lot of grace
  • As she did this, she remained true to her roots, often referring to her humble origins
  • While maintaining a dignified presence, Umm Kulthum was a trendsetter of sorts – both in terms of style of singing and her own image
  • She contributed to the post-six day war period through her own salary  and her own wealth, towards the Egyptian state, which needed all the money, for its war efforts
  • She also encouraged women to donate jewelry, towards the war efforts
  • Her greatest contribution was to showcase Arab unity, when it was most needed, through Art
  • She was a businesswoman, diplomat and an artist.

As an exemplar of the value of giving oneself, and one’s time, Umm Kulthum demonstrates that an artist can make a difference. And it is perhaps fitting that she is celebrated, to this day; almost 40 years after her death, as one of the most important singers in Arabic language.

How to measure what matters : Nonprofit management 101

The nonprofit industry is obsessed with one thing : measurement. For those who do research or are involved in actual program delivery in the nonprofit sector, this desire to ‘measure spoons’ as Alnoor Ebrahim, a Harvard University professor calls it, can translate into a variety of things. There are a great many metrics that are often considered, when evaluating if a nonprofit is doing its job. For instance, people ask if the proportion of money spent on programs versus program administration (overheads) is ‘reasonable’. There are industry norms, suggesting that if an organization spends ‘too much’ then it is wasting people’s money. We base many of these arguments on the fact that they are the ‘rational’ thing to do. In a world, where philanthropy i.e., scientific way of doing charity has overtaken all other forms, this call for rationality and scientific ways of measuring this is but natural. But the really rational or ‘substantively rational’ question should be: what should we measure. And why? What impact does this have, in the long term.

Max Weber was one of the more prominent thinkers who write largely about rationality and how it is shaping our world. This short paper offers an in-depth discussion of the different types of rationalities that Weber expounded, upon. To summarize it, he posited there being four different types of rationalities: practical, theoretical, substantive and formal.

The ‘disenchantment’ of the world that leads to greater ‘rationalities’ of the formal, practical and theoretical type are evident in the field of philanthropy, as well. By this, I mean, there is a move away from ‘feeling’ or ‘reasoning based on an other-worldly’ sense of why we do charity or philanthropy. There is a growing sense that an act is justified or carried out towards an end. As Kalberg (1980) points out, the four types of social actions: affectual, traditional, value- rational, and means-end rational action are the core traits of ‘human’ actions and are outside of historical man.

Substantitive rationality ‘directly orders action into pattern.’ In seeking this form of rationality, one asks, not “what good is there at the end of the action” but rather, “should one even carry this out” and “what good will come out of this action,” in other words, this form of thinking is based on an ethical disposition of what is right and wrong.

Coming back to our initial discussion, if one were to use a substantive rational dispositions, one might : what is being measured and why? Does what we measure matter? And if so, how?

Ebrahim warns us in his piece Let’s be realistic about measuring impact, that “ It is crucial to identify when it makes sense to measure impacts and when it might be best to stick with outputs — especially when an organization’s control over results is limited, and causality remains poorly understood.”He suggests that simply repeating the mantra that measurement matters won’t get us there. There needs to be a long-term commitment to research and collaboration.

 

As Dan Pallotta argues in his book The Uncharitable that how we measure overheads is problematic. He gives the example of two soup kitchens: Kitchen A and Kitchen B. Assuming that Kitchen A spends only 10% of their revenues on overheads and Kitchen B spends about 30%. If this were all one knew, then one would judge Kitchen B harshly, saying they are producing a lot of waste. However, if one discovers that Kitchen A offers very bad quality soup, in poor conditions, while Kitchen B produces very high quality soup, at a great environment, then our perception of the services may change. This is a classic example of using substantive rationality, in making decisions.

There is a strong argument to be made for measuring only a few things, but asking more hard-nosed questions that get to the heart of why we are measuring a thing and at what point in time of the project life-cycle. Not to do so may actually lead to bad and hasty decision making.

 

 

 

How to fix the world – Use your head or heart?

Climate change. Refugee crisis. Unemployment.  Poverty.  Think of these issues or any other countless ‘wicked’ problems and if you are reasonable, like most people; one question sounds in your head: “Do we know all the facts?”. Do we know the ‘right’ approach to fix these issues?  While the ‘facts’ are available to address and solve most of these problems, often, what triumphs in the form of policies and actions taken are based not on technocratic solutions, but value laden opinions. You think policy makers use their head all the time? Think again.

Fix-the-world-321

In a discussion with a senior administrator of a major research university, last week; I brought up this question. To my query of whether most decision makers use the ‘head’ or ‘heart’, she gave me a very interesting answer. The person ( let’s call her Ms.A) said that most of the times, she has seen less of technocratic solutions and more of normative answers. Technocracy or ‘methods’ based solutions are offered very few times and often are not the ones chosen because such solutions can only take us so far.  How does one, for instance, deal with a million people showing up on your borders – when your own country is dealing with unemployment? Do you turn these desperate people and shove them in the sea, to drown? Or do you appeal to normative and moral claims, to tackle the issue, at hand? While there are multiple perspectives at hand, and those who want to justify their decisions on technocratic basis: we are undergoing a recession, OR ‘These people don’t fit in here’ can use any combination of excuses to make the decisions that reflect their values. But ultimately, all such decisions that take place in the public domain are at the end, reflective of our normative values. Even bureaucrats don’t blindly implement laws, but rather implement them based on their own interpretation of it. Dwight Waldo, one of the greatest contemporary thinkers and scholars of Public Administration showed this, in his work.

Even when we write ‘laws’ and ‘rules’ to do things, most decisions take place in a gray area, where  idealism meets pragmatism. It is important to be aware of this, as much as this may be against or for our interests. Sometimes, bad laws get passed because they reflect the values of those who make them and at other times, good laws get made and implemented. To lay claim to a pure ‘objectivity’ in matters of public discourse and action, is foolish. Perhaps, it is the heart that triumphs, most of the time. We just need to ensure that those who make laws have theirs, in the right place.

 

What is wrong with the ‘Islam and the West’ discourse

First things first : I am happy that Sadiq Khan is the Mayor of London. Nothing could be cooler than having someone who shares your last name become the Mayor of a global city.

This incident has been commented upon, quite a lot. Well meaning people point out that this is an indication that the ‘West’ is tolerant of Muslims and Islam. And that forces of intolerance have been defeated.

Agreed.

khanacademy

What I do have a problem with, is the simplistic characterization of his win as somehow mainstreaming of Muslims .  The second problem I see with this discourse is a lot of focus on Mr.Khan’s identity as a Muslim ( ok, I get it – he didn’t bring it up, but was rather attacked for being a Muslim, and an extremist). This identification of him – a Muslim- as an ‘outsider’ who has somehow been ‘accepted’ by the establishment is problematic to me.

He is not an outsider, but a London born Brit. Secondly, Islam has centuries of history in Britain and is certainly not a ‘new’ entrant into the nation.

Just as much as those claiming that ‘Islam’ is out ‘there’ and we in the ‘West’ are ‘here.’ This is patently false. Mr.Khan is part of the West; indeed, he is the new West, as he has claimed. The West and Islam are not only compatible, but are intertwined to such an extent that it is not fair to talk about these two as different categories. Conceptually, Islam and West should be seen as co-existing and co-equal, not two separate or distinct entities – in opposition.

Orientalists have always spoken of Islam as the ‘other’ that is somehow inferior to the West. This discourse of ‘Islam and the West’ perpetuates this Orientalist stereotyping.

On the other hand, Muslims in the West do occupy this ‘liminal’, in-between space, which makes them unique. As Kambiz Ghaneabassiri argues, in his analysis of the History of Islam in America – this space between White and Black America, has made American Muslims unique. To some extent, this argument can be used for Muslims in Europe, as well; though the history of Muslims on that continent has been markedly different.

May be it is a nuance that many don’t care about, or may be it comes across as not being celebratory of his victory; but it is far from true. I am indeed happy that someone like him could become a leader in a cosmopolitan society. It is a proud moment for all minorities. Indeed, not many Christians or Hindus will get to lead a city in a Muslim majority country, such as Pakistan, for instance.

So, yes, Western Liberalism is good and mighty and powerful. But at the same time, this Liberalism should also not reduce complex subjects such as Mr.Khan to a mere symbol – a symbol of the ‘West’s tolerance’. Nor should it perpetuate the ‘Islam and the West’ discourse.

More Charity, less Philanthropy?

Do we need more ‘Charity’ (unorganized, personal giving) and less of ‘philanthropy’ (organized, scientific philanthropy)? While scholarship in the last 25 years of so indicates that there is a growing trend towards philanthropy, we are witnessing new arguments that what we need is really more ‘charity’. Bureaucratized and ‘scientific’ ways of giving don’t really work. Don’t believe me? Look at Give Directly, one of the leading proponents of charity. They do claim, however, to be doing ‘scientific’ philanthropy, but in reality, it is direct one-to-one giving, and per one definition, would count as ‘charity.’

Their argument is simple: give the poor money directly, unconditionally and they will figure out how to use it. To the best of their knowledge. There is some wisdom in that. This is not traditional charity or caritas, which focused on ‘character development.’ The assumption in this model of thinking of the individual was that the poor were poor because they were lazy, drunks or just stupid. This is the traditional Christian view of caritas, practiced in the settler colonies in the founding days of America or any traditional society. But there are other ways to imagine how the poor live and work. Poverty is a complex topic, and I will not attempt to analyze it here. But let’s just say that the poor have a bad reputation. Most poor people I know – and have dealt with – are decent, hardworking people. Many of them have not had opportunities to advance, in some cases, they have been dealt with heavy financial blows that keep them poor and in some cases, they are victims of structural issues. So, how does on help the poor, overcome their poverty? There are several possibilities – one is to fund ‘strucutral’ changes in the system and the other is to fund the individual directly.

When it comes to immediate impact and results that can manifest themselves, there is nothing faster than individual giving. While there are limitations (and many assumptions) on how this works, it is a model that seems to have attracted a lot of attention, especially given the criticism of large international NGOs that spend a lot of money, on overheads. As Paul Niehaus, President of GiveDirectly argues in this paper, the donors usually are concerned with ‘warm glow’ or don’t really care about learning what happened after the donations were made. The cost of such learning is high, he argues. “The well-intentioned benefactor has a limited desire to learn. He always prefers to avoid ex-post feedback as this constrains his beliefs.”  This means that the intermediaries – i.e., NGOs create a ‘need’ for the service and attract donations. This is not a case of misleading donors, but one of asymmetric information and also a different theory of change. GiveDirectly offers one model of giving that is direct, (seemingly) impactful and something worth a try. My mom did this for many decades and it seems to have worked – at least in the case of many of my cousins, who have better jobs, education, thanks to my mother’s ‘giving’ directly.